Home audio & video forum: Extended Warranty.........are they worth it????

At my last company (a high-tech company), I was the one who did the accounting for warranties. With electronics, if it is going to break, it will most likely break sooner rather than later (I'm not discussing out beyond 5-7 years) - after that time - the failure rates begin to increase. Of course... if you offer me a warranty for cheap enough... depending upon the product, I might take it (that's why i'll buy my tv at costco since the throw a two year in for 'free'). However, outside of a very cheap warranty - I never purchase extended warranties. Heck, with all the money I've saved not purchasing them... I could afford quite a few new products to replace the old and/or broken ones.

In addition - any financial planner worth their weight will tell you never buy insurance riders for non-catastropic issues - and that's exactly what you're buying with an extended warranty - very expensive insurance.

When I buy an Apple computer, especially laptops, for my Son I always get the Apple Care plan because unfortunately it is always used. He had several logic board burnouts on his last laptop, and the MacBook I just got him in February was just totally wiped out, but repaired by Apple in just days. They gave him Leopard at the same time.

On the other hand, I have a Dell desktop. I did buy the extended warranty and I did need it. As a result I would never buy it again because I would never let another Dell repair subcontractor touch my computer. NEVER! I still like Dell allright, but I will take it in to an independant shop next time.

If you like peace of mind, then buy an EW. But, financially, they are a losing proposition overall. You may or may not use it and probably won't. Something to consider; certain credit cards will double the manufacturer's warranty. Also, things with a lot of moving parts or that get jiggled a lot, (printer's & mp3 players, laptops) may be a justified EW purchase. I paid $20 for one with my MP3 player and it was replaced twice no questions asked. Whereas a TV doesn't get moved much and usually a "lemon" will break before the manufacturer's warranty is up.

Last time I bought an extended warranty was for my digital voice recorder. It was $5 for the warranty policy, so I felt like it was a good decision. Who knows what may happen to a voice recorder in my backpack?! Textbooks get thrown into it, chairs get set on it, it gets dropped on concrete occasionally, not to mention I have a rock hammer and a bottle of acid in there most days (I'm a geology major, these items are pretty standard). However, I did not purchase one for my laptop.

I always feel bad for the salesmen though. When I bought my laptop I was looking for the best cost to quality ratio. The salesman started telling me how few customer complaints each model had, how dependable and reliable and long-lived they are. After several minutes explaining how each of the Wonder Computers would never ever ever ever break, hard drives would not fail for millenia, etc, he pulls out the extended warranty plan. You know, just in case. I almost laughed out loud. The same guy who just spent 30 minutes telling me how reliable the laptops were was now trying to convince me how completely undependable they could be. And it's not his fault; his boss probably told him if he doesn't offer the warranty he a) gets no commission on it, and b)will eventually be fired because of it. I just went with the 1-year plan it came with. And so far, the only "problem" is that I may need a new battery in another year or so (not exactly earth-shattering, eh?). I say generally they are not worth the money.

I discovered this problem the hard way. Two years ago I purchased a Panasonic VCR/DVD recorder combo. It worked great for 6 months then started failing. The company claimed that I needed to download their DVD support upgrade and the product would perform better. WRONG!!!!
The product continued to cause problems until it eventually refused to record DVD's 11 months later. I had no where to turn, the warranty on this product was only good for 90 days. So that was just $300 wasted. I never had a problem with computer dvd burners and decided I would get another VCR/DVD recorder combo equipped with a hard drive. Only problem is none came with an HDTV reciever. I purchased another Panasonic VCR/DVD Recorder combo that included this type of receiver but I made sure I paid the extra $30 for a 3 year warranty. I can already see problems ahead with this recorder also, but this time PANASONIC can eat the bill of fixing it.

I never buy the extended warranty unless the manufacturer's warranty is weak and the item is costly. For most cases, the warranty will cost you more than replacing the item by the time the manufacturer's warranty expires.

I would buy it for a big purchase as an HDTV plasma, not for a camera or even a computer.

I would like to offer an approach that considers two factors primarily: the cost of the product and the likelihood that one will transport it on a regular basis. First, with regards to cost a person should reflect on the absolute need of the product and if he/she could afford to replace it immediately if forced by need. Consider the situation of a laptop that a family uses to check email and surf the internet versus the striving young businessman who uses the laptop to conduct business. If the laptop is broken in the family, ostensibly one may assume deeper pockets with the family given a more stable economic base as well as less pressing need to replace it a.s.a.p. However, the businessman may miss out on significant opportunities if left without the computer and would need to replace it quickly. Second, with regards to the likelihood of transport, I believe that's an important consideration because transportation exposes one's electronic device to many more factors (i.e. coffee, gravity, theft) than otherwise if it were sitting in the house. Even beyond obvious misuse or theft, which is often not covered under these extended warranties anyway, the simple act of moving expensive electronics makes it more likely that the component parts will come under stress sooner. Consider now the situation of the HDTV which, with a lower price and greater reliability now, will sit at home and likely not come into contact with the outside world. Yes, it was significantly expensive; however, the investment is at relative low risk to the aforementioned situation of the active laptop user. That laptop user will transport that relatively fragile electronic system to multiple jarring events that may, after time, overwhelm the build quality of the system. In summary, if the system is particularly expensive and an integral tool in one's life (that's a question that the reader has to answer him/herself), then all one has to ask is, "am I going to move this electronic device more than once a day?" (arbitrary number, there, but implies that it's moved often and regularly). Finally, here are some examples for fun:

Examples:
HDTV: expensive but doesn't move
PC tower: expensive but doesn't move
Laptop: more expensive than PC tower and moves often
iPhone: as expensive as some low-end PC towers and moves often
Car: expensive and moves by nature
Home: expensive, doesn't move generally, but in serious trouble without one

Hope that this has been helpful/fun.

If the item is made in China, **by all means** buy the warranty. I do a LOT of repairs on "rebranded" Chinese large screen HDTV's that are sold at all the big box stores. You know the ones...$400 or more below the name brand sets. They cut corners in places they shouldn't, such as substandard capacitors, untested firmware, skimping on component counts, no tolerances, etc... the list goes on. My Chinese dvd recorder died due to faulty capacitors and a bad design that allowed the voltage to spike upon failure, wiping out all hope of a repair. Most name brand stuff is designed taking such potential failures into account with the addition of a few cents worth of extra components with protection in mind. The addition of a few $.05 diodes could have saved it from the trash. But if you have no reputation to protect, only shooting for a low price point, expect the unexpected.

I purchased a car stereo back in 2004 and chose not to purchase the extended warranty. My excuse was well, they're cheap enough so when I need a new one, which shouldn't be for at least 3 or more years. Well, the it started acting a little wierd about 6 months in and I wrote to the manufacturer since they do guarantee the product for a year. Then I would have to take it out send it to them blah, blah blah and it wasn't worth that much aggrevation. Depending on the item, especially those big ticket items, i.e. HDTVs, it's a good investment.

Four years ago I bought a home entertainment center for $289.00. It came with a 1 year free warranty and I purchased a 3 year extension for $39.00.
A month ago they sent me an offer to extend that warranty for an other 3 years for just $633.00
I just did not think it was wort it. I called and offered to sell them my 4 year old unit for just $422.00 so that I could go out and buy a brand new one with 4 years of warranty and spend the rest of the money on a good dinner.

I once bought the extended warranty on a car stereo. Unfortunately, the stereo was stolen before the extended warranty would have applied. A complete waste of money!

On the other hand, I purchased one for a stereo receiver when the salesman offered to give me an equal dollar amount of videotape, that I would definitely use. Since that receiver was (at the time) new technology, it had a myriad of problems during the extended warranty period. The free repairs never totally fixed it, but they kept it going an extra couple of years.

Extended warranties are like any other form of insurance. Some policies are worth the money, even though they have a high monthly or yearly premium. It depends on the level of risk you are willing to absorb.

We have clients who work all day getting in and out of their cars with tablet PC's. We recommended they purchase these units with the extended warranty, offered by the national reseller, that would guarantee replacement for any type of problem, including a cracked screen, resulting from a drop.

So far, after totaling the cost of the insurance for three years, for all their units and subtracting what they would have had to pay for two that have been completely replaced, compared with the cost of replacing the units out of pocket and they are about $180 ahead, with a year to go on the warranty. The batteries have started to go on three more of the units, which will be replaced under warranty too, meaning that by the end of the three year warranty period, having the warranty should save them over $500.00!

At the other end of the spectrum is the Grandma who's going to live in a largely dust, vibration and child-free environment and will likely never download a rogue program or dump her desktop over during a drunken frat party. For someone like this to get a "cover everything" extended warranty is crazy.

Like everything else in life... Create a matrix of features you need and the possible vendors who can supply a solution. See which vendor(s) meet/exceed the needs, have the best reputations and cost the least. Give them a chance to win your business and you'll likely walk away with exactly what you need and not have to pay too much.

The reason that sales people push the extended warranties is that they are extremely profitable for the seller. The clerks often receive a payment for selling them. They are so profitable because they are rarely used. As a result, I never buy the extended warranty on anything. And so far, nothing that I have purchased gave out during what would have been the extended warranty had I bought it, so I saved money by not buying.

On the other hand, if buying an extended warranty gives you peace of mind, it may be worth it to you. I just don't advise it.

I'm never "blindsided" by the sales pitch for extended warranties, I expect the sales person to go off on that line. The difference between me and many other shoppers, is that I do all the homework I can on the item I'm buying before I ever set foot inside the store.

Do your homework first... read everything you can about what it is you intend to purchase. Read as many reviews by those who bought it posted at epinions.com, yelp.com and other forums. Read Consumers' Reports articles on the item... if you subscribe, it usually pays for iteself here and it's interesting and informative even when you're not out to buy something.

Having done all your homework, you should have a pretty good idea if the item you're considering is a piece of junk or not. If it is, why would you still consider it? Did previous purchasers end up happy, or did they have complaints. If there were complaints about the product, was it just one person with a thorn stuck where the "sun don't shine," or were there several complaints about the same thing.

Consider all the complaints, the seriousness of them (could you live with it or not?), and how did each reviewer come across. If reviewers seem like they have an axe to grind, I generally place less credence on them and pay attention to the rest.

When you get in the store to make your purchase, you should now be able to do it with a fair amount of confidence, and you should have a pretty good idea of how that item will suit you.

If you're still not really sure about getting an extended warranty or not, consider the cost of that warranty, taking into account the user reviews you've read and how much the unit cost to buy. Also, you need to be sure that extended warranty will actually cover whatever is most likely to fail after the manufacturer's warrant expires. Consider the cost vs the benefit.

I've never bought one and I don't intend to start now. I was tempted once... extending the warranty on my 2004 BMW 325. Extending the service portion would have provided free routine service for a couple more years but the cost was in excess of $2,000. I don't put enough miles on the car to make it worthwhile. The other option was to extend the warranty to cover everything (as if the car were a certified pre-owned) which would cover everything for 4 more years or to 100,000 miles as I recall at a cost exceeding $3,000. If a clutch goes, it costs about $1700. I'm highly unlikely to need another clutch since it's already been replaced under warranty (they only last 35K miles or so). It's a balancing act. The benefit didn't exceed the cost, so I didn't buy it. The car is rock solid anyway.

But I digress...

Consider how good the product is, what the experience of other reasonable people who bought it was, and make your decision. I'll bet you end up telling the salesperson "no thanks."

It depends what I'm buying. I had one for a Dell computer, and the repair guy practically lived here, and it was money well spent. But you have to be careful. Typically the first year or two on a TV, for instance, might already be covered and the first year is definitely a rip off. Things like camcorders might be worth it, but not a digital camera. I'm on my fifth digital camera, and all the old ones still work. If you buy a Panasonic combo DVD burner/hard drive BUY an extended warranty because these things crap out all the time it seems.

Having sold high end audio in the past, these extended warranties were indeed a profitable item.