Money Talks, So Should You

Is it worth it: Extended warranties

Clint Williams
by Clint Williams, Dimespring Contributor

Any time you buy a big-screen TV, a small-screen TV, a refrigerator, a toaster oven or any gadget of any kind, you’ll almost certainly be asked if you want to buy an extended warranty or buyer protection plan. Whether to buy an extended warranty may be the only decision customers are asked to make more than “Paper or plastic?”

The issue

More than 250 million extended warranties are sold each year, including about 11 million for laptop computers and desktop computers, according to the Service Contract Industry Council, a trade association.

“Engineering and design innovations are great for consumers but intricate products and untested technology can and often do malfunction,” says Timothy Meenan, SCIC executive director and general counsel. “Many purchases, such as computers, entertainment systems and appliances, are expensive and consumers view them as investments to protect for many years.”

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The cost of a buyer protection plan — typically 10 percent to 20 percent — of the product purchase price more than pays for itself, Meenan says, because the cost of a single repair is often more.

The breakdown

Repairing electronics and appliances can be costly. Repairing the motherboard of a laptop computer might run $350, replacing a refrigerator compressor could cost you $500.

But what are the odds your laptop or appliance will go on the fritz?

Pretty slim. Data complied by Consumer Reports shows the products seldom break within the extended-warranty window — after the standard warranty has expired but within the typical two to three years of purchase.

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Because most electronics are so reliable, consumer radio and television talk show host Clark Howard says you should never buy an extended warranty.

Others suggest an extended warranty may be worthwhile if it includes extended technical support, such as the AppleCare warranty on Mac computers.

Service contract benefits may also include in-home repair service, free or discounted product repair and replacement, power outage and surge damage protection, and optional accident and loss coverage.

The verdict

Buying an extended warranty is a gamble, and like most gambles, the odds always favor the house. If you need your computer to make a living, an extended warranty may be a good idea.

But for your new MP3 player? Not so much.


Clint Williams is an Arizona-based freelancer for DImespring. He has written for the Arizona Republic and the Atlanta Journal-Constitution.