How it Works
March 19, 2015
We get questions all the time about the warranty industry and how it works, so here it is:
How the traditional warranty industry works
We won’t bore you with heavy legal information and insurance talk. The simple answer for how the warranty industry works is this: insurance companies give a price to the seller. That price is based off of data saying a line of products (TVs, smartphones, etc.) will break at a certain frequency. Most of the time, that price includes an administration fee for the claims process handling by admins or TPAs (Third Party Administrators). Those are the guys picking up the phones when you call to make a claim.
Now, the seller can do whatever they want with the pricing from insurance company. If it’s $10.50 for two years on a certain product, they choose how much profit they want to make off of it. For example, they can take that $10.50 and charge you $89.99. By giving you the hard pitch on a warranty when you’re buying your product in the store, you don’t have time to really think about it or ask questions that could influence your decision. Also, they’re counting on the fact that you don’t understand how the industry works.
At Upsie, we want you to have a choice and the information at hand to make a decision that works best for you.
Furthermore, want you to have a chance to think about what your needs are. Will you keep this product for two years? Can you afford to replace it? Does it make sense for you and your family? You shouldn’t feel pressured into something that you’re not 100% comfortable with buying. That’s why Upsie gives you 45 days from purchase for smartphones and 60 days from purchase for everything else to review all the coverage and pricing information before decide if you want to purchase a warranty. We believe that’s how it should be!