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The Applecare Hustle
101–107 of 107 posts
Re: The Applecare Hustle
#102In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…
There are 3 things about device insurance/warranties that can make them a good deal for all parties. For example, I paid $99 to insure my Google pixel 5a for 2 years.
I did the math and it made sense to me for several reasons:
- historically, I've broken my phone about once every 2 years. I'd prefer to not use a thick case to protect my investment.
- the CAC on mobile phone repair is probably around $50.
- the cost to me for mobile phone repair is about $120, or more than the cost of the premium.
- the cost to Google to get the repair is probably like $60, because they are providing customers.
- so if there is 1 repair needed, Google makes money, I save money, and the repair shop makes what it would have without needing to spend on AdWords or something.
The most likely scenario is this, so most likely it's a profitable trade for everyone. If I don't use it, I get peace of mind. If I use it twice, Google "loses".
I consider it more like "prepaying for repairs at a steep discount" than "insurance". It can make sense in some cases. Home, car, and life insurance aren't nothing like this, as counter examples.
Re: The Applecare Hustle
#103Earlier quoted context omitted.
I'm staunchly anti-insurance in most cases, as once someone is making a profit it can't be a positive-expected-value deal. But that angle seems to have been covered already so just to be different - insurers also have the strongest incentives in the market to make sure risks don't play out. There is nobody with more at stake in the event of a bad flood or other disaster. The incentive structures around insurance (in…
It might not be positive expected value (dollars) but it's often positive expected utility. This is usually because insurance hedges against tail risks that wipe out the individual, and in these cases utility is a nonlinear function of dollars. Most people would rather pay 1% of their net worth to deterministically avoid a 1/100 chance of losing their entire net worth. Because insurers pool risk, it ends up being sim…
I like to think of it as: insurance = risk pooling = “socialism”, whereas markets = information pooling = “capitalism”, and risk is simply the negative of information.
Re: The Applecare Hustle
#104The article misses the point of insurance (which AppleCare actually isn’t technically). AppleCare is an extend warranty program which includes accidental damage coverage. There is a manufacturer/ customer relationship component here that the author might be overlooking. Those expensive but cosmetic fixes aren’t the kind of thing you use insurance for generally. If you are Apple you might be happy to keep your custome…
Yes. I could work for AppleCare phone support. All my friends call me instead. When I need to call, I'd do well betting a year's salary that the first person won't know the answer. I always get escalated, sometimes to someone with a deep understanding of the issue. I'm willing to pay for that, as I have trouble letting go otherwise. AppleCare buys me back days of my life.
This article threw me, first with the "you're" in the caption, then the muddled second paragraph. It's a "Where's Waldo?" of grammatical errors. I lost count.
Re: The Applecare Hustle
#105In contrast, the insured often relies on a recollection of their history and a ton of emotional reasoning to decide if they will be the statistical oddity to make "a profit" of having bought insurance. This isn't generally the point of insurance. The point of insurance is to amortise risk. Yes, the insurance company expects to, on average, get more money from insuring my house than the cost of any damage to it. But i…
> The government also forces me to buy third party insurance to drive my car, which seems fair enough since I can't afford to pay damages for someone permanently crippled from negligent driving. I agree with your post overall, but this piece always struck me as incomplete at best. My state’s mandated minimums for 3rd party bodily injury are $20K per person, $40K per occurrence (and $5K of property damage liability).…
Fair enough. I don't live in the U.S, where I live the limits are far, far higher- at least $500,000, probably more adding up all the different types of entitlements.
https://www.greenslips.com.au/claims-guide/entitlements.html
Re: The Applecare Hustle
#106Insurance is a premium paid to reduce volatility. If one can afford the volatility, then that person should definitely not get the insurance. A typical HN'er should probably not insure things under $2K. Insurance is NOT about trying to "profit" by better analysing a transaction. It is a service purchased for volatility-reduction.
Re: The Applecare Hustle
#107Earlier quoted context omitted.
But when your iDevice breaks, you don’t necessarily go to Apple to fix it. Increasingly more, yes, but iPhone screen and battery replacements on the cheap are common where I live (compared to Apple costs). Mac repairs aren’t anymore, but non-Applecared people might switch off the Apple platform if the cost to repair is too high. It’s possible that AppleCare is a win for both Apple (customer retention) and the custome…
> But when your iDevice breaks, you don’t necessarily go to Apple to fix it. Now you're making the case for not buying the insurance because you have a way of paying less for the repairs out of pocket which makes the insurance less valuable. > It’s possible that AppleCare is a win for both Apple (customer retention) and the customer (lower cost to stay within favorite ecosystem) because it is NOT a zero sum game betw…
But value is not absolute.
I broke my 6s home key last year. The phone was 5 years old at this point. Apple would fix it, for $200 or so. A local guy fixed it for $30. But there is a difference (I was made aware of by both Apple and local guy before choosing):
Fingerprint reader would only keep working if Apple fixed it. Was it worth $170? Not to me. It might to someone else.
In this case, it’s way after the end of AppleCare. But these values (working fingerprint reader, and in general Apple certified original parts vs aftermarket) has a value that differs among people.
Apple decided they prefer to cater to those with higher value for this stuff - and they likely are right economically, as it likely lets them capture value in other places in the ecosystem.
P.s. still typing this from the same 6s.