I have bought a front-loading automatic washing machine for Rs 30,000. I have also taken three annual maintenance warranties, which shall cover it against all mechanical breakdowns. Should I still include this machine in my householder’s policy?
Aarti Kothari, Delhi
Congratulations on the purchase and adding an extended warranty on the washing machine. However, you should know the difference between warranty and insurance. A warranty will normally cover an asset against the losses arising due to manufacturing defects. An insurance cover, on the other hand, provides protection against any accidental losses. For example, a warranty will neither cover loss due to theft nor will it give cover if the asset gets burnt in an accidental fire. Even if the washing machine is spoilt because of an electrical fault in your house, it will not be covered under the warranty. Effectively, the cover under a contract of insurance and a warranty are totally mutually exclusive.
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To be sure that you do not incur any costs in repairs or otherwise if the machine develops snags, you should insure your fully automatic machine against certain risks it may be exposed to even if it is covered under full warranty because there is a difference in what a warranty will do and what insurance will provide. In fact, if the machine is under an annual maintenance contract warranty, one can get a considerable discount in the premium for a standalone breakdown insurance policy – mention this to your insurer.
