Six billion dollars will be spent this year on extended warranties according to this article from the Minneapolis Star Tribune. Experts attribute this to two main factors: one, that customers are becoming familiar with technologies; and two, that the price of the warranty relative to the product is high. Are they worth it? Keep reading after the jump.
Now that prices have plummeted, consumers are much less likely to purchase a $300 extended warranty on an $1,100 TV (the current average price of a flat screen TV) compared to back when prices were often around $3,000. And back when plasmas came out, it was much more mystical, like dealing with the surface of the sun, the 4th matter of the universe.
Target and other discount retailers are also getting in on game, but at a much more reasonable price, with their extended warranties maxing out at just under $80 for anything over $1,000, which, in comparison to the hundreds of dollars being charged elsewhere, could sway customers to purchase at Target.
Sometimes, the price of the warranty doesn't make sense; usually it's 10-25% of the purchase price, but in one example given, it was &79.99, and the DVD player it was for retailed for $84.99. However, retailers counter that it's often worth the possible hassle, such as in the case of large screen TVs, Best Buy will come out to your house to service the item, and if it can't be fixed there, they'll take care of the transporting.
But are they worth it? Consumer Reports says in almost all cases, no, definitely not worth it. For example, digital cameras need repair only 10% of the time an extended warranty is purchased, and this is often outside of the timeframe of even the extended warranty. Even in the case of laptop computers, which have a 43% repair needed rate, the repair can often cost as much as the warranty.
They advise that consumers keep the money in the bank should they need it for a warranty, and if not, use the money for something fun like a date night.
This early 80's throwback pic courtesy of the illustrious untitled 13.
Copyright © 2008 Apartment Therapy
I bought an extented warrenty for my Mac Powerbook, they call it Applecare I think. Thank god I did. I used it over and over again: overheating, bad battery, shutting down for no reason, power cord quit working, hard drive failed. This was over a 3 year period. I got a lemon sticker to cover up the apple.
The aggravation is that I treated my Thinkpad like crap, left it on all the time, threw it in my briefcase to travel, banged it around, and never had any problems at all. My Mac sits like a little princess on it's fan-tray, has it's comfy neoprene case for travel, which goes in a well-contructed bag, and never gets left on when not in use.
But back to the point, sorry for the digression, the Applecare warrenty was easy to use and gave pretty quick service. Of course you're without a computer for a few days!
view mgb's profile
I always get the extended warranty for laptop computers, but not for anything else.
view quercus's profile
I've never bought a warranty on any computer I've owned (including my Mac Mini) and haven't ever had any serious issues to contend with. Now that I've said this, however, all my electronics will break...
I've never quite trusted extended warranties since I worked selling electronics at Sears back in college. We'd hock those things for everything from telephones to big screen tvs. I'm not sure if anyone ever used them, but I know that Sears made a fortune on them (since we'd get extra commission for selling them)
view aghman's profile
One success story -- one of my early Toshiba laptops died a week after the regular warranty expired, and the extended warranty covered the entire cost of fixing it.
One failure story -- a later Toshiba laptop had its keys fall off, and the same Fry's that swore (upon selling me the warranty) that every possible problem was covered then (upon my demanding warranty-covered repairs) decided that having keys fall off the keyboard was not covered.
I now buy HP/Compaq laptops from Circuit City, sans extended warranty, but that's mostly from spite, as I seem to kill 'em just as fast. Perhaps having a work computer to abuse during much of the day will extend the life of my personal laptops.
view wende in phoenix's profile
I've bought the extended warranties, but I tend not to need them, and honestly, I don't even usually know how long I've had them if anything ever does go wrong, so I've stopped getting them; it's just cheaper, for instance, to buy a new VCR or something.
But in Fall of 2001 I bought a SONY VAIO computer; the kind with the screen that you could write on with a stylus. I just about never used it that way, but anyway... not all that long (3 months? 6 months?) the screen started getting black horizontal burned-in lines, but I was too lazy and too much dreading dealing with customer service to complain.
Well... it got worse and worse, and the computer still works, but the screen is ridiculous now. So a couple of years ago, since there was NO help on their website, and there was NO monitor of theirs (or anyone else's) that was compatible with that model, and NO 800 # to talk to anyone about it, I went onto their website and bought (a couple of years after I bought it) an extended warranty for over a $100, so that I could at least get someone on the phone to speak to about it.
So dig it -- I get someone on the phone and THAT official SONY person tells me that I should look on eBay! eBay! SONY told me (for over $100!) to look on eBay! Well, what else could I do? So I did, and let me tell you that the first auction I won, the thing never arrived, and the Seller went out of business, the second one I had looked wrong, and it wasn't the right model and the third one I got would light up, but not really work at all. For THAT one, the Seller had at least said they didn't know if it would work.
So... I'm not only done with extended warranties, I'm really, truly, forever done with SONY anything!
view Curtis's profile
I got a revision A Macbook, and AppleCare has been worth it. Two new motherboards, a new battery, the list goes on. I'm dead certain that the parts I've replaced over the past year are worth more than the original laptop. I renewed it in June and needed to get the Airport replaced two weeks later. It's been ridiculously easy, though, with no customer service issues.
Two lessons here: AppleCare is an excellent warranty system; and never, ever buy revision A again. Next time, I'm waiting the three months for revision B or C.
view Leslie in Toronto's profile
I have gotten extended warranties on laptops and iPods. So far we haven't need the computer warranties but the iPod warranty has been totally worth it. My college age music student daughter really uses her iPod. It has died each and every year in November, Apple has made good on the warranty each time. When the original 3 year warranty was expiring last November my daughter decided to upgrade to a video iPod and we purchased a new extended warranty. I'm not convinced I'll be buying laptop warranties in the future as I haven't needed to use either of the 2 we have in effect these days.
view Alice's profile
The extended warrenties on computers and stereos have been the most helpful to me. I spilled a Coke down the front of my computer, for example, and was able to get the damaged floppy drive (yes, this was a few years ago..) and CD drive replaced, no questions asked. I ended up bringing it in 3 seperate times over its lifetime, to get random things replaced or upgraded when they wore out or were damaged. I used the same computer for 6 years, which I attribute mostly to the extended warranty.
view Speakaboo's profile