We all buy things domestic, industrial, expensive and non-expensive regularly. How many of us have got the real benefit of the so called Guarantee, Warranty and Insurance protection? Many can tell about their stories and bad experiences. Still we buy things which have a guarantee/warranty sheet coming with them without knowing how much useful they are.

The word Guarantee means a formal assurance or promise by a manufacturer or a dealer or even a person, normally in the form of writing which assures some protection from damages and/or malfunction subjected to certain clauses.

Warranty is again an assurance given by a first party to the second party in business transactions, where the second party is assured of certain services by the first party which is (again) subjected to some clauses stipulated by the first party. The second party has to believe that the first party will fulfill the terms stipulated on the warranty card.

Then we have the Insurance which gives another type of protection for the consumer or buyer where the goods bought are insured for a specific value agreed by insurer and the consumer/buyer. This is also subjected to certain terms and conditions.

So, basically, the Guarantee, Warranty and Insurance are all based upon certain standard terms and conditions. There are many cases where none of them are useful to the buyer/end-user or the consumer.

Guarantee normally assures you 100% replacement without any cost for the consumer. This is generally protecting the consumer from any loss due to material, workmanship or other defects. Warranty covers certain things – may be full or partial replacement with zero or some cost to the consumer/buyer. This again could be an extension of the guarantee. Both guarantee and warranty will be for a limited period of time after which the consumer/buyer has to pay from his pocket for any repairs or replacement of damages. There are Insurance coverage provided by the dealer, manufacturer, credit card providers and insurance providers. Some provide free insurance cover for a specific period and some charge you extra. But the insurance does not cover any manufacturer guarantee or dealer warranty. They only provide you with a compensation depending upon the insured value of the goods.

Reading this, you would have guessed where I am reaching to. Guarantee, Warranty and Insurance give you the desired protection or benefit only if you are lucky. Otherwise you would be simply spending some additional money which you could have utilized for some good cause.

Almost 5 years, I was subscribing to a health insurance coverage recommended by my bank for a nominal amount which was supposed to give myself and family a protection (subject to various terms and conditions). Luckily we did not have to utilize their service any time. Otherwise we would have known the hardship in getting some sort of compensation from them. When you subscribe they give you “all simple and easy” steps. But to get money from them you would really struggle. Realizing that it is not worth spending even the small nominal amount, I stopped it.

I have bought a digital camera worth US Dollar 1600 two years back. This was the dealer price, which included one year warranty. In fact I could by the same camera from a retailer for almost US Dollar 1350 without warranty. The retailer told me that the warranty the dealer gives is only covered locally and it is not international warranty. If I were to take this camera elsewhere and if there comes a problem, I would have shelled money for repairs from my pocket. The dealer never explained about the warranty. Luckily, I am still using the camera without any problems. I used the savings for buying some extra lenses for my camera.

My friend bought a brand new car which was met with an accident a few months before. He had only done about 4000kms over a period of 4 months after purchasing it. He was hit by a rash driver who came through a one way road and it was a head on collision where my friend’s car was damaged on the front side and the other one which hit his car was damaged very badly. My friend and the other driver had the cars insured. After assessment of the situation the police gave a clean chit to my friend and so the other man’s insurer had to provide compensation to my friend. My friend’s car was written off as total damage because the repair cost exceeded more than half of the car’s insured value. It was not even six months after purchasing the new one. My friend lost almost USD 18000 from his pocket to clear his bank loan because the insurer reduced the book value by 20 percent stating that it is normal practice. He had insured his car for the purchase value and still he did lose a lot of money in the bargain.

I have also bought a brand new car last year. I have changed three tires during the first 7 seven months of driving this luxury car. In all the three cases, the tire (one front right and one rear left) got punctured under normal driving conditions on a very good highway. I have never taken my car to any off-road driving conditions and I have not hit or scratched it anywhere. In one case it was a nail puncture and the other two cases (the same rear left) it was crack on the wall of the tire. The tire dealer washed his hands on both occasions saying that the tire was damaged in an “accidental manner” without coverage of any warranty or guarantee whatsoever. I am now afraid of taking the car to even smooth roads. I have also paid some money on guarantee, warranty and extended warranty and even taken extended service contract from the dealer. The cost of changing the tires and alignment thereafter, I have to pay because it is neither the problem of the tire dealer or the vehicle dealer and I am not entitled for any warranty or free repair.

There are many types of guarantees, warranties and insurance cover

• Money Back Guarantee

• Satisfaction Guarantee

• Service Guarantee

• Manufacturer Guarantee/Warranty

• Dealer Guarantee/Warranty

• Site To Site Warranty

• On Site Warranty

• Next Day Service Warranty

• Auto Insurance

• Home Insurance

• Health Insurance

• Life Insurance

Never sign an insurance agreement unless and until you are clear with the declared and hidden clauses whereby you will be taken for a ride by the insurance provider by blindly signing it. These guarantees and warranties are another means to indirectly make money.

Think twice why we must pay for Guarantee, Warranty and Insurance? Do we have any choice otherwise?