Info and Answers
Extended Warranties: Buy or Avoid?
Hyped as valuable protection for your new equipment, extended warranties could also be a waste of money. Here are some guidelines to consider.
Extended Warranties
February 27, 2008 by Jeff Winston

Extended warranties are the dirty little secret of the consumer electronics industry. Everyone says they’re a bad deal, and no one wants to admit to purchasing them, but someone is buying them. Electronics stores do make a lot of money on these warranties. People buy them inappropriately, or fail to use them even when they have a valid claim. Still, there are times when an extended warranty can pay off. If you’re considering purchasing an extended warranty, here are a few things to keep in mind:

First, before you buy a warranty, check the instructions on how to use it. The best warranties let you take the equipment back to the store where you bought it (or even better, any store in the chain), and swap for working gear. The next best warranties let you take the gear back to the store for repair.  You should be prepared to lose the item for a few weeks, but sometimes they will decide to replace it instead. Things get less convenient when you have to call an 800 number, as this can require shipping your equipment at your expense. The worst are those where the 800 number is run by a third party company. Their profits increase as they provide less service, and so they may make it difficult (long hold times, complex procedures) to exercise your warranty. These warranties may not be worth their cost. 

Next, consider warranty overlap. Extended warranty periods are often measured from the day you purchase the item, and run concurrently with the manufacturer’s warranty. If you purchase with a credit card, your credit card company may already double the length of the manufacturer’s warranty, leaving little time for the extended warranty to be the only one in effect. Stores often represent their warranty as “better” than the manufacturer and credit card warranties, but read the fine print carefully, as many of the benefits may not be particularly useful. Most name-brand consumer electronics manufacturers have become better at their own warranty support. So, unless a store offers in-store no-questions-asked replacement, its extended warranty support may be no better than what’s offered by the manufacturer or credit card company. 

Think about how rough you will be on the item. When a store offers in-store replacement (or refund) and the item is likely to get a lot of wear, an inexpensive extended warranty can be a good purchase. When my kids were younger, I bought extended warranties on their low-end CD players and joysticks, and benefited from a number of free replacements. Cordless phones are also a likely candidate for a warranty. 

Consider how long you will use the item. A friend who runs a small business always buys extended warranties on his business equipment (printers, copiers, etc). He doesn’t get much use out of the first 3-year warranty, but that first warranty is required in order to purchase a second or third 3-year extension, and in those subsequent periods the warranties have saved him from several costly repairs. Warranties on this type of gear also typically offer in-home service, or at least carry-in to a local shop. 

Flat panel TVs seem like a likely candidate for an extended warranty. They’re complicated to fix and hard to transport. Nevertheless, recent surveys show that plasma and LCD TVs have proved remarkably reliable in their first few years of operation, and so unless the terms are unusually compelling, an extended warranty may not be a good investment. Even if you have a problem, it’s likely that your manufacturer’s warranty or credit card extension will still be in effect.

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Jeff Winston - Contributing Writer
Jeff Winston has been writing about home electronics since 1998. An electrical engineer, Jeff has contributed to the development of products in the computer, consumer electronics, and wireless industries. He spends his spare time with his wife, kids, and many PCs, sometimes in that order.

Warranty Buying Chart
When To Buy an Extended Warranty

- Cordless Phones
- DVRs
- Portable Electronics
- Game Machine (w/ disk drive)
- CD/DVD Carousels
- Printers/Copiers

- Stereo Receivers
- Speakers
- Game Machine (w/o disk drive)
- LCD and Plasma TVs
- CD/DVD Single-Disk Players
- Digital Cameras

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