I'll Pass On This One Thanks...

I received a letter this morning from a well known electronics company. The Japanese company are the makers of my Handy cam, the one I purchased last July after the previous one, made by another Japanese company, had developed what turned out, upon research on the Internet, to be a well known fault that the company in question couldn't be arsed to correct.

Anyway back to this mornings post, it was the offer of product insurance, which is another way of the manufacturers saying, "look, it was good of you to buy our stuff but it won't last long so why not hand over some more cash to insure it against the inevitable breakdown." Now I'm not one of those people who has a dislike of insurance in principal but what struck me about this offer was that it would cost me £21.99 a month, £263 a year. Now the camera only cost £270 six months ago, it has since been replaced by a newer model that sells for....£156, I can actually buy a 'good as new' refurbished Handy cam online for £116.

Now in simple economic terms that means that I have to sign up and hope that the camera breaks down in under eight months so that the outlay to me in insurance premiums is less than the cost of a new model. Isn't the usual relationship between premium and item insured one where the premium costs less?