I'm just mulling over the offer of a manufacturer's extended warranty on a car.
Generally I try to avoid all forms of non-compulsory insurance against
non-catastrophic events that can be self-insured over ones lifetime, as
there is negligible likelihood of not coming out ahead.
One reason is the existence of Insurance Premium Tax, which looks like
an 'initial charge', and so which makes any policy look bad value, even if
it is an 'evens bet' in every other respect.
However, I now wonder whether I'm being a bit selective. There's another
tax - VAT - which I would normally suffer on vehicle repairs paid directly
from my own pocket. The fact that there is no VAT on the insurance premium
suggests that the insurance has an edge in that respect.
OTOH, the cynic in me suspects that the equivalent (or similar) VAT is
collected by some other means (restriction on VAT reclaims somewhere close
to the my end of the chain, perhaps?), but is that so? (And, if it is, it
begs the question as to why it wouldn't be simpler to force VAT on the
premiums and simplify things elsewhere).
I'm admit that I'm hoping that someone will explain that the VAT saving is
illusory, so that I have an excuse not to consider this insurance any
- posted 7 years ago