Extended Warranty Purchases Up 10% This Year 253
Hugh Pickens writes "Consumer Reports says that most of the time, extended service contracts aren't worth the additional dollars. But the Washington Post reports that purchases of extended warranties are up 10 percent over last year, according to the Service Contract Industry Council, a trade group. Consumers 'tend to be more risk-averse and are less willing to absorb the cost of an unexpected product repair or replacement,' says Timothy Meenan, the council's executive director. Mark Kotkin, director of survey research for CR, acknowledges that there are instances when the extended warranty can be worth it. 'We recommend getting one for the Apple computer,' Kotkin says. 'The tech support that comes with the extended warranty is great. Without it, the tech support is skimpy.' Another product where extended warranties may be of use are giant television sets, where few manufacturers will come to your home to make warranty repairs. Extended service contracts for big screen TVs often offer in-home repair, says Meenan, who once shipped a Sony TV to the service center for repair under the manufacturer's warranty. 'They fixed it and brought it back 45 days later.'"
Re:You get what you pay for (Score:4, Interesting)
You're probably thinking from the using it or not aspect. It's somewhat accounted in the prices; they don't ask for the full costs of giving such support because they know everyone won't use them. They just calculate how many will and adjust prices based on that.
ISP's work the same way too (and many more areas of industry). There's no way they can provide everyone constant maximum of bandwidth they sell, but it works out ok because not everyone are using the max bandwidth all the time (well, it works with ISP's outside US at least).
Personally I would pay a little extra to get better support and extra services. If you've already paid a high price for the product, you might as well spend a few dollars more on such and avoid shit if you happen to need those services.
Re:You get what you pay for (Score:4, Interesting)
It also means that the salesmen are getting more and more persistent on trying to push the "extended warranty" down your throat.
And that with no information about that many cases where you expect it to be valid invalidates the warranty anyway. Like when using your mobile phone while sweating...
Re:Not worth the money? (Score:5, Interesting)
Except that the standard warranty generally doesn't last as long as you would reasonably expect the product to work. Notebook computers usually come with a standard 1 year warranty, but I would reasonably expect a notebook to continue working for at least 3 years. My personal notebook is well over 2 years old and still works fine, however, thanks to the extended warranty that I purchased, I got a new screen yesterday because of a column of blue pixels that suddenly showed up last week.
Unless you make a habit of replacing all of your devices every year, the extended warranty is often useful, depending on the device. I use my notebook every day, all day, and the extended warranty was worth the peace of mind knowing that I would only need to replace it after a minimum of 3 years - it's insured against theft and accidental damage, and the extended warranty covers device faults and failures. Without it, I'd probably have had to buy a new notebook in the next few weeks/months, depending on how annoying the screen fault became.
My rule of thumb... (Score:2, Interesting)
However, my house is insured. If it was burnt, I'd be in tough financial shape. I can't 'self insure' it. *if I hit someone else, they are insured.
Re:Not worth the money? (Score:3, Interesting)
Indeed, there are exceptions where it's worthwhile, like home appliances. Given that this is a tech site, those didn't occur to me. ;)
Re:You get what you pay for (Score:3, Interesting)
I worked for a PC manufacturer for a while. The margins on extended warranties are higher than on anything else, even than on catalog upgrades.
Also, warranties are rarely benchmarked. Well, quality isn't even benchmarked, but the experiences I've had with basic warranties (Asus never followed up on a procedure I started for a failed MB, Dell made me kneel below a desk to ... check out a PC that was supposedly covered by on-site service ...), those don't make me want to pay more for more crap.
There are things it's wise to insure (Score:3, Interesting)
It's probably wise for someone to insure their TV (as that is all the Extended warranty is really) if it was rather expensive, but there are a few things that I will not purchase the warranty for, and have been pressured by sales people.
MP3 players (they're small, portable, likely to break, but honestly, you can buy a half decent one for 20 quid)
Digital Cameras (The home-market ones, not the Professional level ones.)
PCs and peripherals (Myself, personally, if shit goes wrong with my PC I know how to fix it, I don't need some tit 100 miles away replacing every component and wiping the OS when I know it's a driver issue)
Honestly, I got pressured by a bloke in Curry's about getting Extended warranty on a £15 USB Mouse that cost twice as much as the mouse itself. I've been using it for 7 years and it's still perfectly fine (and it's by Microsoft :O)
Same with my MP3 player (5 years) and my phone (3 years so far, and only a bit of the front casings come loose, Sellotape FTW). My last phone fared less well, it lasted two months, but I *did* slam it in a car door. Accidents happen, but the phone only cost £20 and it was PAYG so I only lost about £3 in credit.
Re:You get what you pay for (Score:3, Interesting)
Re:By some countries' laws, they're useless (Score:2, Interesting)
Under EU law, you may be entitled to a working device, however, you may find out that the level of service is much worse than when you had an extended service contract. Like waiting two months for a repair, compared to a week.
Stupid Stupid Stupid (Score:3, Interesting)
Re:You get what you pay for (Score:3, Interesting)
They are very aggressive (Score:3, Interesting)
Last year I bought a freezer. Recently, just as the warranty ran out I received a letter urging me to buy a £35 three year extended warranty for it for "peace of mind". The letter told me that replacing the engine on it could cost as much as £100. Given that the freezer only cost me £95 to begin with, I wasn't impressed.
When I didn't respond to this shambolic offer,
the insurance company sent me another letter to reinforce how important it is for me to "protect my investment".
I'm pretty sure there are people around who do go for these offers, otherwise why would the insurance company even bother?
Re:Not worth the money? (Score:3, Interesting)
There is no way to avoid the reality. With extended warranties the customer is getting scalped.
Not if I value my peace of mind highly enough to pay the extended warranty just because of that. I never made the argument it makes financial sense. But for me it might still make emotional sense. ;)
Any Decent Warranty Companies Out There? (Score:3, Interesting)
Are there any decent warranty companies out there, other than the rip-off ones that the Best Buy clerk is hawking, that deliver good value at a fair price?
I could see paying for one that would come to my home to fix big-ticket items, like the HDTV example in the summary.
Comment removed (Score:4, Interesting)
Re:You get what you pay for (Score:3, Interesting)
I think it would have to depend on the device. for example, if I were buying a $5000 TV set, yeah get the extended warranty, for the $150 LCD monitor? Not a chance in hell.
For me it's not so much about price as it is about the type of device. TVs/monitors are the kind of device I wouldn't get an extended warranty for because the general trend in these devices is that they're getting better and cheaper at a rapid rate. Now I don't spend $5k on a TV, but I did just buy a 46" LED-backlit LCD for the same price as the 20" LCD monitor I bought five years ago. It's quite probable that by the time my TV gives up the ghost during what would have been the extended warranty period, I'll actually be looking forward to the chance to buy a better device for less (I do want my washing machine to last 6 or 10 years, and it'd be nice if any problems that came up were covered.
Business class warranty uplift on a notebook (Score:2, Interesting)
That is the best investment I could have made. Buying a business class notebook through work's discount program got me a much better product than the consumer one. The warranty uplift cost $79 for three year, next business day, onsite warranty service. I've had to use it three times. The last time was 2 years 10 months after I bought the notebook and they sent a new one rather than fix the old one.
Best of all they hosed the warranty transfer so I could buy a new warranty uplift (buying one off the 'old' warranty was much more expensive) so I've got a new notebook and 3 years of great warranty service. I see a non-fixable hardware failure happening 2 years and 10 months from the replacement date.
Extended warranties can be worth it if the warranty actually improves the service you receive. Spending a little money to go from taking/sending the product to a service center to having in home service is great for things like large appliances and other items where it's just a headache to try and get the thing anywhere or when you don't want to or can't be without whatever it is.
Then there's the warranties for stupid products that will cost less to replace when they do break than to deal with trying to get it fixed. Microwaves, keyboards, stuff like that. Sometimes the price of the warranty is the same as the item. I despair for humanity when I see people buying them.