Each time you head to the electronics store and are ready to make a purchase, whether it is a camera, gaming machine, or appliance, chances are you will receive a sales pitch that tries to coax you into purchasing an extended warranty for your item. The pitch includes a “logical” explanation about how spending the extra cash now will save you headaches later. The price of an extended warranty is often just a minimal percentage of the item cost. Your extended warranty promises to take over after the manufacturer’s warranty terminates, usually after a year.
Before you sign up for the extra insurance policy, carefully consider the following factors:
- Item Cost: Most experts discourage the purchase of extended warranties on goods that cost below $100. This is especially valid for electronic items, whose value depreciates by up to 50%, as soon as the product leaves the store. Instead of spending the money on added warranty, use it to invest in another item purchase. If your item costs around $1,000, then you should definitely consider an extended warranty. Big ticket items for which this applies are washing machines, television sets, laptops, and refrigerators.
- Manufacturer’s warranty: Before spending the extra cash on added protection, check to see if your item is already covered by a manufacturer’s warranty. For many electronic items such as laptops, smartphones, and tablets, a one-year warranty is already in place. But a manufacturer’s warranty does not cover all unexpected contingencies. A manufacturer’s warranty covers situations such as defective parts and faulty wiring. It does not cover accidents. Only extended warranties cover left over contingencies. This is why for big ticket items; it makes sense to have extra coverage. The cost of this extra coverage will depend on the item’s price.
- Who is behind the extra coverage: What most people do not realize is that even though the extra coverage was sold at a retail store, it isn’t the retailer who is providing the service. It is usually administered via middlemen. What this means is if your television set needs to be repaired, you may need to send it across to town or to another country. There are two ways to deal with this. Either purchase the extra warranty from the manufacturer or buy one from a store which offers in-store repair services.
- Consider alternatives: There are other places than at the store, where consumers can purchase extended warranties. There are many websites that offer additional coverage services. When buying coverage from an online source, the amount of coverage will depend on the item’s cost, type, and the duration of the warranty. For example, a smartphone’s warranty could cost a customer $125 for two years, whereas a laptop that costs around $1,500 would be covered for $300.
Regardless of the type of extended coverage you choose, remember to:
- Ensure your coverage can be tracked and filed online, and the receipt or proof-of-purchase for the items is stored online.
- Before settling for an extended warranty, read customer reviews.
- Inquire to find out if there are deadlines for replacement or repair of items that covered by extended insurance.
Extended warranties are beneficial to customers if the product meets many of the criteria listed above.