Jeremy Zowadny recently wrote a delightfully obvious weblog entry concerning mortgage insurance. His point was that it is a total waste of your money. This got me thinking about an exchange I had with a clerk at Intermarchie in France.

Being American, and constantly bombarded with offers to purchase insurance for anything with more than one diode in it, I, in my pathetic one language state, thought I was being offered a third-party warranty for tea pot. I exclaimed loudly that the piece of shit had better last more than a year to the clerk’s shock and suprise. Turns out she was only noting that the tea pot had a one year warranty. Sorry dear.

The lesson? When in France, speak French. I don’t. But the real shame is that poeple waste their money on these after-market warranties. Question: Would any sane company sell a product they were losing money on? The correct answer is no, of course not. So, why should you as a consumer buy such a warranty? You shoudn’t - ever. They are not good bets. If you have questions concerning the quality of the product you are buying you should not be buying it.

I recall reading the annual report for CompUSA several years ago and within it was revealed that CompUSA had, in fact, lost money selling physical product that year. The interesting thing was that they had turned a profit and it was based on the sales of electronics warranties - to the tune of hundreds of millions of dollars. Now, CompUSA is a small fish compared to Best Buy. Ponder for a moment the revenue that Best Buy is generating on these warranties. I would wager the figure exceeds one-half billion dollars and that represents a lot of wasted consumer opportunity.

Don’t be foolish. Just say NO to the warranty.