Indiegogo Insurance Perk offers a refund for failed products

Crowdfunding, be it from Kickstarter, Indiegogo, or any other service, is quite the thing these days, allowing creators and buyers to make their dreams a reality. But not every campaign has a fairy tale ending and a not a few hearts have been broken. Indiegogo, perhaps the second most popular crowdfunding platform, is now testing out a new way to mend those broken dreams, at least by offering recompense and a refund, in case a product is not able to ship within a specified amount of time.

This experimental refund system isn't open yet to all campaigns and is, in fact, an opt-in feature. Backers will have to explicitly choose an Insurance perk, Indiegogo's lingo for a reward or add-on, to avail of the refund option. The way it works is that if a product is not shipped within an amount of time after the estimated delivery date, the backer who selected the Insurance perk will receive a refund of his pledge, minus the cost of the insurance. And that price might be quite substantial itself, sometimes 10 to 20 percent of the appropriate pledge amount.

So far, only three Indiegogo campaigns have included this perk. The Olive wearable stress monitor was the first to offer this perk and had a $15 insurance for a $129 tier. Sondors Electric Bike offers a $120 insurance for a $600 pledge. And the Bluewire Bluetooth headset call recorder had a $20 insurance for the $170 mark.

But more than this rather high numbers, what is more surprising is the low turnout of insurance buyers. Only three people opted for the Olive insurance and five insured their Bluewire investment. None, however, went for Sandor's offer, which isn't surprising given the high cost of the insurance. Given the high risk nature of crowdfunding, especially for physical products, it is almost baffling that people don't seem to be too interested in this new system. Considering Indeigogo itself has a "Flexible Funding" mode, where the campaign takes the pledged money, or at least majority of it, even if the funding amount isn't achieved in time, you'd expect more Indiegogo users would be interested in this.

It is not yet known what factors contribute to this rather poor turnout and Indiegogo is continually testing the waters. The Insurance perk, in fact, is just one of those tests and it may change eventually to adjust to the needs of the community. Perhaps insurance prices will go down to make it more affordable for users, but that might backfire on Indiegogo itself. The company provides the insurance and has allocated only $500,000 for it. That might not be enough to cover refunds if the Insurance system explodes. But that's still considerably a lot more compared to crowdfunding darling Kickstarter, who offers no refunds at all.

VIA: TechCrunch