Consumer Reports has repeatedly warned consumers that they often aren’t worth buying, as do a host of consumer groups. Why? Well, first of all, they aren’t cheap, they may not cover what you think they cover, and you may not need more than the manufacturer’s warranty.
Consumers may have a right to be cautious about extended warranties, but many people buy them and have no regrets.
Extended warranties are like insurance in case a product fails. They typically cover the costs of repairing or replacing an item during the manufacturer’s warranty period, but very often the coverage period extends beyond that. They also may cover things that the manufacturer’s warranty does not cover, such as normal wear as well as damage caused by a power surge. What’s more, the best ones may pay for additional services, such as an annual cleaning and preventative maintenance.
Warranty Week estimates that consumers spent more than $16 billion on extended warranties last year. In a PC World survey of consumers, about 63 percent said they bought extended warranties, and 71 percent of those said they are glad they did.
So why do so many people buy extended warranties?
They give consumers peace of mind. Some people worry more than others, and many worry-warts find that it is worth paying something to worry less. If something breaks, they know they won’t have to pay (or at least pay as much) to fix it. That gives them peace of mind, and that, after all, is one of the reasons people buy insurance. It makes them feel better to know they have it — just in case.
They are a good use of money. Many people who don’t have a lot of extra money lying around like extended warranties. If, for example, they just bought a car, and the purchase drained their savings, they wouldn’t have money for a major repair. With an extended warranty, they wouldn’t need money for a major repair.
They make sense for people who are not gentle consumers. Maybe you’re hard on your purchases. Maybe you have toddlers who don’t know any better or teenagers who are just plain careless or reckless? Maybe you own a laptop and you assume one of your kids – or maybe you or your spouse – will break it sooner or later. If so, extended warranties might be exactly what you need.
They are part of a gift. You buy someone a gift, and the salesperson offers you an extended warranty. You wouldn’t buy it for yourself, but you know the recipient would really appreciate it. So it’s like you’re giving two gifts in one: the initial gift and the knowledge that the recipient won’t have to pay to fix it if it breaks.
Bottom line: Extended warranties make sense for a lot of people. Only you know whether it’s right for you.