Item — HN Reader

I always recommend looking into having laptops covered through your insurance company. I have state farm, and my wife and I have our laptops under personal article policies. The coverage is better, broader, and cheaper that anything else I've seen. My wife recently got a surface pro 3 to use during her forest soils PhD, and I was adamant we get nice insurance if she was going to be using it in the field. Two years of no deductible spill, drop, and malfunction coverage through squarespace is 280$. I get the same coverage plus theft and loss for 40 a year through my insurer. And it is a 3 block walk to the office where I can eat pastries and drink coffee while I file a claim. I have only had to file one claim, but it was for a head crash and they covered a new hard drive w/out question.

I'm not saying it is a good fit for everyone, but it works out well for me. I do recommend squarespace for individual parts of a self-built tower pc. I spent 120 on a motherboard and on the third replacement spquarespace upgraded me because it turned out that model had an almost 50% failure rate in the first year.

2 comments

Don't buy insurance for things that won't ruin you.

The insurer will calculate the risk of whatever happening, and obviously charge more than likelihood * cost.

So unless your risk is higher than average, you're losing money. And keep in mind that the average insurance taker probably has higher risk than the overall population.

I generally agree. However: If you are risk pooling with much lower-risk devices and people, then you can still come out ahead. For example, maybe most people buying that kind of coverage are buying it for devices that rarely break or are lost/damaged -- they might be simply insuring against theft while you're using the damage coverage.

Reminds me of this clip from Seinfeld: http://youtu.be/-Jy5R0XjKC8?t=1m30s

Even if it won't ruin you, unexpectedly having to shell out over a thousand dollars for a new laptop might be so much of a hassle that it's worth "wasting" a few bucks each month to not have to worry about it.

Put those few bucks each month into some interest bearing account and then it can be used for many purposes instead of just a new laptop?

Insurance is about pooling and distributing risk. What you describe might be the right move on average. But people live in the world of specifics, not long-term averages. If your new laptop suddenly breaks a few months after purchase and the replacement cost would cause you distress, then the $20 you have saved in an account doesn't help much.

By this logic, nobody should buy life insurance because the insurance companies have calculated their premiums so that they come out ahead. At least on average.

> By this logic, nobody should buy life insurance because the insurance companies have calculated their premiums so that they come out ahead. At least on average.

If you flip the statement, it's "do insure against things that can ruin you".

Whether life insurance is worth it depends on what you mean by that exactly. You can insure your untimely death with a benefit for your family, but there are also contracts that are more of a form of investment, and combinations thereof.

While arguably once you're dead, you're, well, dead, so you personally might not care that much anymore, your family might. And for them the loss of one of the primary earners of the family is probably ruinous, so it's reasonable to take insurance against that.

The investment case is different, it's essentially just an investment contract with associated cost. In that case, you're just buying a service (managing your investment, and to some degree insuring against investment risk). The two forms are commonly mixed together, and then it depends a lot on the structure and cost of the contract. YMMV, but I think over here these contracts have very intransparent cost structures and are commonly more expensive than getting a plain life insurance and a separate investment contract (or investing yourself, for that matter).

"Insurance is about pooling and distributing risk."

It is also about making insurance companies fabulously wealthy.

Sure, and Tesla is also about making Elon Musk even more fabulously wealthy. I'm fine with that.

$40 a year in a savings account isn't going to net you much.

No, but consider all of the things that you might insure - appliances and electronics. Now take the total cost of insuring them and put it in a bank account. In the case that one of them breaks, the savings will likely cover that replacement. Chance are none of them will break. Do the same thing next year. Not only to you make a little interest, you have all of last year's left-over premiums.

Almost everything I would want to insure as far as appliances and electronics go are already covered by my renters policy, if you do not have a renters policy go get one, right now, mine is only $10/mo with state farm (including an additional addendum to cover up to $10K in personal electronics).

Of course, there's a $500 deductible on that, but the things I expect to happen that would cause me to file a claim on my policy are likely to end up with a lot more damage than that.

My laptop and personal assets I carry when I travel are an entirely different story, a $500 deductible if my duplex burned down or an electrical storm fried every device in my house is pretty acceptable, but that's over 1/3 of the value of the things that go into my laptop bag. Considering I've already had a car broken into and only recovered $200 after my $500 renters deductible a personal assets policy would be well worth it to me if it cost $10/mo.

Do you expect the insurance company to lose money on your account? Do you expect to beat out the professionals at their game?

I don't have comprehensive insurance on my car, and the premiums have over time added up to more than its value.

Except healthcare! You're required to buy it in the US now, but regardless...the hospitals would negotiate with insurance companies to <50% of the bill (and I've seen >90% reduction)- you can't do that as an individual and will generally be stuck with the full price.

Health cost can very easily ruin you, even if you are quite well off. Even the possibly better prices negotiated by insurances for a serious illness are ruinous, and keep in mind you most likely won't have an income while you're seriously ill. Reduced cost in the US is just icing on top.

So everyone definitely needs insurance for healthcare.

Ah, I think you misunderstood my point. I was specifically saying that getting health insurance was important- even if you have enough money to cover the cost generally. I mentioned insurance negotiation to emphasis that there were outside factors contributing to making it must-have.

This is awful advice!

Losing a smartphone isn't going to ruin me, but it sure would piss me off to have to fork out £500 or whatever because it gets jacked. Similarly, someone could break into my house and clean it out. Not going to ruin me, but I'd rather not have to replace everything.

The whole point of insurance is collective risk-spreading. Yes, this means that the majority (by value) of people with insurance will have 'wasted' money, in the sense that they purchase insurance without claiming. But that's not what they're purchasing – they're trading off a small, certain cost for the elimination of a large, uncertain cost. That's a purchase of 'certainty' or 'stability' – and it's what they get.

In other words, since you have no reliable way to understand risk and likelihood of a particular event happening, it's not possible to decide if you are at a higher risk than average.

No, that what you gave is awful advice, to anyone who cares about their money!

Go talk to an _honest_ insurance broker (not some State Farm or other company you see on TV commercials) or better yet a financial adviser. You should reserve an insurance claim for catastrophic issues only. You should also have max deductibles. Forking over 500 for a lost iPhone is a MUCH cheaper deal than paying insurance premiums for that coverage and then the INEVITABLE rate hike because this claim appears on your CLUE report.

I made the same naive mistake as your assumptions when I was young. Lost a 1k watch, made a claim, went about my jolly day with my nice check for $750 (250 deductible). 1 year later when I go to buy a house I am surprised by how much my insurance rates are. FOUR years later after that claim fell off my CLUE report my premiums went way down. I paid the insurance company more than the $750 I got from them.

I was lucky in that my neighbor was an insurance broker and told me low deductibles are taking advantage of suckers and the lesser fortunate who are scared into these policies. What he advises most of his clients to do is take the highest deductible they can, then put aside that amount of deductible in some low earning liquid account. Now when you have an accident you "pay your self" and keep your insurance rates low.

Don't be a sucker.

I don't think there's any debate about the benefits of a high deductible, or that you should avoid claiming on insurance if you judge that the extra expenditure is worth saving your claim-free status.

I'm in the UK, so I can't help but assume there are differences in the insurance market. I have a comprehensive insurance policy that covers buildings, contents and accidental damage, and that covers things like smartphones too. Despite a couple of previous claims for stolen and damaged electronics, the rates are pretty good. The marginal cost for accidental damage is minimal.

But yes, low deductibles are a sucker's game.

Why not put the money in the bank only and skip the insurance then, if you're not going to use it anyway?

Don't be a sucker.

Yes, for things that you can afford to cover yourself.

As a counterexample, for all but the richest people having catastrophic health insurance is a good idea.

"The whole point of insurance is collective risk-spreading"

If you can afford to replace the item yourself you can instead spread that risk over time (and multiple items) by essentially self-insuring.

I absolutely agree you should buy insurance for "large, uncertain costs", but a smartphone or laptop is not that for a lot of people.

Healthcare and liability (auto, homeowners/renters, etc) are two examples of actually "large, uncertain costs" for most people.

And even for healthcare and liability you can opt for high deductibles. (Though in some countries buying comprehensive health insurance perhaps via your employer even is either mandatory or tax advantaged. The tax advantage might be big enough to change the calculations.)

Over time, you're probably paying 2x or 3x in insurance premiums compared with what the loss would be.

Consider also the overall effect if you invested the premiums instead of paying them.

This is also nutty. The guy is clearly risk-averse, which means if he did invest he would go for a risk-free rate, which is.... 0.90% right now?

I've had this conversation with friends before. Some people can't see outside their own risk profile.

I pay $45.00 a year for a $2,062, no-deductible policy on my MacBook Pro through State Farm. I'd have to have the MacBook for 45 years for the premiums to even equal the payout on loss.

22 years if you invest the premiums at 7%. (At 45 years you'd have $12,858.70.) Add this up for all the other non-catastrophic items you have insurance for.

I know when you're young 45 years seems like it'll never happen, but if you're lucky it does.

You can't guarantee 100% expense coverage during random events. Not everybody has thousands of dollars laying around in emergency fund for 12+ months. Committing to an insurance policy is simply a semi-guaranteed safety net.

Have tons of cash? You should still probably look at a cheaper plan with a super high deductible.

I'd buy a cheaper computer before one so expensive it would be a fiscal catastrophe if I lost it. Buying a computer on credit is just as bad, might as well just set fire to money.

In fact, my laptop is a $500 one I bought 2 years ago for travel use and didn't want to be too upset if it was lost/broken/stolen.

My previous one was 10 years old and was a bit heavy :-)

"Buying a computer on credit is just as bad, might as well just set fire to money".

You are not living in reality. Most of people live on credit and can't afford to pay for things in full.

Especially not $500 laptops "for travel".

Please take a look at the antecedents in this thread. The person had a Surface Pro 3 (a thousand dollar item) he was buying insurance for.

If I had to buy such on credit, I'd opt instead for a $150 machine from a pawn shop I could pay in full.

A $500 laptop is garbage and hardly adequate for the use of most of the people that frequent HN. I mean, what does $500 buy you? A shitty TN panel with a subpar resolution, color reproduction and viewing angle, often shoddy build quality, tons of bulk and probably a spinning drive (I wouldn't buy a laptop without a SSD today).

Not everybody on the planet needs something svelte and sexy, but for those of us who work on their machines a $500 POS doesn't cut it.

I did work on an Acer C7 ($200 with about $200 worth of SSD+Memory and a $100 23" LCD when I was home, total cost $500) with Ubuntu for about half a year. I initially bought the machine to travel with, and it became a workstation when another machine malfunctioned. I do a mixture of C, Python, Javascript, and Clojure development. It was absolutely fine. Clojure needed a settings tweak to bootstrap the repl properly (it was slow at over a minute), but I never left the repl, so it was a one time cost. C/Python/JS have compilers that were fast even on a dual-core Celeron. tmux/bash/vim were fast (as always).

I did everything on that machine up to and including playing TFC via Steam. It ran an IRC client, Chrome, Firefox, VirtualBox for Windows, and my xterm w/tmux. I don't know that I'd give up my rMBP for it, but I did a lot of work on the chromebook.

As far as a developer machine goes, a $300 special 14-15" screen plus $200 of RAM+SSD would probably be fine for 99% of what I do. This likely doesn't work for those who need Photoshop, do video editing, or need to rebuild their OS (rebuilding world in FreeBSD on the thing would have been a bit much). If you're slinging JS, Python, Ruby, Erlang, Clojure, Java or something similar and you can't get by on 16GB of RAM and a 128GB SSD, something is atypical.

You do have a good point, a $500 laptop doesn't make for a great development machine. But that's not what I use it for, I use it as a travel machine. (It can be used for dev in a pinch, and I carry along a full size $9.99 keyboard and wireless mouse for that purpose.)

I use a desktop for dev built with about $600 in parts from newegg, excluding the display. I do get a bit spendy on the display, as that is the most bang for the buck value to me. None of the high end laptops have a display large enough for dev for me. Portability and dev are at odds.

But this thread is about insurance to protect against the loss of a high end laptop. I presume that someone doing serious computer work is making enough money that they don't actually need insurance to cover the loss of even a high end laptop, and the premiums hence won't be worth it.

BTW, my laptop is an ASUS X202E. It's small, and the build quality is surprisingly good. You can also get usable laptops from the pawn shop for $150. A bonus is you'll never have to worry about someone stealing it :-)

What is stopping me from putting away in a saving account (or any separate account) some 20-30 bucks every month/year so I can retrieve them later in case I need them to replace my laptop/phone/tablet/whatever, instead of giving more than what I'd need to somebody else and effectively lose that money?

House always wins.

Or at least, on average.

Surely you mean SquareTrade, right?

Man those squarespace ads on podcasts have done their job...