Insurance for disposable items

We signed up my oldest son for swim lessons.  He likes to swim and he needs to burn off energy in the winter.  There are few options right now in Chicago to buy swimming gear.  Luckily his swim trunks still fit, but he needed a pair of goggles.

So, I headed off to a large sporting goods store and found a bunch of overpriced goggles.  (OK, maybe they are not overpriced, but I am cheap when it comes to things like this and I assumed I could find something for $5) With the help of a friendly store employee I headed to the front of the store with a $14 pair of goggles.

A different friendly employee helped me as I checked out.  She asked – did I want to a protection plan for the goggles?  For just $4, they would replace them if they got scratched or a strap broke for 1 year.  I politely turned her down.

The transaction at the sporting goods store reminded me why I stopped buying electronics at Best Buy.  You could never get out of that store without a pitch for an extended warranty.  Their pitch always sounded good.  I cured that by making most of my purchases at Costco which includes free returns (no pesky restocking fees) and a 2nd year warranty.  When I use my no annual fee American Express card to pay for it I get more free benefits if my item is stolen or breaks.

I contemplated my decision as I watched my son use his new goggles at his swim lessons.  In the grand scheme of things, $4 was not much to spend.  But, and here is the point of this post, the protection plan was 28% of the value of the goggles.  That’s outrageous.

Protection plans (which we used to call insurance) should be for costs that would hurt our budget.  That’s why you need health, car and home/renters insurance.  If one of those things break you could be on the hook for thousands of dollars.

For small items you have to judge any money problems you would have to fix or buy a replacement.  Like most money decisions, there is no correct answer.  My goal is to help you stop, think and decide what is best in your situation.

In the end I was willing to take the risk that we would need to replace the $14 goggles and it would not affect our spending.  Plus, the goggles are more likely to be lost than scratched so I might as well add new goggles to the long list of disposable items that I need to buy.  Maybe I can get lucky and find them on sale before I need to replace them. That sounds like a better protection plan to me.

Keep making your money feel better.