Break even for Appliance Insurance?

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We had an appliance insurance program at our last house, which was around 9 years old when we bought it (Service Sentry - it was through the local gas co. South Jersey Gas).

I must say it was a good deal. Over 4 years, we probably had the repair man out about 4-5 times to fix the furnace, air conditioner and hot water heater (that was the plan we had). I think we paid something like $120/year (I can't really recall).

Now that we built a new house, we haven't had it.

I am wondering when it makes sense to buy it again.

I probably would just insure the same appliances - hot water, furnace, and air conditioner (not the washer/dryer and dishwasher and stove).

Watching the Green Bay game tonight and seeing -24 degree wind chills made me think about our furnace (and the stories in Siberia).

[disneysteve]

I don't think it ever makes sense. We've never had to repair our furnace or AC. We've never had to repair our hot water heater. We've never had to repair our washer, dryer or dishwasher. We've been in our home almost 14 years. We have replaced the washer, dryer and dishwasher one time each within the past few years, but no service calls at all.

I think these plans are in the same category as extended warranties. They are generally not good investments.

[MonkeyMama]

I'm with DS. I wouldn't bother.

I thought the same thing - "like an extended warranty."

[maat55]

In theory, they are a ripoff. In most cases you can self ins. and come out ahead in the longrun. I will say this, only one time have I bought the ins. on a car and it paid off. But I have never bought it again on anything and have had no trouble. These ins. are big money makers for the sellers and issurers.

[asmom]

How much does the insurance cost? Last year, our central AC failed during the 100+ temp heat wave to the tune of $4000 to replace it for a bottom of the line model. The insurance that had come with the house had lapsed a few years ago as we thought it was unnecessary and a rip-off. During the 4 days of hell we endured waiting for it to be repaired, many people told me that they had to replace their entire units. I was surprised as I didn't realize that it was such a common problem. So I guess it depends on the cost of the insurance and whether or not it includes something like regular maintenance as to whether or not it is a good idea.

[maat55]

I'm not sure, but I think the age of your appliances may be a factor in the price of the ins. It's inevitable that your appliances will go out at some point. To keep them ins. for life is going to cost you much more than the upkeep on your own. Is it possible for a newer appliance to go out, yes, but not likely. There is a huge difference between the money these insurers take in and payout. Besides, its a well know fact that appliances don't go out till the warranty is over.

[Joan.of.the.Arch]

We don't know the age of our furnace or air conditioner. But judging from color and "style" of the labels, I think they are both early 70's. About 13 years ago, we had to replace the motor of the fan that blows the air through both furnace and AC. I see a sticker on the furnace indicating that the previous owner had some sort of service on it. But that might mean that in 35 years only two repairs have been needed. Dryer, no repairs in 13 years, but we use it lightly. Washer, totally replaced one time in those years. Fridge 15 years and still no trouble.

I have to admit though that one of the things that keeps me from updating to newer, more efficient appliances is the fear of breakdowns of poorly made newer stuff. I think of washers, for example. If you bought a washer in 1965, you might still have it working today. If you bought it in 1995 as I did, you've already had to replace the piece of junk. Even so, I think I would not buy insurance/extended warranties.

[maat55]

Even good old appliances will go out, better start saving for the new.

[disneysteve]

We don't know the age of our furnace or air conditioner. But judging from color and "style" of the labels, I think they are both early 70's. Dryer, no repairs in 13 years, but we use it lightly. Fridge 15 years and still no trouble.

If you bought a washer in 1965, you might still have it working today. If you bought it in 1995 as I did, you've already had to replace the piece of junk.

You are neglecting one very important piece of the puzzle and that is energy efficiency. We've discussed this before around here. It is true that your 30 year old washer might still be working, but it is sucking you dry on your utility bill.

We replaced our furnace about 5 years ago when it was about 40 years old. Our gas bill dropped 50% that winter! My cousin recently replaced his 20 year old fridge. His electric bill dropped by almost $30/month. The new fridge was $480 so he'll break even in about 18 months. Even if the new fridge only lasts 5 years, he would come out ahead financially, and more likely it will last 10 or more making his savings far greater.

So no, a new appliance probably won't last 30 years, but you will save so much money that it won't matter. We're planning to replace our basement freezer this year. It is from 1992 and I can't wait to see how much we save by getting rid of it.

[Scanner]

How much does the insurance cost?

I don't know offhand but I seem to recall us paying about $150/year through Service Sentry, which is a side co. of South Jersey Gas. Co.

Now. . .as far as the air conditioenr. . .we had it worked on twice and both times it was a fuse, solenator, that sort of thing - totally covered.

There is an exclusion for the compressor, which I think is a $2000 part, but I think the labor is covered.

I guess I was lucky in that I know we came out ahead.

I wasn't really thinking of "appliances" as much as I was thinking of air conditioner, hot water heater, and furnace (I guess they are appliances).

There is something to be said for speed in these situations. Our furnace broke in winter one time with the baby and they had it fixed that day while my wife baked cookies and bread to try to keep the house warm.

I was thinking 7-10 years may be the break even point.