Just after reading the latest Steve Yegge rant (<a href="http://steve-yegge.blogspot.com/2009/04/have-you-ever-legalized-marijuana.html" rel="nofollow">http://steve-yegge.blogspot.com/2009/04/have-you-ever-legali...</a>), I read this article. Steve explores the hidden complexities of seemingly simple projects.<p>What's hidden in ztail?<p>Insurance companies hate adverse selection bias and have actuaries work to control its effects. Won't those who beat up their stuff be most interested in a "put option" on their investment? So, ztail must control for this somehow. They can stipulate that the item must be in like-new condition, but that would make the stroller customer mentioned in the article unlikely to place value in the ztail guarantee. It's hard to push kids around in a stroller for a year without some damage occurring. So, ztail is stuck between a rock and a hard place. They could stipulate "normal" use, but how many scratches should an iPhone have after a year?<p>Do consumers really want to purchase a put option on their stuff? If something's cheap enough, I don't worry about the manufacturer's warranty claims -- I "self insure" by taking on the risk myself. Options are insurance. We know that that $900 stroller (hopefully a quad model for that price!) will likely have some value two years from now. And, most mommies (at least my wife) take a lot of time when shopping for a stroller, so they know approximate resale values by brand, etc. So, one could easily calculate the likely value of the option at the date of expiration. The option doesn't seem like its worth that much given that most items aren't likely to be worth nothing in a year or two.<p>As another poster pointed out, the whole process is complicated -- both in terms of comprehension and execution. Is it worth incurring this fixed cost to purchase an option that will be a pain to execute?<p>I have a $2500 deductible on my home insurance for two reasons: (1) it makes the insurance cost less (partially by proving to the insurance company that you don't think you're likely to incur a loss!) and (2) because it's a PIA to file a claim for a gutter bent by a fallen tree branch.<p>I don't get this much like I don't get BillMeLater.