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Should You Buy Damage Protection Insurance For Your Holiday Gifts?

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It seems like retailers are always coming up with new ways to get us to spend money. From flooding our inboxes with information about sales and special deals to all those inviting window displays, our favorite stores have a knack for getting us to fork over our hard-earned cash.

One new product that has been popping up more and more frequently in the past couple of years is something known as “damage protection insurance” or sometimes a “damage protection plan.” This is a special type of insurance usually offered on more expensive items, such as furniture and electronics. These plans provide replacement or reimbursement for accidental damage you may cause to the item in the future, and are frequently hocked by salespeople when they’re ringing the item up.

But should you purchase damage protection plans for your holiday gifts? Are they worth the money or just another scam? Take a look at the information below to decide if damage protection insurance is right for you.

Benefits to Damage Protection Insurance:

  • They could save you money – in the event that an item you purchased for someone as a gift is dropped, scratched, kicked, or chewed on by the dog, you won’t have to buy a whole new one if you have a damage protection plan. This could end up saving you big bucks!
  • They could save you worry and anxiety – if you constantly find yourself worrying about your kids or pets damaging an expensive item or gift, it might be worth the money to purchase the damage protection insurance so that you don’t have to stress about it.
  • They’re usually inexpensive – most damage protection plans are $20-$100. This is hardly a huge amount of money, so even if you never end up using the plan, it’s not as if you’ve wasted a mint.

Drawbacks to Damage Protection Insurance:

  • They have a lot of restrictions – damage protection plans vary a lot in quality, but most contain a lot of restrictions in terms what does and doesn’t count as an “accident” that will be covered by the plan. This could make it difficult to cash in on the insurance if you actually need to use it.
  • Many contain loopholes galore – while it might seem obvious as to when and how damage protection insurance should be used, these plans often contain a lot loopholes that make their applicability murky. For example, if an item is under warranty, a damage protection plan might not cover an accident. This is why it’s important to fully understand the specifics of the plan before signing on to it.
  • They could be voided – damage protection insurance is usually offered by the store you bought the item from, so if the store goes out of business or suddenly decides to stop honoring, you could be out of luck.

As with lots of other types of insurance, it’s important to weigh the benefits and drawbacks of damage protection plans before purchasing them. The good news is that you can usually decide within 7-10 days of buying your gift if you’d like to buy the damage protection insurance, so you have a little time to decide – use it wisely!

About Lindsay Meredith

Lindsay is a high school teacher and personal finance blogger. She lives, works, and plays in the Washington, D.C. area.

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