Don't Insure What You Can Afford to Replace

The Problem

You buy extended warranties on everything — TVs, headphones, phones, appliances — 'just in case.'

The Hack

Skip insurance/warranties on items you can afford to replace from savings: electronics, small appliances, furniture. Only insure catastrophic losses: health, home, auto, life.

Why It Works

Insurance is profitable for companies because most people pay more in premiums than they'll ever collect. Self-insuring small items by keeping an emergency fund saves money long-term.

Pro Tips

• Extended warranties: average payout is 15-20% of premium cost
• Phone insurance: you pay $10-15/month + $100-250 deductible per claim
• Save that $15/month and buy a refurbished phone if yours breaks
• Insure what would financially devastate you. Self-insure the rest.