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Should You Buy a Protection Service Plan?

Updated on October 24, 2014
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Rebecca Graf is a seasoned writer with nearly a decade of experience and degrees in accounting, history, and creative writing.


Any time you buy an appliance, furniture, or a big ticket piece of electronic, you are offered the chance to purchase a protection service plan, PSP. When presented, the plan sounds wonderful until the part of how much it cost arises. That is when most people decide not to purchase one. But there are times when it might be a good idea to shell out the money. You don't want to find yourself regretting not purchasing a PSP and out a ton of money you didn't have to be. Let's explore what a PSP is and when it might be a good idea to get one.

Understanding PSPs

PSPs are kind of like an insurance for you as the consumer. You buy a $900 computer, you don’t want to have to buy another one in two months because your kid cracked the screen by dropping something on it. That’s a lot of money to shell out. Not many people can afford $900 one month and the same amount a few months later. Who knows, they might need to shell it out again in a few more months. Drinks get spilled on computers, and they get dropped. That’s what PSPs were designed for.

They are a one-time insurance safety net. They cover what the manufacturer doesn’t.

Benefits of a PSP

So, why should you consider a PSP? As I just pointed out, it can save you a ton of money. Accidents do happen. If you are like me and my family, they don’t just ‘might’ happen. They will happen at some point. Too many kids and animals in the house. If I have struggled to save up the money for the new laptop or the new leather couch, I want it to last. That means I don’t want to have to replace it in a few weeks or a few months. You want these items to last a few years.

I’ll give you a personal example. My computer was left open sitting on the kitchen table where I thought it was far enough away from harm. My son knocked over an empty glass that literally was sent bouncing along the table and slammed into my screen. A spider web of cracks developed across every single inch of it. My computer was essentially useless which is not good news for me. If I had had a PSP, which I did not, I would have gotten a new laptop for no extra cost. Instead, I had to shell out close to a thousand dollars just six months after getting that one. Hard lesson to learn.

Under a PSP, the labor costs in repairing your product is covered. If the company reviews your merchandise and deems it reparable, it can cost a ton in labor costs. Without the PSP, you’d have to pay at least the labor cost. Compare that to buying a new computer and you might find yourself on the losing end.

A PSP will cover things that a normal warranty from the manufacturer doesn’t cover. If the hard drive of your computer suddenly stops working after a week of using it, the manufacturer will fix it. It is a manufacturing issue. If your kid breaks the screen or you drop it going to a meeting, you're out of luck. That is where a PSP comes into play and saves the day. You purchase a PSP, and a damaged product is repaired or replaced.

Also, with a PSP you typically do not have to send your computer off across the country to get it fixed. Most repairs are done local. Buy a couch and the dog pees on it? The cleaning service is local. There is very little you have to do when you have a PSP.

Have you ever used a PSP?

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What To Be Aware Of

This is also where the company makes their money. They are not out anything when you purchase the plan and only have to pay out when you submit a claim. It’s a win-win with them as the odds are that you will not use the protection plan or it will take a long time for you to need it. That means they get to use your money for growth and expansion.

Most people don’t realize that a PSP is a one time purchase. I buy a PSP for my new computer which gets me a whole new computer. Now all is well, right? Yes and no. You have a new computer which that PSP gave you and saved you a ton of money. But what happens when you break the second computer? Unless you purchase another PSP, you have to pay for a completely new computer - the entire amount. Sounds like too much but look at it this way: Pay $1000 for first computer plus $300 for the PSP. Get second computer ‘free’ because of that $300. Pay another $300 with the new computer so when it breaks you get another ‘free’ one, or wait until it breaks and pay $1000. Go through two computers and pay either $1600 with two PSPs or $2300 with only one PSP. Which one sounds more appealing to you?

PSPs can be expensive. That is why you need to be educated on them. A good PSP should not cost more than 25% of the value of the product. If a salesman tries to talk you into a PSP that is 50% of what the value of the product, find another store to buy from. You’re getting conned.

Should You Get One

I have to admit that I don’t always purchase a PSP. It depends on the product. You can get a PSP on a piece of electronic that costs only $100. I typically don’t purchase one then. $100 is easier to come up with than $1000. Anything that costs more than I can come up in the next paycheck or two I get the PSP for. It has paid off many times over. So consider your financial position.

Do you have pets? They might claw that new couch or pee on it. How about kids? Trust me, they can destroy anything.

Think of what could happen to your new purchase and how easy you can replace it. Think worst case scenario and go with that. You’ll thank yourself in the long run.


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