July 10, 2014
Extended warranties offer consumers longer terms of coverage on service, repair and replacement for their homes appliances than the standard out-of-the-box warranty from the manufacturer. These warranties are highly profitable for retailers, as they can run up the total cost of your purchase by 100 or more, with very few claims being filed per year. Are they actually worth it?
You can argue the benefits both ways.
In the fast paced world of home electronics, by the time the extended warranty expires, future technology will far out
Consumerreports.com agrees. Their data concludes that the likelihood of most home appliances needing repairs in the first three years is less than one in five. And most defects will reveal themselves within the first year of use, while the manufacturers warranty is still good.
That said, extended warranties should be purchased for some items, including those that are difficult to repair or high-priced items that would be painful to replace. These include high ticket items like a 6000 Viking gas range or pricey hi-definition plasma TVs, suggests smartmoney.com
Since extended warranties do make so much profit for retailers, they are very aggressive about selling them to customers. If youre tempted, follow this rule — the cost of the warranty should be no more than 10 of the purchase price.
And if you decide to skip the warranty, be prepared to shoulder the cost for assessment service calls, repair time in labor plus parts and shipping. Though its more of a hassle, this can be the most cost-effective measure. If you have a warranty option of 250 and you experience only one instance in the life of your appliance where it needs 100 of work, you could save 150, or 60.
Ultimately the choice and risk are yours to assume. Extended warranties can be worth the cost in terms of peace of mind, but only if its for a product you dont intend to change for a few years.