CUSTOMER: “Ok, I’ll take it.”
SALES PERSON: “Excellent choice. Would you like to buy an extended warranty to go along with that?”
CUSTOMER: “Extended warranty – what’s that and do I need it?”
An extended warranty is a non-affiliated extension to your manufacturer's warranty offered by a retail store or third-party company. Many times, they offer extra benefits like preventative maintenance, free replacement, no or low-cost repairs, and power surge protection. Items covered vary, but usually all televisions, DVD/VHS recorder/players, and speakers have some sort of extra protection available.
POINTS TO CONSIDER
1) Value of item being purchased
2) Price of extended warranty
3) Length of manufacturer's warranty
4) Length of extended warranty and date coverage begins
LENGTH OF WARRANTY
Most manufacturer warranties come in two varieties: one year parts, 90 days labor OR 1-2 years parts and labor. Knowing the length of the manufacturer's warranty is important when considering extra coverage that lasts anywhere between 2-5 years.
WHEN DOES COVERAGE BEGIN?
When looking at the length of the warranty in question, it’s equally important to know when the extra coverage begins. Does it begin the date of purchase or when the manufacturers warranty expires? Most extended warranties begin the date of purchase – meaning when you purchase the extended warranty. While extended warranties are usually bought the day you buy your new electronics merchandise, many retail outlets and third-party companies offer extended warranties for purchase anytime during the term of the manufacturer's warranty, meaning you can buy extra coverage the day your original warranty expires. Some third-party companies offer coverage for some electronics products up to 10 years.
VALUE
Determining the value of an extended warranty is in the eye of the beholder. For some, it offers security and peace of mind knowing their investment is protected long after the manufacturer's warranty runs out. Others believe it’s a worthless product sold only to raise profits while appearing to provide a value, but in reality the products are so well-made that the warranty won't be used 9-out-of-10 times.
LIMITATIONS
Sometimes, what the warranty doesn’t cover is more important than what it covers. Read the fine-print carefully to determine if the reason you’re considering purchasing is covered under terms of the warranty. At times, the extended warranty might not cover such issues like damaged to the picture, preventative maintenance, or free replacement if the item needs to repaired somewhere not in your house.
PRICE
Prices for basic VHS or DVD players begin around $15 for two years of coverage, but the price can go up to $75+ for the more expensive DVD recorder. Expect to pay over $100 for most televisions with the exceptions the non-digital tube TVs priced under $200. Projection television extended warranties can cost upwards of $600 for coverage of 4 years. Flat Panel televisions range anywhere from $300 and up depending on the size of the television.
RISK VS REWARD
After reviewing all the facts surrounding your decision whether or not to buy an extended warranty, take a step back and look at the risk versus reward. Are you buying a 3-year extended warranty that costs $100 for a $300 item or one for 4-years, costs $500 for a TV that’s priced around $4000? What’s the worst possible damage that could happen to your equipment, and how strongly will the manufacturer stand by their product even after their warranty expires? It’s an unanswerable question and standard that can’t be defined or measured. You have to ask yourself the ‘what if’ questions, and decide if the risk outweighs the reward or vice-versa.
In either case, make the decision for yourself, not because a sales person says you need one. After all, when was the last time you took your TV, VCR, or DVD player in for repair when you took good care of it? If you answered yes to the previous question, perhaps an extended warranty is in your best interests. If not, maybe you should ask the sales person if you can think about it and buy at a later date.
