My son and I went to the local camping store prior to taking a canoeing trip with his Boy Scout Troop. Since we were going to be roughing it for almost a week, it seemed wise to invest in some rain gear in case we got up to the park and ended up with a few days of rain. Because I am not the most outdoorsy of dads, I just picked out the basic $9.99 rain suit that comes in its own pack.

When I got to the register, I was certainly surprised to be offered an “extended warranty” on the rain suit. We’ve all become familiar with extended warranties for cars or expensive electronics – but I was shocked to be offered one for a rain suit that doesn’t even cost ten bucks?

Amused by the offer, I feigned interest and asked how much it cost (about $1.50 or 15%) and what it would be good for. With great earnestness, the young man at the register explained that if the rain suit leaked – say, due to a bad seam – it would be fully replaced. In mock seriousness, I asked if I couldn’t just return the rain suit in that situation and get a full refund. I was told that I could, but it would be “much easier” with the warranty.

How profitable must these extended warranties be that retailers are now offering them on $10 products? How stupid are people to believe they need this insurance? Do they not understanding the concept of insurance?

My opinion on extended warranties is the same as I have on any kind of property insurance: if I can afford to absorb the loss, it is the profitable decision to “self insure”.   A friend of mine with an expensive sports car said you should never own a BMW or Mercedes “uncovered” – but how is that any different than a $10 rain suit?  If you have the money to fix it – which for me, would be about everything short of my house – why pay the margin someone else would need to insure property?

Before I walked away with my new rain suit, I assured the clerk that “I have the means to personally cover the loss” with a smile. It’s a good line that captures the ridiculousness of most extended warranties.

What’s the silliest thing you have ever been offered an extended warranty on?