Or Putting Money Aside - Which is Better?
Appliance insurance - the question is do you need it or not? We have probably all been there - a mayor appliance breaks down and we wish there was a way we would not need to pay the several hundred (or in some cases even several thousand) dollars for the new appliance or repair of the old one.
Well, there is a way - Appliance insurance or in our case - Refrigerator insurance, of course. But such insurance might cost quite a lot and you might have a lot of trouble when trying to get the insurance company to pay.
You will need to have your appliances installed and maintained by qualified technicians, or they will refuse your claims due to improper installation or improper maintenance - and according to a lot of people's experience, the insurance companies love to do just that!
There should be another way - and, actually, there is - Putting money aside or creating an appliance budget for the time when your appliances break down or simply wear down and needs a replacement due to old age.
In our case, a refrigerator should have a life expectancy of 15 - 20 years, so you should expect to replace it after 20 years at the latest - if it does not wear out sooner, breaks down or you simply want a new fridge to fit in with your new kitchen decor. If your fridge costs about $1000, this means you need to put aside about $5 per month or $60 per year.
Counting in all the other appliances you have (oven, stove, dishwasher, washer, drier, air conditioner, water heater, etc.). In the same manner, we can quickly deduct you need to put aside about $600 per year. In 20 years this amounts to $12,000 (plus interest from the savings account in the bank), which should be enough to replace all appliances. Of course, if you have expensive high end appliances, you need to put aside a larger amount - $50 per month for a $10,000 refrigerator for instance.
We now have two ways of paying for repair or replacement of a broken or worn out appliance, so let's compare the pros and cons of both of them:
Putting Money Aside
So, what should you do: put money aside or get appliance insurance? It depends - on your situation (old or new appliances, etc.) and your personality - do you prefer to pay the insurance fee to sleep better or be in control and are self disciplined enough to follow through on the savings plan.
It's up to you, of course. Read the pros and cons again, think about them, get some quotes from different insurance companies, read all the Terms and Conditions carefully (you'd be surprised how many people never read the fine print!) - this is where most of the catches are - and then make an informed and well thought out decision.
Good luck regardless of your decision and may your refrigerator and other appliances happily serve you for a long time.
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