Extended Warranties Worth Buying

The Consumers Guide To Extended Warranties

Walk into any big box retailer and attempt to buy just about anything and you will quickly be offered an extended warranty, replacement agreement or service contract. Consumer Reports and various other consumer groups

The Good

These extended warranties can be a blessing for many consumers. Think of it as cheap insurance (although the retailers will swear up and down that it is not insurance for legal reasons) for your medium to larger purchases. In the case of service agreements, repairs are often done in your home and parts and labor are included. Often they will include yearly maintenance checks to keep your equipment in tip-top shape before there is a problem. If you are not mechanically inclined and don't relish the idea of paying for part and or labor charges (which start at about $70 an hour) or having to replace the item altogether, then a service agreement is in your best interests.

Replacement agreements are usually offered on low to middle end electronic items. The benefit of these agreements is that if there is a problem with the item, the retailer will replace it for free with a brand new one and they usually cover the item for one to two years. If you find yourself buying the same item over and over again due to breakage (for me it's the computer headphone/microphone headset) purchase a replacement agreement and be done with it. This can save you an awful lot of money in the long run.

Most of the better service agreements include a "lemon" clause. If you have the same item worked on for the same problem three or more times, they will usually replace the item with a spanking new one.

The Bad

Extended Warranties are about 90% profit for the retailer. They are betting that you won't be one of the 10% of users who actually encounter a problem with the item involved during the warranty coverage period. What

Many items are not repaired in the home. Some good examples would be push lawn mowers, compressors, power tools and smaller televisions. This means you will have to take the item in to be serviced and often have to wait one to two weeks or more for the item to be sent out to a repair center and then returned before you can pick it up and actually use it again. In the case of a lawn mower, you (and your neighbors) might not be too happy about the wait. If you are mechanically inclined, you can often make simple repairs yourself, for just the cost of parts and not have to deal with the wait.

In regards to electronic items and the replacement agreements that come with them, most electronics will fail in the first 90 days of use if they are going to fail at all. So in many cases the replacement agreement is a "rip-off" for the consumer.

Tips

Read the agreements carefully or make sure the agreements are explained well. Often times you will find out that many things are not covered, such as throw-away parts (filters, belts, spark plugs, batteries, hoses, etc) and abuse, or more specifically what the company considers to be abuse, or abusive.

Always check to see if the extended warranty runs in concurrence with the manufacturer's warranty, or if it starts after the manufacturers warranty ends. There is little point in buying a replacement agreement of the same length as the basic manufacturers warranty unless there are a lot of extra things covered or thrown in.

By GtrSoloist - Classically trained in music I have branched out into many other fields that include such things as writing, sales, movie reviews and the computer industry in general.  

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