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Black Friday is on November 29th, 2024 and Cyber Week 2024 is from December 2nd to 8th. Providers are already doing a lot of advertising on their online platforms. Electronic items sell particularly well on these bargain days. They are often offered in combination with insurance.
With just one click or consent in the store, not only the new television ends up in the shopping cart, but also the device protection insurance. The concept is called Embedded Insurance. “But caution is advised, especially when it comes to insurance and warranty extensions for small electrical appliances. They are neither needs-based nor do they offer economically advantageous insurance cover,” says BdV board member Bianca Boss.
Insurance integrated
With the embedded insurance solution, insurance for small electrical appliances such as smartphones or dishwashers is unobtrusively integrated into the purchasing process. “If the premium is hidden in the total price of the product, in the worst case scenario consumers will not even notice that the contract has been concluded,” says Boss. Since the conclusion usually takes place very quickly, consumers hardly have any time to carefully check the conditions and contract details. “And even if you take the time to do a thorough check, it is difficult to understand when you will receive which benefit from the insurance company and under what conditions,” warns the insurance expert.
Numerous benefit exclusions
The consumer advocates allege that the numerous exclusions from benefits and the disproportionately high insurance premium do not generally provide adequate insurance coverage, especially for small electrical appliances, especially since the maximum compensation is usually the current value of the device. According to BdV, this means that the insurance company will not reimburse the purchase price, but only the current value of the affected device. And the decline in value is particularly high for electrical goods, says the BdV. On top of that, in the event of damage, a deductible is usually due, which is based on the amount of the purchase price.
Problem case termination conditions
According to the BdV, two further disadvantages of embedded insurance are the limited selection and the difficult termination conditions. For example, if you buy a smartphone from a specific dealer, they will only offer the insurance of their cooperation partner. Consumers are therefore tied to a specific insurance provider.
And there is also no comparison with other insurance providers. Furthermore, consumer advocates complain that customers are generally not sufficiently informed about the termination conditions. “Since embedded insurance is sold as an additional service in a package, it is not always clear how and when you can cancel the insurance contract,” complains the BdV.
Embedded insurance solutions have now become established not only for the purchase of small electrical appliances, but also for many other products and services such as concert tickets or travel. The BdV provides background information under “The Hidden Risks of Embedded Insurance: Why Convenience Can Be Expensive.“
One shows how popular the bargain days have become Evaluation of the e-commerce service provider Salesforce: Global online sales rose by six percent during Cyber Week 2023 (November 21st to 27th) compared to the previous year, and in Germany the growth was even nine percent.
What are the key benefits and drawbacks of embedded insurance for consumers during Black Friday and Cyber Week sales?
Thank you for having me here today. We’re going to talk about Black Friday and Cyber Week sales, Embedded Insurance, and its implications for consumers. To begin with, can you give us some insights into the significance of Black Friday and Cyber Week for retailers and consumers?
Guest 1: Sure! Black Friday and Cyber Week sales are significant events in the retail calendar. They offer consumers an opportunity to shop for their holiday gifts at discounted prices, which is exciting. For retailers, it’s a chance to increase sales and revenue during the festive season.
Guest 2: I agree. Embedded Insurance is becoming increasingly popular on these bargain days, particularly for electronic items. How do you think consumers perceive Embedded Insurance? Do they understand the fine print of these policies?
Guest 1: Embedded Insurance seems like a great idea at first glance – it provides peace of mind in case anything goes wrong with their newly purchased item. However, consumers should be aware that not all insurance policies are created equal. As the article mentions, insurance premiums can be high and exclusions numerous, leading to disappointment later on.
Guest 2: It’s essential for consumers to carefully read through the policies before signing up for any embedded insurance plan. They should understand what is covered and what isn’t, otherwise they might end up paying for something they don’t need or won’t benefit from.
Guest 1: Absolutely! Moreover, embedded insurance tends to limit consumer options since they’re often tied to specific providers, making it hard to compare policies. Can you share more about the problematic termination conditions associated with these policies?
Guest 2: Yes, consumers may find it challenging to cancel embedded insurance policies since they’re often included in a package deal. They might not even realize they’re still paying for the insurance after they’ve finished using the product or service. It’s crucial for consumers to stay informed about their rights and cancel policies promptly if they no longer need them.
Guest 1: I see your point. Lastly, how do you think insurers and retailers can improve the embedded insurance model
