FAQ: Should I buy that extended warranty?
It's getting to be that time of year again: The leaves change, the temperature drops, and we redecorate our living rooms, desks, cars, and backpacks with shiny new electronics.
A recent survey by the Consumer Electronics Association found that respondents plan to spend, on average, $222 each on gadgets this holiday, an 8 percent increase over last year. And among teens and adults, computers and video games are the most wished-for items this year after clothing.
One of the grand traditions that goes along with buying electronics is being asked at the register, "Would you like to purchase the extended warranty?" Some will always say "No" out of principle, while others are torn by the snap decision it requires.
Here are some things to consider this season when it comes to extended warranties on consumer electronics like laptops, TVs, cameras, MP3 players, and more.
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I always get asked to buy an extended warranty. Is it worth it?
It depends on what you buy, what the standard warranty covers, and the cost of the service. But for most people, no.
There are several things to consider: The standard warranty that comes with electronics covers parts for one year and labor for 90 days. And certain devices often come with more, like hard drives or TVs. A year is going to be plenty of coverage for most electronics, so make sure you know what the manufacturer will cover before considering paying for extra coverage. The extended warranties often offered by retailers, which cover parts and service normally for up to two or three years after the standard warranty expires are basically pure profit for them, and it never hurts them to hit you up after you've just laid out a lot of money. But it usually doesn't make sense for most customers for several reasons.
First, the majority of gadgets won't ever need to be repaired--though retailers and device makers don't usually share statistics about how often they break, Consumer Reports has done studies and found that 3- to 4-year-old gadgets don't need repair all that often. Laptops need service about 43 percent of the time after 3 or 4 years, desktops 31 percent, while camcorders and digital cameras very rarely, about 13 percent and 10 percent of the time, respectively. Three to four years is also a really long time when it comes to technology now. And as the cost of laptops and desktops, for example, continue to decline, sometimes the cost of replacing the device isn't that much more than getting it repaired. More on that later.
Second, the price of the warranty may be as high or higher than the device itself. Obvious example: If you're asked to buy a $30 warranty on a $50 calculator--you should probably just take your chances.
Third, sometimes the cost of a one-time repair is equal to the cost of the extended warranty. If you need to repair the hard drive on your $1,000 laptop, for instance, paying $150 or $200 out of pocket one time makes more sense than paying the $280 Best Buy is currently asking for its Geek Squad Black Tie Service.
Last, if you buy an item on a credit card, find out if the credit card company offers any additional warranty protection, which is fairly common. In some cases they'll double the standard warranty period at no extra cost to you.
But aren't warranties a no-brainer for big-ticket items?
If you're really unsure about the brand you've chosen, then perhaps yes. (Although maybe you should reconsider your purchase if you're that worried.) But for items like televisions, traditionally an item that is expensive and gets a lot of use, a lot of experts would actually say, "No."
Though it's been common for people to consider flat-screen TV technology new and untested, that doesn't hold true any longer, notes CNET's in-house TV expert David Katzmaier. Plasma and LCD are well-tested, and are reliable technologies to the point where breakdowns are rare, he points out. And if the TV you bought does turn out to be a lemon, the manufacturer's warranty is usually sufficient.
Plus, a two- or three-year extended warranty is nothing compared to how long TVs are guaranteed to work. Plasma and LCD TVs are rated to run at full brightness for 60,000 hours, or more than 10 years. But if you break that down, it's actually longer when you consider how people actually watch TV, Katzmaier says. The average TV is not running for 60,000 continuous hours. If you guess it's on for about 5 hours per day, 60,000 would actually cover more than 30 years. And, Katzmaier points out, the "lifespan" spec is just how long until the panel fades to half brightness, not until it no longer works properly.
OK, but what if I'm a worrier?
Then just get it. Sometimes the extra $200 to $300 is worth the peace of mind. There is definitely a case for buying insurance on something you've spent a lot of money on that you might not be able to afford to replace, should something go wrong a couple years down the road.
It also might be a good idea if you can't afford to go without the item in question, as The NPD Group's electronics retail expert Stephen Baker noted.
"You can make a pretty good argument today that given how important consumer electronics are to (people), that buying insurance, or a warranty, on them is pretty important because you don't want any down time," he said. "It's the same reason you by a warranty on a refrigerator or an oven: You don't want to be without that product for one minute."
For a lot of people, that could be true if we're talking about a laptop or any computer. And in that case you have options: You can buy the extended warranty from a retailer, or you can get one from a third-party seller. Some of them, like ElectronicWarranty.com, which sells extended warranties, include the option for a loaner laptop, which they will ship overnight if you absolutely can't be without a computer while it's being fixed.
Another thing to consider: If you don't want to or don't have the means to take something in for repair, extended warranties can be helpful. Some programs will include in-home service contracts, so the technician comes to you instead of you hauling the device into a store or repair shop. This might cost a bit more, but it might make sense if you live a long way from the place that does the repairs. Apple's AppleCare program, for example, isn't cheap by any means, but it does allow customers to have a repair consultation over the phone after the 90-day complimentary period expires for no additional charge. Otherwise there's a charge to speak to a representative instead of taking the item into an Apple Store to make an appointment for service.
So while peace of mind is priceless for some, for others the extra cost of a warranty won't make sense. While we don' think many of them are worth it, there are always going to be exceptions, and ultimately it's up to you.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
I've always found that if a home machine breaks, I can fix the thing myself for a lot less than what it would cost long-term. Worst-case scenario would be the mobo or CPU needing replacement, but even those are cheaper than the 'plan' usually costs. One can usually find replacement parts (even for laptops) cheaper than a plan would cost you after the first year. In a desktop or laptop, if they don't pop in the first year (when they're still under warranty), then they usually don't pop at all.
Now there's always the chance where something breaks but is still expensive/rare after the initial warranty dies, but I've found that it's so rare, the warranty is more wager than insurance.
Now for servers? Oh hell yes I'll happily sign a PO for extended coverage. The parts are usually more expensive in those puppies, and what I'm also buying with it is a 4-hour turnaround time from problem to parts delivery.
All that said, not everyone can repair their own machinery. in that case, get the extended coverage from the OEM, not the store. AppleCare, Dell, HP... get it from them (they sell it), not from BestBuy and the like.
For example a new Acer notebook it comes with a one (1) year warranty and you can purchase an additional one (1) or two (2) year warranty before the original warranty service expires. So you can extend the warranty on or before the day warranty coverage expires. This way if your product requires service it will be serviced by an expert technician with your device. Not some teen age kid at an electronic shop. Contact the manufacture of the product to confirm extended warranty time lines.
PS: That?s were all the re-furbished products you see ?Onsale? get serviced; directly from the manufacture repair centers.
So far warranty worked for me.
Seems to me all the laptops have one thing in common...can you figure out what?
16 laptops in 3 years? That's about 1 laptop in every 2 months! I think I had 3 only laptops in 10 years. All are still working. The only time I had to repair a laptop was when my then 1-year-old son stepped on the screen and cracked the LCD.
Hardy har har...I prefer to have a laptop work for me right out of the box, if it breaks down within 2 months of use (not even last 6 months), I want my money back. If a company can't make good crap...I don't want their bad crap. 2 HP laptops...1 ordered online and one bought at a store (both had atleast 8 dead pixels on the screen) returned within 2 days. Got a Gateway tablet...bluescreened all over the place, turns out it was the graphics chipset that was faulty which they failed to replace (overheated and burnt the motherboard in the end), Acer the parent company of Gateway offered an Acer and I hate Acer branded laptops...so it was a no go. My Compaq's screen burnt out (turned it on and saw a flash of White light) and then the screen died (within 4 months of use). Just got a MBP 13 inch (8 dead sensors, 1 died right in the Apple store after it came back from repair), on top of that they replaced a hard drive and an Airport Wifi card because the upgrade to Snow Leopard killed the bluetooth module somehow which even they don't have an explanation for. Got a Sony, had a burnt hard drive, Vista started to confuse the USB hub with the RAM, had a Wifi card replaced, a motherboard replaced and a fan replaced. Now this is really my bad luck or companies are producing more crap than ever before. Is this enough or should I go on.
None of them had any accidental damage or any signs of wear and tear both physically and cosmetically. I take really good care of my laptops (the ones I have for a couple of weeks to a couple of months).
My first laptop was a Toshiba Qosmio, the hard drive died and they wouldn't replace it. It was only 10 months into usage. So that was the one that lasted me the losngest.
I am a hardware designer myself. I personally check and double check every piece of hardware and related software to make sure that they both work properly together. So I guess the Q&A/QC at these companies is non-existant.
Just got an IBM thinkpad and so far its been working well for atleast a month. Looks like this wil break the losing streak of all the companies.
Sharmajunior, you do realize that it's the companies sticking it to you, not the other way around, right?
The only time I had to repair a laptop was when my then 1-year-old son stepped on the screen and cracked the LCD."
See - if you had been running Linux, then it wouldn't...um...oh, wait.
(1) The contract should contain the clause that grants you the rights to loan, free of charge, the same or equivalent equipment while yours are being repaired.
(2) The contract should offer more than just what a standard warranty (As compared to extended one) would. There is no sense in paying for extended warranties if no extra is provided.
(4) insist on a replacement equipment of equal or greater value after n failed tries at repair.
As per #3 I really think the turnaround time being in the contract is a real big issue. I've heard far too many people buy service plans from big box stores where there is nobody at the store that does repairs on said item and the laptop is sent to depot repair for weeks at a time.
I think another important thing to consider is the total number of repairs before on gets a replacement. You generally can't get a replacement until you have exceeded that number of repairs in the contract. The moral of the story is to actually read the contract and know what you are buying. Most people sadly don't.
That's a very hard service to beat. You have to pay for it though.
For Laptops, always!
Everything else, never.
Desktops are another story. Technically, I have to tell each customer about them, but generally they are not a good idea.
When Microsoft opens their retail stores, and start selling branded computers I really hope they "steal" this idea from Apple.
Sell a $150 insurance policy for free repairs that could cost 5, 6 even 7 hundred dollars 3 years from now.
...you do realize that for desktops, a CD/DVD drive is dirt-cheap and can be replaced at home, right? Only the logic board or CPU will cost you any serious bank.
"...you do realize that for desktops, a CD/DVD drive is dirt-cheap and can be replaced at home, right? Only the logic board or CPU will cost you any serious bank. "
... and you do realize that if you replace the DVD drive yourself, you have just voided the warranty from Apple?
Why void a warranty, pay for the part ouf or your own pocket, and ruin any chances of future warranty service work done on your system when Apple will replace it free in the first place?
Most PC makers even include instructions on how to replace common parts like memory, hard drives, and cr-rom drives right in their owner?s manual. Seems to me Mac could learn a few things from HP and Dell on that one.
She saw one student. The cord was stretched across his own feet. Instead of behind him. He stood up took 2 steps, tripped over the cord. In trying to save the cup of coffee he was holding he ended up pulling the laptop to the floor, tripping over it snapping the screen off at the hinges. But he saved his $3.00 coffee. The laptop was one of those new paper thin $2,000 Sony's. I am sure his parents will be glad to know he has his priorities in order. It would be interesting to hear his logic that Coffee is more important.
Also, if you're buying a Dell laptop, call them vs. order online. When I did, they offered to discount the laptop $350 if I bought the 4 year warranty for $400...a no-brainer.
The best deal, by far, is to use a credit card like AMEX that doubles the warranty. For things likely to suffer accidental death and dismemberment, though, what you want is insurance, not a warranty.
As a former Staples employee and someone who worked at a local appliance/television repair shop in college, all warranties aren't bad, but I wouldn't buy one just because the kid at Best Buy asks if you want one. Actually read the pamphlet. Call the warranty center with a question on what they would repair. Is it a repair warranty or a replacement warranty? Does it cover a power surge? Is it in-home or mail-in? At what point do they just replace it rather than repair it?
Does your appliance or electronic already have an extended warranty on some parts? Electronic controls on appliances used to be covered for five years, while the rest of the unit was one. The control board is the thing you would worry about (looking at a few hundred for the part and labor), everything else on something like a washer is pretty inexpensive.
Personally, I wouldn't buy one unless it was to be had for relatively cheap and provided not only great coverage, but convenience. In my experience, the factory extended warranties and warranties underwritten by NEW and NSI were pretty easy to get claims through. They didn't ask many questions, and our repair shop was often willing to "work" with the customer to get the claim covered. We might not mention the thunderstorm that occured before the TV blew out. That was our shop though.
I've seen them be worth every penny for some folks, but I also worked in a repair shop, so I didn't see the people who had a warranty and never used it. My purchases have been great in the last five years. Samsung TVs, Asus laptop, Canon printer, GE Profile appliances, and my PS3 have all been flawless.
In North America, ASUS notebooks purchased after January 1st, 2003 will carry a 1 year standard warranty service. Extended warranty coverage may be avaible from some ASUS notebook dealers.
It gets worse. Under exclusions:
(d) there is damage caused by accident, natural disaster, intentional or accidental misuse, abuse, neglect or improper maintenance, or use under abnormal conditions;
One year warranty, not two, recommends a extended warranty should be purchased, and no accidental damage protection. Now that Asus is one of the big boys the customer service looks like it is going to crap.
For laptops and all-in-ones which often have proprietary components, are hard to service and expensive to repair, I think they are worth while and buy them my self.
For everything else, it doesn't make sense. Simple math, add up the cost of buying extended warranties on every consumer electronic item you buy. The calculate the cost of having the one of two items that MAY fail serviced. I would guess that for most, the latter will be far less than the former.
My computer's service plan come with virus/spyware protection for one year and online backup. Up to $100 on the plan.
TV's are a mixed bag. Vizio and RCA get the plan. I'm not so concerned about the other brands. I just had a customer who's TV dropped dead 2 months after the manufacture warranty. The power supply was proably weakened by all the storms we have had recently.
I live in the Southeast. Power Surges are a big problem. One customer lost a computer though a lightening strike. Even had it on a power strip. He got his system replaced. The manrufactor would not have done anything, and I know the store would not have;
What dose the plan cover over/offer the manufacturers warranty. Normal ware and tear? Damage due to dust heat and humidity? Power surges? How about the battery in an Ipod which is only good for about 113 charges? Cleaning of optical drives? How about US based tech support?
There is a lot more to weigh in on than just an extended warranty.
All the margin comes from warranty, surge protection and cables. Once these are added on, even with discounts on each item, a TV sale at 2% margin can quickly climb to 25%.
Warranties in Australia often have 70% margin, cables from Belkin can have an amazing 300% margin (those silver series HDMI cables for AU$399 really cost $69). Surge protectors have about 80% margin.
While I bemoan pushy salespeople, I've seen pushy salespeople in non-commission sales floors as well as commission sales floors. Anyone in sales regardless of their pay system has an impetus to sell things. If the store isn't selling things at best their hours will go down and at worst they will be out of a job.
For computers,I would never buy a warranty on a commodity desktop PC, period. And I would never buy a warranty that exceeds 10% of the cost of the item itself. Any warranty that costs that much is mostly profit for the seller. And if you *really* need that warranty, negotiate the price down to 10% or less. Talk to a store manager if you need to. They can usually adjust the prices on things to accommodate you.
But I bought a houseful of new appliances and while I would usually never buy a warranty on such things, I was offered a rather comprehensive warranty on all of the items for five years at about 5% of the cost. I've used it and the warranty cost vs. what I perceived as the value of services rendered was about a wash. So if I'd bought a more expensive warranty or one that had a shorter term (since all warranty work occurred in year five) I would have taken a loss.
Also, let's not forget that most peoples stuff *could* be covered by a homeowner's or renter's policy that can feature deductibles as low as $100 for a relatively low price. I seem to remember my renter's insurance costing less than $100/year. This covered everything I owned. So any accidental damage was covered.
And, of course, there's buyer friendly things like American Express which automatically doubles the manufacturers warranties up to an additional year on purchases made on certain cards. Or Costco that gives a 2 year warranty on all electronics and has exceptionally competitive prices to boot.
As soon as I finished with him my boss came over and asked me why I wasted an hour on a customer. As I tried to explain what happen he cut me off and asked if I sold an extended warranty with it. I of course did not because I know those things are junk. The boss told me that on most electronics the margin is .5% to 1%, so we made about $30 bucks on my "big sale" while the $290 warranty was pure profit and much larger. He told me that if I didn't sell a warranty with just about every purchase I wouldn't be employed there. He was going to "give me a break" this time because I was new. I quit on the spot. What a horrible business model. Customer service and computer knowledge not needed. They just need a warm body to push warranties.
At Staples, they also wanted you to get the guy to buy extra ink, paper, a (preferably gold-plated) USB cable, and a warranty with a printer. I could have cleared the shelves of those printers and laptops, but if I didn't sell more than one warranty with them, my day was a failure in the eyes of the manager. I wasn't going to tell someone they needed the "gold plated" USB cable, when they have one at home. I also wasn't going to tell them their printer had "trial size" ink in it, when they had full-size and probably go through one cartridge a year because they don't print a lot.
The kicker of course was that we weren't on commission. There was a "store bonus" type thing, but I believe it relied on other factors like a "mystery shop" score as well as warranty and accessory sales. Staples really wanted to believe that they could get people to sell warranties and other add-ons like they were on commission, without being on commission.
When it was actually a good deal, I would sell it. Staples sold $9.99 replacement plans on TI-83 calculators. When the high school parents came in, I thought it was a decent deal, so I pushed them. I wasn't there to rip people off because the store manager said we had to.
I had fun working at Best Buy but the pressure to sell Geek Squad services was horrendous. That was one of the reasons I quit (I also had a 30+ hour internship which paid double so once I bought a TV, camcorder, ipod, and digital camera with my discount I was gone). It got to be where they would call us in early on Saturdays and lecture us on how to sell GS.
Considering the obscene price on accessories at Best Buy, I have a feeling that your $3K sale made Best Buy far more than $30. They probably made more than that merely off the cables you sold them because Best Buy historically has been notorious for obscenely overpriced cables. You may have not have made as much as the warranty, but warranties are often the bedrock of profitability for electronics stores. I recall one of the last quarters that Circuit City turned a profit was largely thanks to service plan sales.
What I never understood is why retail stores seemed so caught up at service plan dollars to the point that many managers talked more about those dollars than actual gross profit dollars. Profit spends the same regardless of the source. As a former co-worker said, service plans are a means to an end and not an end themselves. There are some customers that you simply won't get a warranty sale out of.
Oh, and I would always buy a laptop protection plan; especially one that covers the screen. BUT, make sure it will cover you if you drop it; not just defects.
The article's comment about a warranty plan on a frig or oven is laughable. These are durable goods that are meant to last upwards of 10 years (and sometimes more). A 2 or 3 year coverage on something you should expect to own for 10 years is silly. My parents first frig lasted 37 years before it finally gave out (or they just wanted a new one; I'm not actually sure which). The thing was actually older than I was until it died! LOL.
They really just don't make them like they used to, and today's fridge is more complicated.
Whats even worse is that many companies are diluting their warranties in the name of "simplicity" for the consumer. Even a basic fridge used to have a 1-year on everything, and then usually a 5-10 on sealed system parts (compressor, evaporator, etc.). A range might have a 1-year, with a 5-year on the electronic control. A washer would have a 5-year on its transmission. Now they are just doing "1-year on everything", saying its "easier" for the consumer. BS.
- by Special(e) November 3, 2009 7:31 AM PST
- I worked at Circuit City for a summer. They told us that the only thing that mattered was the accessories and extended warranty. That should tell you all you need to know.
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- by BigGuns149 November 3, 2009 6:46 PM PST
- The main items generally sell themselves particularly when they are competitively priced and the accessories and extended warranties generally do not.
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