Podcast: Why Bulk Insurance is Bad Idea for Schools

Let's start with a known fact:

If insurance was a good deal, they wouldn't offer it.

That said, some insurance purchases are a good idea: car, health, home, even life insurance. But when it comes to insuring your school's iPads or Chromebooks, it's never a good idea.

Basic Economics of Insurance

It's Easy Math: Don't Buy Device InsuranceThe fundamental economics of insurance are easy to understand: pool together a bunch of people and while you might lose money on some individuals, you profit on the entire pool. It’s called the Law of Large Numbers and it’s a mathematical fact. Put another way, if you buy car insurance, you may "win" by getting in a car accident, but by grouping together thousands of drivers, insurance companies guarantee they come out the winners.

Why it's Bad for Schools to Buy Device Insurance

As pointed out above, when you buy insurance on a single device, you might "win". Probably not, but you might. The insurance company will make their money by pooling together thousands of different people's devices. But what if you're a school with thousands of devices? A school (or business) insuring a fleet of devices has already created the pool for the insurance company. That means the school loses.

A school or business insuring its devices will always lose money on that decision.

Example: AppleCare+ for iPads

Assume the following:

• A school buys 1,000 iPads with AppleCare+.

• AppleCare+ costs a school $59 per device for two years or $29.50 per year. (according to Apple Education price list)

• A $49 deductible for each damage claim. (source)

• A 10% breakage rate. This is common with schools where students take iPads home.

Now for some simple math:

Cost / Year = insurance cost X devices + broken iPads X deductible
Cost / Year = (1000 x $29.50) + (100 x 49)
Cost / Year = $34,400 per year.

Now consider the same school skips AppleCare+ and uses a third party company for repairs. The only extra assumption we need is the cost to repair a broken iPad. Let's say $100 (it's probably less in reality).

Cost / Year = broken iPads X cost to repair
Cost / Year = 100 x $100
Cost / Year = $10,000

The math makes it clear:

A school can expect to save $24,400 per year for every 1,000 iPads they own IF they don't buy AppleCare+ and work with a reputable 3rd party repair company instead.

But What About...

There are two big things an Apple representative may say to refute the above argument.

1. "Yeah, but insurance is a lot easier to work with."

   • Not true.

   • In many cases you'll have to fill out a form or jump through some other hoops to get it taken care of.

   • Your accounting department is still going to have to write a check for the deductible.

   • There's a limit to how many times they'll fix a particular device. If a student breaks it multiple times, you may need to find another solution anyway.

1. "Apple is super reputable and the only company you can trust to fix your iPad."

   • Not true.

   • Compare the Yelp reviews for our Chicago Repair Store to those of the Apple Store right down the street. It's not even close. Our store has a 5-star rating with 290+ reviews while the Apple store has a 2.5 star rating with 150 reviews.

Make the Right Choice

There are three main options when it comes to insuring a fleet of devices:

1. Fix them yourself. This is common for Chromebook repairs - especially screen repairs.

2. Find a reputable 3rd party. Obviously we think TechUnwreck is a great option. :)

3. A combination of the two. Do the simple repairs yourself and then work with a 3rd party company to handle the more difficult repairs.