EPISODE 2: Warranties Vs. Insurance

[00:00:20] KK: Hello, and welcome to episode two at Risky Business with The Coverage Queens. I'm Kathy Kaehler.

[00:00:28] BL: And I'm Bliss Landon.

[00:00:30] KK: Welcome.

[00:00:30] BL: Hi, Kathy.

[00:00:31] KK: Hi.

[00:00:32] BL: Hi. Hi.

[00:00:33] KK: I’m so excited we're here again,

[00:00:35] BL: Me too. This is going to be a really exciting show and very informative.

[00:00:37] KK: Super, super fantastic.

[00:00:39] BL: Very informative.

[00:00:40] KK: So let's share our mission statement, just in case you are new to us for the first time. But we are here to inform K-12 industry technology leaders and administrators about the risks inherent with one-to-one learning environments through solution-based approach.

[00:01:00] BL: We will be discussing best practices, current events and hot topics with rising stars from school districts and vendors across the United States. Exciting.

[00:01:10] KK: Very exciting, very exciting. I loved our first show.

[00:01:14] BL: Me too. It was good to get that under.

[00:01:16] KK: It just kind of gets you under the belt, right?

[00:01:17] BL: Kind of under the belt. Yeah.

[00:01:19] KK: But it –

[00:01:19] BL: When I'm done and we're ready to roll.

[00:01:21] KK: But it just made me so like eager to get more, just learn more about this whole massive subject.

[00:01:28] BL: Exactly, exactly. It's very fun and very informative and exciting stuff, Kath. Yes.

[00:01:34] KK: We also had a very good visit with our estate sales.

[00:01:39] BL: Yes, we did.

[00:01:39] KK: We have some stories to share about finds, treasures, and also the lines to get in.

[00:01:48] BL: I know. When is that going to end?

[00:01:50] KK: That has to end.

[00:01:51] BL: It has to end.

[00:01:51] KK: We wait and we wait for our number to come up, our wristband, our whatever it is to get into these estate sales.

[00:02:00] BL: Yes. I think we went an hour for the first one on Saturday. That was a long time to wait to get into an estate sale.

[00:02:06] KK: But worth it.

[00:02:07] BL: It was worth it in the end. It was definitely worth it.

[00:02:08] KK: It’s very, very worth it.

[00:02:10] BL: But would have been a better experience having had to wait so long. Yes.

[00:02:13] KK: Plus we can get to more.

[00:02:15] BL: Exactly.

[00:02:17] KK: Well, we do have another person here with us.

[00:02:20] BL: We do.

[00:02:21] TDH: Hello.

[00:02:23] KK: We have a guest. We have a guest that has arrived to our episode too, so I'm going to

let you take it away to introduce –

[00:02:33] BL: Tim Duncan. So this is Tim. Tim has worked for us for about two years at School Device Coverage. He is very versed in the at-home one-to-one learning situation that's going on right now. He was here for a year before the pandemic, and now he has been here for a year through –

[00:02:53] KK: With the pandemic.

[00:02:54] BL: Through the pandemic. I think Tim – Well, first tell us about you. Tell us about you, how you got into this whole world of insurance.

[00:03:03] TD: So I'm 32. I had no idea what I was going to do with my life. I was bouncing from job to job and I came across a job listing for State Farm. I landed that position. I subsequently went to insurance school for them where I actually met Matt, who is my direct boss. I wound up leaving State Farm after a little while and reached out to Matt to see if there were any positions available, which at the time, he had just hired someone on for UK, and School Device Coverage was still just –

[00:03:38] BL: A new product, yeah.

[00:03:39] TD: Coming around and wasn't quite ready to hire a salesperson. About three weeks later, I get an email from him saying, “Hey.” My boss, Bliss, went ahead and approved us hiring on a salesperson for School Device Coverage, and I was like, “Great. When can I start?” So I came in, met with him. Then came in, met you for the first time, and here I am.

[00:04:01] BL: The rest is history.

[00:04:02] TD: Exactly, as they say.

[00:04:02] BL: There you go. Yeah.

[00:04:04] KK: Awesome.

[00:04:04] TD: Yeah.

[00:04:04] BL: Yeah. Tim's done a great job. He's been very busy. He had a great year last year, did a terrific job in sales.

[00:04:12] TD: Thank you.

[00:04:14] BL: Anyway, he's got a lot of knowledge because he is dealing with the superintendents at schools and the tech directors at school.

[00:04:22] TD: CTOs, you name it.

[00:04:24] BL: Yeah, at the district level. So he is hearing firsthand the obstacles, the request, everything that that the schools need to buy devices and have them covered for insurance. He gets to hear the whole gamut. We don't sell product but we do sell the insurance. So he's well-versed in what their needs are. Tim, what we want to discuss is warranty versus insurance. Like Kathy said, she said that in our last year, she said that warranty to her meant insurance, so it’s the same thing. But clearly, they are very different. As time goes on, we are learning just how different they are.

[00:05:06] TD: I think that it's becoming more and more clear how different they are, based on the fact that warranty kind of comes across to me as a broad term that's handed down from the manufacturer. That, hey, if we mess something up on this, that's our fault. We'll replace it. That's not insurance. It's ensuring they're insuring themselves against their own problems is all that really is. So when you see schools going, “Oh, we have a warranty,” okay. But how far does that warranty actually extend as far as what it covers? It’s surprising at how lacking warranty coverage is and how misled it seems some officials at school districts are.

[00:05:50] BL: So tell me, what would be a typical item that is not covered by a warranty?

[00:05:58] TD: That's typically not covered by a standard warranty would be screen breakage. I mean, the most common thing we see with devices.

[00:06:05] BL: The warranty doesn't cover that?

[00:06:06] TD: Nope, not a standard warranty. Now, some companies do have extended warranties that cover accidental damage.

[00:06:13] BL: Something like an ADP, an accidental damage protection plan.

[00:06:15] KK: Protection plan. It is for that.

[00:06:17] TD: Something along those lines.

[00:06:18] KK: The extended. Was that the like device owner or is that the school?

[00:06:22] TD: So it's a mix, depending – I've seen some districts will get discounted warranty rates or free extended warranties because they're buying the devices. But in most cases, from what I've seen, the rates still don't challenge what we charge for insurance and don't cover half of what we do.

[00:06:44] BL: Myself, I know that warranties do not transfer. So let's say that your device breaks, you send it in for repair, and they give you a loaner device. The warranty will not cover the loaner car, unless it was purchased originally on that loaner device. Correct?

[00:07:00] TD: Correct. Now, with warranties, they don't transfer it also. Say, even if they have to replace your device entirely, usually, there are, again, like I said, so many different warranty programs out there that you can't just pin them down. But most of them don't transfer at all. With insurance, we actually transfer the coverage to loners that are out while devices are being repaired. Or even if the device is damaged beyond repair, lost, stolen, the coverage then transfers to the new device in case of replacement too.

[00:07:30] BL: Okay. What about lost and stolen devices? Do warranties ever cover that?

[00:07:37] BL: Warranties, I don't think I've ever seen a warranty cover loss or theft, and that's one of the biggest things that we come up against with schools that they say, “Oh. Well, we've got a warranty. Fantastic. Does it cover screen break? Oh, it does. So you have an accidental damage plan. I bet you don't have loss and theft coverage, though.” That’s a big head turner for some school districts when they're like, “Wait a second. We can go ahead and just insure them against the loss and theft. Let the manufacturer worry about the other stuff. Fantastic.” We’ve worked with a lot of schools that prefer to go that route. But in my experience, I have seen that even just buying loss and death coverage, you're now adding that to your cost of your warranty, and now you're spending even more.

[00:08:21] BL: Let’s say you have a basic warranty, and let's say that the device falls off the table, and it breaks.

[00:08:33] TD: If you just have a standard warranty, it's going to do nothing about that. If you have an –

[00:08:38] KK: Can I ask a question right there?

[00:08:40] TD: Yeah.

[00:08:41] KK: Time just keeps coming up for me. Like the minute I hear somebody's broken, it's like, “How long is that going to take?” Where do you begin? First of all, are you going to be on a phone call, waiting on hold for seven hours?

[00:08:53] BL: Like with the warranty company?

[00:08:54] KK: Yeah. Like who will you call?

[00:08:56] TD: Warranty centers. Warranty centers are a nightmare, and that's all I've ever heard. I'm sure most people that will see or hear this will be able to relate in some shape or form to the fact that warranties aren't necessarily bad. They're not a bad thing but they're not quite managed the same way insurance is, and I think part of that has to do with the fact that insurance is governed by laws that we have to follow.

[00:09:23] BL: It's regulated.

[00:09:24] TD: It's regulated where if we do something wrong, we can get fined. A manufacturer that goes back on their warranty, yeah, things can come of that. But it's not like for an insurance company where there's fines, there's de licensing, there's all sorts of problems that you could face, whereas a warranty program. Don't worry about it. Wait.

[00:09:46] BL: I heard you guys talking in the sales room about – So let's say they have the extended warranty. They have accidental damage protection plan or whatever, and they drop the device, and it gets broken. They'll ask how many feet that the device dropped from. They can really kind of hassle you over how things happened, how they occurred because it's really at their discretion whether they want to cover it or not. It’s not a regulated item where it says, “This is what we'll do.” It's kind of at their discretion because it's not really insurance. Does that makes sense?

[00:10:27] KK: Yeah.

[00:10:27] TD: Yeah. Whereas everything that we do is written out in a policy, this is what we cover, this is what we don't cover, you look at a warranty, there's just as much legal ease, and it's that much legal ease to make sure that it's not covering as much as possible. They're trying to make sure that it's worded in a way where it's just things that are very obviously the manufacturer’s fault that they're going to actually fix. So that's kind of what my experience with that is.

[00:10:52] BL: So a warranty probably makes sense for a manufacturer defect.

[00:10:57] TD: Yeah.

[00:10:57] BL: Right?

[00:10:57] TD: Absolutely.

[00:10:58] BL: Because that's something that insurance does not cover that – I know we don't cover that.

[00:11:01] TD: Correct.

[00:11:03] BL: It might be a good idea for a school district to have just the basic warranty for defects, right?

[00:11:10] TD: Correct.

[00:11:11] BL: Then you add in insurance, which covers basically everything.

[00:11:14] TD: Everything else.

[00:11:15] BL: Everything else, which –

[00:11:16] TD: Unless it's intentional.

[00:11:17] KK: Which is the more likely of the two, of having more damage from dropping, dog.

[00:11:22] TD: You're more likely going to see a dropped device. Yeah.

[00:11:25] BL: Yeah. I mean –

[00:11:26] KK: Chocolate milk —  

[00:11:26] BL: The claims are going to most likely happen with the insurance, so the insurance will cover most of the claims. But the warranty is a good idea, just in case there's a bad batch of devices that you get where all the cameras don't work or –

[00:11:40] TD: Battery issues.

[00:11:41] BL: Or battery issues or — what other defects have you seen maybe?

[00:11:46] TD: The big defects that I've seen are the battery issues where they'll receive a batch of 1,000 devices, and 150 of them just won't charge. You plug it in, they won’t work, and –

[00:11:55] BL: And they don't turn on.

[00:11:56] TD: They just don't turn on, and so they'll wind up having to do their manufacturer a rebate or replacement, however they work that. Then they can insure with us because then they'll have a working device.

[00:12:08] BL: Right, yeah. We want the device to be working when we insure, yeah.

[00:12:10] TD: Exactly. On the subject that you're bringing up of them not covering specific things, I've seen it across the board from drop height. Was the student running on grass? Was the grass wet? What kind of shoes were they wearing?

[00:12:27] BL: Oh, my gosh. Really? They ask those kinds of questions?

[00:12:28] TD: I’ve –

[00:12:29] KK: Let me tell you. If you’re asking that of a fourth-grader, they aren't going to know one of those answers.

[00:12:33] TD: Absolutely not. Absolutely not.

[00:12:34] BL: They’ll be like, “What? Huh?”

[00:12:35] KK: “I don’t know. I don’t know. I can’t remember.”

[00:12:38] TD: Yeah.

[00:12:39] KK: Right?

[00:12:40] TD: Absolutely. I remember being that age and I've got kids. I've got a six-year-old and a nine-year-old. Believe me, the six-year-old in particular, “I don't know. I don't know how it happened.”

[00:12:52] BL: But also, don't you find too that with the – I know with some of our customers where they have the ADP coverage and then they have our insurance, where they'll just deal with us because it's easier. They've got a phone number, somebody answers the phone, and they get the help that they need, and they get the item covered.

[00:13:11] TD: The beauty of it is we do it without being a traditional call center either. We have a dedicated claim staff that handles all of the claims, and I have. I've had districts that have said, “Look, we have accidental damage protection but we just don't even use it anymore. It's just easier going through you guys.”

[00:13:29] BL: That's great. Yeah. So the insurance really fills the holes that the manufacturer just can't provide.

[00:13:37] TD: Exactly.

[00:13:39] BL: Yes. I think the best case scenario for a school district would be basic warranty. A lot of times, they're free for the first year, right?

[00:13:46] TD: Correct, yes.

[00:13:47] BL: And at a minimal cost for years after that.

[00:13:49] TD: That’s correct.

[00:13:49] BL: But that thing gets into the extended warranty, which is if you're going to do the extending, might as well buy insurance because then you're fully covered.

[00:13:56] TD: Exactly.

[00:13:57] BL: So that kind of allows the district to have the complete package of what they really need, right?

[00:14:02] TD: Exactly. There’s nothing better than making sure that all of your bases are covered, especially when it comes to – I say this on a lot of phone calls when it comes to keeping the devices in the kids’ hands because that is the whole point of all of this. So it's the most important thing is making sure that every kid has access to devices. If a school district doesn't have the funds to provide loners or whatever, getting that device back into a student's hands as quickly as possible in working order, that's what's important.

[00:14:31] BL: Do you find that the school districts take kind of ownership in dealing with the manufacturers for the warranty type problems? Or do they rely on the parents to do that? Or how does that work?

[00:14:43] TD: For the manufacturer warranties from what I've seen, the districts will typically handle that sort of stuff themselves. They are also very good about staying on top of – Excuse me. I kind of lost my train of thought there.

[00:15:02] KK: Well, like their involvement is –

[00:15:04] TD: Their actual involvement level, let's stay on that. The involvement level I see across the board. Some school districts want nothing to do with the devices, once they put them in the hands of the students. Other districts are like, “These are our pride and joy. We need to do everything we can to protect them.” So it really varies as far as the process is, but I do know that nobody likes dealing with warranty companies. Kind of a side note, bringing back up the accidental damage, though, and I kind of want to just make this point is some manufacturers do provide those accidental damage plans, but almost every single one of them comes with claim limits, deductibles.

[00:15:41] BL: That's right. That’s right.

[00:15:42] TD: That sort of thing.

[00:15:43] BL: I forgot about that. That’s another important piece to the warranties is that they will limit the amount of claims that you can have.

[00:15:51] TD: Exactly.

[00:15:52] KK: How much would be the deductible?

[00:15:55] TD: I can give you an example. I'm not going to name the multibillion dollar corporation. But when they sell devices with their protection plan, they give you three years. But in that three years, you can only break the device twice, and it's a $50 or $100 deductible every time you break it. But you're only breaking the device twice. So there's a lot of value lost when, A, you're paying that deductible and when it's three years of coverage that's supposed to cover two breakage incidences. If you –

[00:16:25] KK: You’re kind of left.

[00:16:26] BL: Exactly.

[00:16:28] BL: Well, and that's not really in the best interest of the school either because now the limit has happened on the warranties, and now what do they do with the device? They stick it in a closet because now that one's no good anymore, and it doesn't have coverage. I just know from dealing with the districts that it's better in the long run also to have insurance to protect the devices so that at the end of the life of the device, they have fully working devices where they’ll get top dollar when they go to turn them in or to sell them back to – There's a lot of companies out there that buy –

[00:17:03] KK: Yeah. I didn’t even question that.

[00:17:05] BL: They buy back devices.

[00:17:07] TD: It's a huge industry. It really is.

[00:17:09] KK: Could they repurpose them or do they –

[00:17:11] TD: A lot of them will actually part out the devices so that they can sell the parts to companies that do repairs, like the ones that we've partnered with for our repairs. It allows them to get those parts at a price that allows us to keep our rates low because everything kind of reflects to us directly.

[00:17:28] KK: Can you imagine where these schools just have rooms full of devices?

[00:17:33] TD: I've had an actual district who had I believe about 3,000 devices sitting in a closet that were unrepaired because they didn't know what to do with them.

[00:17:43] KK: And see how many schools have that happen.

[00:17:46] TD: I got to imagine a lot.

[00:17:47] BL: I think it's kind of common. Yeah. That’s a problem, and so they're not going to get top dollar for broken devices that they have in the closet. They’re not going to get a full life out of the device. Maybe if they take really good care of them, they can get an extra year of life out of the device. So taking care of the device, from the minute they landed your hands until they timeout or life out, it’s very important to keep them in top working order. The warranty is not going to provide the longevity of taking care of the device. It just won't. The insurance needs to be a part of that to fully take care of the device, so it's a very important piece. I just think that a lot of districts are not completely educated on the difference between warranty and insurance, and how we really believe that insurance is replacing warranty. Or, like I said, first year, great, it comes with it. But then have the insurance in place for the years after to fully take care of the device and keep it in working order, and like you said, in the kids’ hands. Or you said that.

[00:18:56] KK: Then the other thing that I was thinking just hearing you both because, again, I'm kind of a newbie on this whole subject but I'm fascinated is that how much – Is there a piece of paper that comes home with the device? I know that sounds old school. Sorry.

[00:19:15] BL: It still happens. It still happens.

[00:19:17] TD: Paper marketing.

[00:19:18] KK: With some instructions or like passing on the importance of how to take care of this device. What happens when this breaks, when it's your fault, you've done it, or it was an accident? How much is educated through the school, through the parent to the child, and then also that final piece? We're also concerned with our footprint on this planet. That's a huge piece. We don't want to have these devices stuck in a closet somewhere, and then all of a sudden one day they say, “Oh, take that to the dump.” Right? So that's a whole piece.

[00:19:57] TD: That's correct. Yeah. A lot of school districts have computer user agreements that they'll pass out to their parents and the students. The concern is that even though that paper is going to the kid, and then it's supposed to make its way to the parent, not every parent is actually going to see those rules. Little Jimmy comes home with their device and then winds up breaking it three months later, and the parents like, “Why are you guys trying to charge me $100 to fix the screen on this thing?” It’s because they never read it, right? But we actually – We send out flyers for our insurance coverage. If that's in there with that computer agreement, it's going to make them more likely to see because we'll say, “Hey. Without insurance, your costs will be X.” Knowing that, just that one sheet, it'll get them looking through the paperwork to see and kind of realize.

[00:20:49] KK: It’ll get taped up on the wall.

[00:20:50] TD: Exactly. Opens the eyes a little bit more.

[00:20:53] KK: Very interesting.

[00:20:53] BL: Well, we’ve been really working on onboarding our school districts in a way to reach the parents because that's so important because ultimately, they're in charge. They're responsible for the devices. I mean, the school district may purchase it and do all their due diligence to take care of the device. But at the end of the day, if it goes home with the parents and the kid, it lies in their –

[00:21:19] KK: Their responsibility.

[00:21:20] BL: Exactly.

[00:21:22] KK: It’s so fascinating. 

[00:21:22] BL: Yeah. We have best practices. We've been really working on that and modifying that. You know Airies. I’m sure you're familiar with that from our kids going to school. We're trying to get into their parent portals where all of the paperwork, where we're just another line item or another piece of paperwork.

[00:21:39] KK: That they'll see.

[00:21:40] BL: That they’ll see and go, “Oh, this pertains to the device that Junior got, and I have to pay attention to this and buy the insurance. Then, oh, it tells me what my claims instructions are.” We go –

[00:21:51] KK: And what to do if this happens.

[00:21:52] BL: Exactly. We spell out everything for them.

[00:21:54] KK: So how about we give an email if people have questions?

[00:22:00] BL: Yes.

[00:22:00] KK: On how to – Certainly, we can share more information. Our email is riskybusiness@schooldevice –

[00:22:08] BL: Coverage.com.

[00:22:09] KK: Coverage.com. Tim Duncan, you've been amazing.

[00:22:14] TD: Thank you very much.

[00:22:15] KK: Thank you for sharing.

[00:22:17] TD: Glad to be on.

[00:22:18] KK: Really, really good information.

[00:22:19] BL: Very good information. Yeah, absolutely. I knew Tim could really clarify because he is talking to them on a daily basis, so he knows what’s going on.

[00:22:26] KK: Leave today knowing there is a very big difference between warranty and insurance.

[00:22:33] BL: All right. Thanks, Tim.

[00:22:34] KK: Thank you so much.

[00:22:35] TD: Thank you for having me.

[00:22:35] KK: And thank you, guys, for tuning in. We will have another awesome show at Risky Business with The Coverage Queens.

[00:22:43] BL: Yes. Looking forward to it.

[00:22:45] KK: See you next time.

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