To Buy Or Not To Buy: An Extended Warranty
You just bought this year’s newest big screen T.V. model. It’s got all the latest tech and a bunch of whiz-bang stuff you’ve never even heard of. Now the salesman asks you that one question – do you want the extended warranty? What do you say? Most consumers immediately say no. It’s like a knee-jerk reaction.
And, while extended warranties can be worthless, here’s when it might make sense to pick them up.
When The Item Is Expensive & You Can’t Afford To Replace It
When you buy a new iPhone, do you think much about buying AppleCare? Most people don’t – they pick it up immediately. And, while AppleCare isn’t insurance it often feels like it because it’s a very generous warranty offered by the manufacturer.
New age gadgets are often expensive, disposable, and yet somehow oddly irreplaceable. Think about it. A tablet or smartphone’s components will be outdated in 6 months or less, but the information on that device is near priceless. And, its functionality is irreplaceable. Most people couldn’t live a day without their iPhone or Android device.
In these cases, it makes sense to buy the warranty. Even when you believe Apple or Google makes a stellar product, electronics can fail at any moment, and most people don’t have a spare $400 to $700 to shell out for a new device.
When Insurance Doesn’t Cover It
When insurance can’t or won’t cover your purchase, it might make sense to buy the extended warranty. What you’ll find is that, while many of them cover expensive electronics, not all of them do, and not all of them cover every electronic device.
For example, some insurers specifically exclude electronics will a low resale value or an unusually higher replacement value where the risk of breakage is great.
More and more insurers are covering high-end electronics though, so check with your insurer before you pay extra for something you don’t need.
When There’s No Manufacturer Warranty, Or The Warranty Is Limited
When a manufacturer’s warranty is unsubstantial or non-existent, it might make sense to buy the extended warranty. This is especially true when the cost of replacement is high and the item is essential or when living without the item would make life extremely inconvenient or impractical.
When a manufacturer has, for example, a 30-day warranty on an appliance that you rely heavily on, it might make sense for you to buy an extended warranty to cover any accidents outside of the warranty period or those specifically excluded in the warranty.
Service contracts, a form of extended warranty coverage, accounted for more than 95 percent of service claims in 2012. And, while a typical appliance repair costs $250, the warranty may only cost $100 to $150.
When Repairs Cost More Than The Warranty
And this brings us to the final reason you should consider warranties. When the repair costs exceed the cost of the warranty, it’s almost always a good idea to get the warranty. Likewise, when the repairs are simple or cheaper than a warranty, skip the warranty.