October 8, 2007

Should you buy an Extended Warranty?

Anyone who has shopped in an electronics store has almost certainly been offered an "Extended Warranty" or a "Extended Service Plan" of some sort. The salesmen will happily tell you all the wonderful benefits of these services ranging from protecting your shiny new computer if the screen breaks, to curing cancer! So what is the real deal behind the warranties?

First, lets just clarify that a company will almost NEVER do something just to benefit their customers. Companies are there to make money. That is not to say that the products they offer have no value, but you need to realize that they have more value to the company then they probably do to you. So lets talk about some of these services and just how much value they add to the product you just bought.

Typically there are 2 kinds of extended warranties. 1 is a replacement plan (usually for smaller items like mp3 players, printers, etc) and repair plans for this like laptops. Lets talk about the repair plans first.

Repair Plans:

Depending on the company you go to, the terms are going to be different for the repair plan you buy, but in general this is what they will cover:

  • Defects in hardware
  • Defects in labor
  • Technical support for the product and all components included with it at the time of purchase
Thats it. Some more expensive ones will cover the following:
  • Software support
  • Accidental damage
  • Physical damage to the screen (if it has one)
  • In-home repair
  • Replacement of consumables (like bulbs in projection TVs and Projectors)
For those things you pay about a third of the price of the product (some times more some times less)

So for an additional 30% you are given the assurance that your product will continue working for the life of your warranty, without the hassle of dealing with a manufacturer, and usually for longer than the manufacturer will support it. But is it worth it? The answer is maybe, but in most cases no.

The truth is, the amount you pay for the warranty would cover most small repairs that may be needed once out of the manufacturers warranty. The times an extended warranty are really helpful are when you need expensive parts replaced, like the screen on the laptop or the bulb in a projector. These items in them selves cost more than the warranty usually doe so they are worth it. But for most desktop, they really aren't. Of course, if the assurance that down the line you wont have to pay more is something you want, this is may be something you want. In reality you should be thinking of these things like more of an insurance. Because thats what it really is, chances are you wont need it, and you should hope you don't need it, but without it, your going to be pissed that one day when you pay the $400 for a new screen.

Replacement Plans:

Replacement plans are a good deal in my opinion. I buy them on most of my gadgets. The great thing about a replacement plan is at the end of the term, you can make up some generic "intermittent" issue and have them replace your item with a new one. Most places will give you a credit in the amount of the item if they don't have it, so for the last several years I would buy replacements plans on my mp3 Player, when a new one that I liked came out id take it in say it was busted, get a credit for the amount I paid for the mp3 player then use it to buy the one I wanted. The wonderful thing about electronics is the price on them either drops, or their functionality goes up. So when I originally bought that 1 GB mp3 player for 200 bucks, I have eventually traded up for my iPod . Same thing for my PDAs, LCD monitors, and just about anything else that you can buy a replacement plan for. This is why I think replacement plans are worth it, as long as you remember to do that exchange.

But before you buy any plan (replacement or repair) be sure you know the terms and conditions. Unless a plan specifically says it covers physical or accidental damage, it will not cover it. Most plans do NOT cover you damaging the product or damage caused by misuse. Heck, most places will not do the repair if there are signs of misuse, even if it isn't the cause of the problem.

If you spill water or some other liquid on an electronic, it will usually cause some discoloration on the circuit board in side of it. Even if this spill did not cause the problem, the warranty will usually be void.

So be sure you know the terms and conditions. It really bothers me getting calls from people who have left the store I work for and then ask "what is this warranty I bought, what does it cover?" I just can't comprehend how someone spends several hundred dollars on something when they don't know what it is. Don't be that person.

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