Extended warranties: to buy or not to buy? That is the question.
From power tools to cars, electronics to appliances, stores and salespeople are always trying to get us to buy addition protection on our purchase. There’s an obvious reason for this: since the majority of products never need to be replaced or repaired, extended warranties generally make the store money.
So are they ever worth it?
CNET.com says you should compare the manufacturer’s warranty to the extended warranty, to be sure you’re not paying for coverage you’re already getting free. You should also measure the cost of the product against the warranty. If you’re buying a $10 pair of headphones and the warranty is $5, the warranty is probably not going to save you any money.
Determine what is covered, and what is not covered: damage, accidents, defective parts, and when the extended warranty or service plan kicks in. Is it right away, or after the manufacturer’s warranty expires? How long does the extended warranty protect your item?
In my own experience, I don’t typically spring for an extended warranty, but in a few cases I have, and they’ve been mostly good experiences.
In 2007, my husband bought a Tom Tom GPS from Best Buy, with a four-year extended warranty (beginning after the manufacturer’s one-year warranty expired) for less than $50. In 2011, we had a major issue with the GPS unit, and because it was covered under the extended warranty Best Buy replaced it with a brand new comparable unit, even thought it was more than four years old.
More recently, we bought an Electrolux range from Sears, with a one-year manufacturer’s warranty and a three-year extended service plan. Within the first year, we had a burner with a serious defect, and the manufacturer sent someone out to repair it. The repair took six visits, after which the problem was still not resolved. By now, the manufacturer’s warranty was expired, and Electrolux basically told me to go pound sand. Luckily, the Sears service plan covered the problem, and they’ve ordered the parts to – hopefully – fix the problem once and for all. Had we not bought the extended service plan from Sears we would be out of luck and would have to pay for these repairs out of pocket. (As a side note, I highly advise against buying Electrolux products. We also had an issue with an Electrolux microwave, which had to be replaced. The quality and price are in parallel universes, and they don’t stand behind their products.)
On the other hand, we spent $2,000 on an extended warranty for a used car (which came without any other warranty protection) my husband bought last year. The warranty lasts for two years, so we still have a year left of coverage, but some problems he recently had to take care of were not covered by the warranty so we had to pay for the repairs out of pocket.
I’ve also heard some extended warranty horror stories, where stores refused to honor warranties by citing obscure loopholes in the contract. I read about one case in particular where the manufacturer voided a warranty on a dishwasher because it needed so much repair it eventually exceeded the value of the dishwasher, leaving the owner with a broken dishwasher and no warranty protection.
Bottom line: When considering a purchase, and an extended warranty, weigh your options. Think about the cost of the item, how much potential repairs or replacement could be, and know exactly what the extended plan covers. Read the fine print! If it seems more like a gamble than an investment, it’s not worth it.