I'm writing an article/paper on Extended Warranties... need input!

Hey guys,

I'm going to start writing an article/paper on extended warranties in the next few days and I want to get your input on what you would like to see covered.

I'm going to touch on the major concerns, for sure:

1. Their cost
2. Are they worth it
3. What you really get
4. Is the store telling you everything
5. Why are they suggested in the first place
6. Are any particular companies better than others?
6.1 Are any stores/retailers any better to get them from than others?

Is there anything else you'd like to see?

Oh and PLEASE do the poll

I'm a TV Technician, and perhaps 85 - 90% of the work I do is extended warranties. First of all, the stores selling the Extended Warranties (EW) make a great profit off of them. Things like EW, Monster cables, and other accessories are where they make their greatest profit margin.

EW companies will do a repair as long as it cost effective for them. If they repair is less then what they can get a replacement TV for, then they will authorize the repair every time. This is actually what the warranty is for mind you, nowhere in the warranty does it usually say if you have a problem, you will get a new TV.

Things like inconvenience, time off work to be home for the appointment, aggravation, or even time out of service, usually don't factor into the equation. Cost of repair is the main factor.

Obviously the warranty companies are gamblers. They are gambling that they will take in more money then they have to pay out. They no doubt have a lot of research involved in setting prices, and the likely probabilities and such of course. They must also be winners, or they wouldn't be in that business.

It seems when the salesmen at the retailers sell the warranties, they make it seem like if anything goes wrong, a technician will fly in on a magic carpet within 20 minutes, and it will all be fixed. But salesmen are salesmen, and they are looking at the profit.

The question of is it worth it is tough. It depends on the item, what it's replacement cost is, and whether you will need a repair at some time during the life of the EW. If you paid $700 for a LCD TV, and it's panel needs replacement, the cost of replacing the panel for the individual will usually exceed the cost of the TV. And while the EW company will often choose to replace the TV for this reason, at least you either get your TV repaired, or a replacement.

If you purchase the warranty, and never use it, but the peace of mind of knowing you were covered was valuable to you, then even that can be considered worthwhile.

When you purchase the EW, you usually will get a little pamphlet with some basic points. But you are signing a multi-page document that spells out all the exclusions and responsibilities. You could ask to see the entire document, but you can imagine the legalese in which they are written.

If you can get a warranty for $150, then even a house call to have it looked at will almost make it worthwhile, and the majority of repairs would exceed even 3 or 4 times that amount. TV's are much cheaper these days, and repairs are expensive.

All in all, I think EW are a good idea for my customers, but I'm sure there are millions of people I never see, who don't ever get to take advantage of them.

A Guy

I bought a new TV from best buy in 2008 at I bought an extended warranty that covered it for five years last year the panel got black streaks in it I call them and the next day we took the old TV in a got a brand-new one for free and at the same time I bought another extended morning for the new TV just in case.
Jerry

I don't normally buy extended warranties since the majority of items I have purchased have lasted past their usefulness.

I did buy a Squaretrade warranty on my Kenwood 10" car subwoofer since subs have been prone to fail on me.
I also purchased a Squaretrade warranty on my refurbed WDTV Live since it only carried a 6 month warranty and the extended warranty was only $8 or so for 2 years.

I have never had to file a claim with Squaretrade so I am not sure how well their service is, but if one of the 2 items above fails, I will find out first hand.

unifex said:

Now, as far as warranty is concerned, I believe that your homeowner (or renter) insurance is a much better friend than a warranty. Most warranties I've seen have clauses like "we repair or replace the damaged product at our discretion" and so on, which makes the process rather complicated at best. For insurance you just need to keep your proof of purchase.

Isn't there normally a deductible? And the amount of claims you make can cause your insurance premiums to increase, which means you are paying more in the long run.

I've tended to take them out for expensive household electrics, like the washing machine, fridge/freezer, tumble dryer and the TV. It has paid off for me, the warranties are repair or replace and my washing machine is a replace one from warranty, the tumble dryer had complete new drum and motor and the TV has had repairs done.

I buy my electrical things through my mail order catalogue and take the warranty at the same time, they will renew it every year up to the equipment being 8 years old. It has worked out well for me so far although I didn't take it out when I bought my new monitor, it was a one off payment to cover it for 3 years and I thought why, it's already covered by the manufacturer for 3 years so why waste the money.

It's usually electrical items costing a few hundred pounds that I get cover for.

I don't typically buy extended warranties for any of my tech. Reason being, if I bought extended warranties for all of my tech items, I would certainly spend more in warranties than I ever would in actual repairs.

The only time that I get a warranty is for stores like Target that do a no questions asked swap and the cost of the warranty does not exceed 10-15% of the cost of the item

In the past, when I did buy warranties, it always seemed that I fell into some loophole that wasn't covered by the warranty and they weaseled out of it. To me, I would rather keep my money, somehow invest it for 1-3 years and then either pay for a repair or buy a replacement.

I've never understood why anyone would buy the store warranty for a PC purchase which has full warranty and tech support coverage from the manufacturer for the first year.

The first year is the time to get the box shaken out, replaced if necessary, then shaken out some more until you know you've done all you can to test it out and get a good unit in place by the time the year runs out.

If you're still not sure, buy another year from the manufacturer.