When you purchased your smart phone, or your new television, the store you bought it from probably offered to sell you a form of BuyBack insurance. The sales clerk usually will describe all the ways that this insurance can help you. Keep in mind that the sale of the insurance helps the store more than it helps the customers.
BuyBack insurance is something that a consumer purchases in order to prevent exposure to certain kinds of risk. Specifically, the BuyBack insurance can help you recover a little money if your smartphone, big screen TV, or computer becomes obsolete shortly after you bought it. In general, this means that a technological upgrade of the phone, computer, or TV became available to consumers right after you bought what is now the “old” one.
Best Buy is one of the stores that sells this kind of insurance. Customers do not pay premiums on BuyBack insurance. Instead, you pay a flat fee at the same time that you purchase your phone or laptop. For Best Buy, the fee to cover a smartphone with BuyBack insurance is $60.00. For a TV, it will cost $180.00. In reality, this isn’t actually insurance. It is much more like a warranty.
Let’s say you decided to pay for BuyBack insurance coverage for your smartphone. Six months later, a more technologically advanced smartphone is on the market. You no longer have the hottest, newest, coolest piece of technology in your hand.
You can bring your current smartphone right back to the store you purchased it from and get a fraction of the original price of the smartphone back. This could come to you in the form of a rebate, or a gift card for the store. Now, you have a little more money to spend on the new upgrade.
With Best Buy’s insurance, consumers get half the purchase price back if they return the phone within six months. If the new upgrade doesn’t hit the market until eighteen months after the customer bought the smartphone, then that person is only going to get 20% of the price back. Obviously, your smartphone has to be in good condition at the time you return it to the store.
BuyBack insurance could, potentially, help some consumers. I think the people who feel strongly compelled to always have the latest, newest, most awesome version of everything will rush to the store to return their smartphone or computer. For this small group, the BuyBack could be worth the money it costs.
However, I don’t think that everyone who pays for the BuyBack insurance will do so. Some people are going to forget that they have a BuyBack warranty. Others will lose the paperwork connected to it, or will not have taken good enough care of their smartphone or computer to have it remain eligible for the BuyBack rebate anymore. Stores, like Best Buy, are counting on this. They make a large amount of their profits from sales of BuyBack insurance.
Image by John Karakatsanis on Flickr