Extended warranties, insurance for gifts; Should you buy them for electronics, jewelry?
Houston - If you’re buying expensive holiday gifts like electronics or jewelry, you might wonder if you need to buy a warranty or insurance.
An expensive cell phone, TV, or video game console can break. But Consumer Reports says buying an extended warranty may not be worth the cost.
Let's say you buy an $800 cell phone and it breaks down. It would cost you $800 to replace. Should you buy a warranty to cover it?
Warranties cost an average of 24% of the cost of an item. That's about $200 to cover that $800 phone.
Consumer Reports warns that repairing electronics or appliances usually costs about the same as the service plan, and that you're better off saving the money for repairs.
If you bought the device with a credit card, the credit card may provide a warranty.
Or the device may come with a manufacturer's warranty. And Consumer Reports say an extended warranty on top of that is usually not necessary.
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If a warranty has expired, Consumer Reports says it never hurts to contact the manufacturer to see if they can help.
When it comes to deciding whether to repair or replace an electronic device, use the 50% rule.
Consider repairs if they're less than half the cost of a new device. Industry periodicals say common cell phone repairs run $50 to $100, laptop repairs run $100 to $250, and typical tablet repairs run $150 to $200.
On the other hand, another expensive gift is fine jewelry, such as engagement rings, necklaces, and earrings.
But many buyers make the mistake of assuming their homeowner's or renter's insurance will cover it. You may need to add a rider to your homeowner's or renter's policy to cover a valuable piece, or insure it through a jewelry insurer.
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"You're covered for loss, theft, damage, or mysterious disappearance and things like preventative maintenance as well, which is oftentimes not something you'll see on your homeowners' policy," said Rachel Ackmakjian of BriteCo.
The cost of insurance is usually based on the value of the piece.
"I would say that on average it's about 1.5% to 2% of the appraised value annually. At BriteCo, you're going to get offers between half a percent and 1.5% of the appraised value annually," said Ackmakjian.