Earth to consumers: extended warranties are a bad deal

It's no secret that you and your loved ones will probably drop some serious coin this holiday season (Black Friday in particular, we're sure), and while future repair costs may cross your mind, Consumer Reports recommends that you brush off that extended warranty those big box retailers will be shoving in your cart. Stores like Best Buy typically don't garner massive profits from just selling the snazzy new LCD or LCoS televisions, but "around 50 percent" of the extended warranty's pricetag goes straight to their pocket, and rarely do consumers need the coverage until after it's up. Studies have shown that most major breakdowns occur after the warranty period expires, and that in most cases, the repairs cost "about the same" anyway. Two potential exceptions were RPTVs and laptops Apple computers. The report stated that RPTVs have erroneously high repair bills and can be difficult to ship / move when the time comes for fixin', and since Apple's machines only come with "90 days of phone support," it was recommended that you pick up that AppleCare box with your purchase. Notably, studies found that notebook damage didn't occur nearly as much as generally believed, especially during the first year or three when the warranty was in effect. Nevertheless, it's estimated that non-savvy consumers will drop a combined $1.6 billion on fruitless warranties this year, so just be sure you're not one of 'em, cool?

[Jason @ Nov 15th 2006 4:51PM]

Still smart for game consoles too...

[Eric M @ Nov 15th 2006 5:01PM]

Yeah the only thing I would ever get a EW on would be a TV.

[mitchellgreen @ Nov 15th 2006 5:02PM]

I was going to say, I bought one for the PS2 at (close to) launch and when it DRE'd I sent it back and got a shiny new one.

[Bill @ Nov 15th 2006 5:03PM]

yeah... i always pick up the best buy extended warantee on something i know im probably gonna be done with in a year or so (or whenever something better comes out). When i want the best buy store credit i take it in a make up some bullshit problem with it and collect the store credit towards whatever i want.

You used to be able to do this with ipods... on 1 warantee i went:
Intel pocket concert
archose jukebox
G2 ipod
G3 ipod

[Darren @ Nov 15th 2006 6:22PM]

your on the mark there...

I have replaced my G2 IPOD twice now, and because of the Best Buy Performance plan I have only had to pay for the new plan on each successive IPOD. I now have a smudgerific Black 80GB G5.5 IPOD that I paid 65$ for. If I hadn't had the plan I would have had to buy two new IPODs at a cost of $500 for the second one and $350 for the newest one. So I have paid a total of approx $130 dollars to have continuous IPODs at my disposal as opposed to $850, and this has all occurred since I bought my first IPOD 3 years ago.

[Wun Chiou @ Nov 16th 2006 9:48AM]

Ditto for me. Last night I bought a silver PS2 so that I could play the latest Final Fantasy. What I really want is the PS3, but it's going to be at least 6 months before they become readily available (and good games start showing up). I bought the Best Buy EW with the intention of using it to return my PS2 later and use the store credit towards what I really want.

Essentially, I bought a playable down payment on a PS3.

[Jonathan @ Nov 15th 2006 5:06PM]

I got a 3 year extended warranty for my old dell XPS when I got it in '99, the hard drive died on the last day of the warranty. What luck :)

[chenry @ Nov 15th 2006 5:09PM]

Nice thing with Apple is the Apple Care can be bought within one year of date of purchase. So, as long as the Apple breaks during the first year, you can go and buy the AppleCare after it breaks.

[narco @ Nov 15th 2006 5:10PM]

I bought an extended warranty from Circuit City for my Canon Digital Rebel XTi. It was $200, but it covers me for 4 years. It's called "accident insurance" so if I drop it and it breaks, they're supposed to give me a new one. Hopefully they keep their word if/when it happens.

Fishes,
narco.

[TPW @ Nov 15th 2006 5:11PM]

I will do whatever it takes to get accidental damage warranties on my portables. I had to use the one on my TabletPC.

[Paulstar @ Nov 15th 2006 5:14PM]

Glad I'm living in the EU, where law dictates that consumers have 2 years of waranty by default. Besides that the law also takes in account the expected lifespan of a product. If your brand new bike suddenly falls to pieces after 2 years you'll get a new one.

[Tnegg @ Nov 15th 2006 5:31PM]

PaulStar...You just keep thinking that! Let us all know how much your legal costs are for making that happen and how old you are when it comes through. I'm not saying it can't be done, but I my wife runs a LemonLaw Clinic that proves different.

[540Ninja @ Nov 15th 2006 10:06PM]

"Glad I'm living in the EU, where law dictates that consumers have 2 years of ..."

So you like being a child of the Nanny Government? Wake up from dreamland. No wonder unemployment is so high in the EU. You guys should let the market work. You never know. Something remarkable may happen... as in those with a good product do well. Those that sell junk go out of business.

[John Sununu @ Nov 23rd 2006 1:01PM]

And you don't think the retailer/manufacturer calculates that into the price? This is exactly one of the reasons Europeans always complain about higher prices on electronics. Along with the ridiculously high VAT.

[John Sununu @ Nov 16th 2006 1:30PM]

And you don't think the retailer/manufacturer calculates that into the price? This is exactly one of the reasons Europeans always complain about higher prices on electronics. Along with the ridiculously high VAT.

[What the... @ Nov 15th 2006 5:21PM]

I bought a EW for a TV I bought... I got it cuz I didn't know all that much about LCDs aand such at the time... I haven't needed it yet...

I heard you really wanna get an EW for plasma TVs tho... is that right? That their life is way shorter than LCDs?

Other than that, I never get a warranty... I think I have a price limit... if I am spending under a certain amount of money on an item there is no way i am getting a warranty... but if i'm spending enough... its a little scary to not get a warranty.

[Tnegg @ Nov 15th 2006 5:38PM]

What the...Yes a Plasma is much more of a chance of having an issue than the others, but all the others have their own problems. I tell all of my customers to buy the extended warranties. To spend an extra $250 for an Accidental Replacment warranty is worth every penny. Also check your home owners or renters policy. Many don't cover PlasmaTV's at all because of the "Magical Gas" inside. Being from Louisiana and processing over 1500 claims for Hurricane Katrina and Rita I saw people get 3 times more than they paid and others get nothing. That's where the Extended Warranty comes in Nice!

[zoara @ Nov 16th 2006 11:17AM]

Tnegg, I'm in the UK and have managed to get a brand-new replacement for a four-year-old (Apple) laptop and a repair (about �150 or $300 worth) on a second-hand car based on the laws mentioned. Free of charge, though a bit of hassle persuading the companies involved that I knew my rights.

Actually, in the UK products are generally expected to last six years and if they don't then you can get a repair; if that fails then you're entitled to a replacement. And certain items (say, washing machines or cars) can have that extended to a "reasonable amount of time".

[G. Snyder @ Nov 15th 2006 5:34PM]

"The report stated that RPTVs have erroneously high repair bills"

Well, if they are erroneously high then why are we worried about them (since the charges were in error)?

[Lucas @ Nov 15th 2006 5:36PM]

Mmm...bad reporting. Apple Warranties on ALL their products are 90 days of phone support, but 1 year of parts and labor.

I love FUD.

[-Tj- @ Nov 15th 2006 5:37PM]

I bought an extended warranty on one of my laptops. The original manufacturer's warranty was great, but the Philips Magnavox 3-year extended warranty is total crap. I think I paid $300-$400 for it and all I got was headaches since then. They deal with MicroMedics, who completely ruined my laptop after I'd had it sent to them for repairs. They refused to cover the damages. I even filed a report with the BBB, but MM never replied to their messages.

Yeah, extended warranties are a bad deal.

[Sean @ Nov 15th 2006 5:37PM]

Earth to Consumer Reports, Apple computers come with 90 days of tech support AND one year of warranty in case it breaks. AppleCare just extends the normal one year service an additional two years, but why sweat the details?

[Sinister7 @ Nov 15th 2006 5:40PM]

Yeah, you'd have to be a complete moron to buy it on alot of things. I work at Futureshop, the Canadian alternative to Bestbuy (same company if you didnt know...). I definatly get paid more for selling it, and is a huge part of where I make my commission. However, your article is very misleading, consumer reports recommends that you buy extended warr. on 3 things not 2, All televisions, including LCDs, plasmas, CRTs, and RPTV; laptops, and camcorders. I also think you'd have to be retarded not to buy it on an ipod, anything hard drive related, and game consoles which all have a 90 day, with the exception of the ps3. I judge that based on the amount of these products that come back to the store that we replace on our warrenty.

[Jeff @ Nov 15th 2006 5:40PM]

The dumb thing is most people can extend their warranties simply by paying with a credit card (which many of those purchasing these warranties are doing anyway).

I bought my wife's Dell laptop with my Visa card, which extended its warranty from one to two years. Wouldn't you know, 13 months after I bought it, the hinge cracked. I sent it in and it was a $250 fix - covered under my Visa warranty, which came free just by using the card. (I had to pay up front, but they actually did reimburse me pretty quickly - within about 2 weeks.)

True, you can't extend a warranty from 90 days to five years, but you *can* double it and it costs nothing to do so. In some cases, this means you're literally flushing money down the toilet on an extended warranty. Let's say a big screen TV has a three year warranty, and for $130 you can extend that to five years. Problem is, your credit card is already automatically extending it to six! So you may as well just take that $130 and rip it up in front of the salesman's face - you're getting just as much for your money.

[Sinister7 @ Nov 15th 2006 5:45PM]

Yeah I call propable BS on that one, there's no way they paid you in 2 weeks. I actually tried to claim something it took 3 months, and it was the biggest pain in the ass of all time.

[Dimitri @ Nov 15th 2006 8:00PM]

"...you're literally flushing money down the toilet on an extended warranty..."

Uh, you don't mean "literally", dude. You mean "figuratively", or nothing at all (which implies "figuratively".)

Nobody is literally putting money down their toilet.

[disciple83 @ Nov 15th 2006 5:43PM]

The 1 year warranty only covers parts. After 6 months, you are responsible for labor. Paying for the AppleCare package increases the free labor to one year, but that is called "extended warranty". I love people who can't even correct FUD properly...put your little white earbuds back in.

[MacTX @ Nov 15th 2006 6:36PM]

disciple83 "The 1 year warranty only covers parts. After 6 months, you are responsible for labor."

Not sure where you got that from but it's parts AND labor. I just had my powerbook's lcd panel replaced (2 month left on the 1 yr warranty) and all it cost me was the 5 minute drive to the apple store and 1 week without my laptop.

[Andrew @ Nov 15th 2006 11:28PM]

you have no idea what you are talking about. all labor and parts are covered by apple under their limited one year or applecare unless it is acidental damage

[bobsmith @ Nov 15th 2006 5:45PM]

IMHO it is silly to say that extended warranties are a bad deal without context. Like ANY insurance, you will generally pay out more in the cost of insurance than you will recover from it when/if it pays out (otherwise the insurance companies would go bankrupt). However, the purpose of insurance/extended warranties is to manage and control risk. For example, if you know you will need a laptop for 4 years (eg for school), and you know that you cannot afford to replace it if it fails, then a 4 year warranty makes perfect logical sense.

[A-ron @ Nov 15th 2006 5:46PM]

I tend to think of warranties on 2 levels. 1) How much is the thing I'm buying worth to me beyond the dollar amount? How much of a pain would it be to be without until I buy another? and 2) Given my answer to (1), would I rather have the warranty and not need, or need it and not have it?

On a laptop, it's something of a no-brainer, I feel. ANY repair will cost more than the warranty when you factor in both parts and labor. My 12in Powerbook hard drive bit the dust after 2.5 years. Would have cost me at least $400 to get it fixed. Plus, transferability makes resale much more profitable.

This article seems to imply that anyone who gets one is an idiot - they've come in handy for me enough times that I would have to disagree with that sentiment.

[Bill McCloskey @ Nov 15th 2006 5:47PM]

Turns out that you can make a free appointment online, show up to the Apple Guru desk in you local Apple retail store, and get support on your Apple product anytime, with or without a warranty. If there is something broken in terms of hardware, then the 1 year and/or the extended warranty will save you on parts and labor. By the way, the Apple Care provides house calls without charge. Take that one to your PC box assembler and watch them laugh.

[Bill McCloskey @ Nov 15th 2006 6:15PM]

Apple Guru at Genius Bar appointments made here: http://www.apple.com/retail/geniusbar/

[jesse @ Nov 15th 2006 5:50PM]

I just used my extended warranty at Circuit City to upgrade from a 32inch tube tv to a 46inch LCD projection. It was a pretty sweet deal in the end but was a major pain in the ass to deal with the morons at the repair center and then the phone reps at the service center. It took them over a month to get me a replacement. I would get the warranty for my new tv if i wasnt tech savvy at all. The biggest thing on the Rear Projection TV's is the lightbulb can go out. however they have made these bulbs really easy to change and the bulb costs about 200 dollars vs. the warranty that costs around 350 (at circuit city at least)

[Corey Menscher @ Nov 15th 2006 5:57PM]

I bought a Nikon D70 from some online dealer, but it turned out to be a "grey market" imported version. When it started exhibiting a known manufacturer's flaw, Nikon USA refused to fix it since it wasn't a US version. (They are HUGE bastards regarding that stuff.) Had I not purchased the warranty, I would have had to spend a few hundred bucks to swap out the board. Not only did the warranty cover the cost of fixing it, but they let me take it to a local shop, who fixed it in a day...rather than ship it off to some service center. I usually don't buy warranties, but I'm extremely happy I did that time!

[Spencer @ Nov 15th 2006 6:15PM]

Regarding the FUD about Apple warranties:
I purchased a "refurbished" 2nd gen iPod from store.apple.com cause it was cheap and, having never owned an Apple product before, I could trust a big name corp like Apple whose customers love it so much they bash non-Apple stuff.
It arrived and didn't work, wouldn't charge or anything. The Apple customer service person tried to tell me it didn't work because it wasn't charged and I couldn't charge it because I had a PC. Okay. I told her the actual power brick didn't charge it either so she finally had a new one sent out. Still didn't work, big surprise.
I call back to have it replaced, and they tell me it's not under warranty. I purchased it a month ago and the warranty is exprired? "Yes, it expired 14 months ago."
Turns out they didn't update their database of serial numbers, and didn't even refurbish it.
After much arguing trying to prove I had just purchased it, they agreed to send me a new one to replace it, if I gave them my credit card number for insurance purposes (I was cross shipping the broken one back). That seemed fine so I accepted the offer. The new one worked great, I was very happy.. Then at the end of the month the CC bill comes and the assholes had charged me for it. They refused to credit my original purchase or the new replacement.
Worst $680 (plus shipping) piece of hardware I've ever purchased. If you must buy Apple, don't buy an extended warranty. Who knows what kind of crap they will try to pull on you.

[Jason @ Nov 15th 2006 6:23PM]

I had two laptops that went bad after the manufacturer's warranty was up and thankfully I bought the extended warranty on both. If I didn't have those then I would of had to pay about $2500 for two more laptops and all it cost me was $300.

[kriz @ Nov 15th 2006 6:26PM]

"The 1 year warranty only covers parts. After 6 months, you are responsible for labor."

Um...how about no Scott. No where in the entire warranty does it mention some sort of 6 month period. Now they might ask you the end user to replace a user replaceable part (i.e. if they send you new RAM or a new Battery) but thats not labor, and its no different than any other computer manufacturer. Of course if you take these into an Apple Store they'll do it for you for free anyhow.

And Spencer, sorry to hear you had a bad situation, but no company is 100% without errors, and i could counter your bad example with numerous examples of outstanding customer service from Apple. No that doesn't excuse what happened to you, its still a mistake and they definitely need to fix it, but its not accurate to portray the entire company based on one incident. Thats just bad statistics.

[macleg @ Nov 15th 2006 6:28PM]

I'm of the mind if you can get a replacement as opposed to repair and especially if it covers physical damage I'll get it. Hell, even if something isn't wrong with it near the end of the warrenties I'll replace sometimes because I get the latest and greatest model :)

[macleg @ Nov 15th 2006 6:31PM]

ipods. 1 year they pay shipping, 6 months they pay parts/labour, and 3 months telephone tech support. Go into a local store and check out the extra warrenty you can buy from apple. I live in Canada and I know it to be this way. (used to work in Radioshack)

[macleg @ Nov 15th 2006 6:31PM]

sorry... 1 years parts/labour 6 months shipping.
my bad

[Hildy @ Nov 15th 2006 6:34PM]

I'd buy it on any of the disk drive based mp3 players. I bought a Creative Nomad Jukebox at Best Buy and when it broke I paid the price difference and upgraded to a 3G 30GB iPod, (that switch paid for the warranty easily). Then my 3G had numerous issues over the years and they recently replaced it with an 80GB video iPod, (which actually cost less than the 3G so I didn't have to pay the upgrade).

[zargon @ Nov 15th 2006 6:45PM]

I would double check that. I have heard many horror stories about a person being told that, but when they go to get the item replaced, it is not honored.

Either these sales people will tell you anything to get a sale (I know this isn't exactly the case with CC any more or stores like Best Buy), but especially stores with comission. Also, stores like CC and BB have what I like to call, idiots, working for them. Or at least a much higher ratio of them, that they just have no idea what they are talking about and will tell you anything to get rid of you.

Moral of the story, read the fine print.

However, that doesn't always matter. I have actually heard of stores changing their waranty policy and being able to do it legally (to a degree) because they put it on their waranty that it is subject to change. I know for a fact, CC has done this recently. It had something to do with rather than getting brand new, you got refurbed. Even while the original waranty stated that the replacement would be brand new.

[wslcrew @ Nov 15th 2006 6:51PM]

I have a tendency to physically abuse my gadgets... So I need good warranty with electronics. So far, I've got my IPod replaced about 5 times (3 from applecare, 2 from CompUSA), and many times more for my IBM X40 ($700 worth motherboard twice, Hard drive and speaker). The only "gadget" with extended warrenty plan that I was not able to get it replaced was my TI-89 calculator.

Anyway I just got my costco membership and their replacement plan sounds better (free)! I'll probably give it a try when a ps3 comes out...

[ShaneLucPicard @ Nov 15th 2006 6:56PM]

Yo word up fellas and filet. I work at CompUSA and I sell the extended warranties and I really think they are a wise idea for example Laptops with our warranty you also get a battery replacement so even if nothing goes wrong you still get a battery
also accidental screen damage. But aside from that I would defiantly recommended it on peripherals because I use it all the time and I tell you how to use it properly

Example: Video Card, When I first started i bought a cheap video card I bought "TAP" (our extended warranty) on it then next month I "TAP replaced" it for a new better one I did this at my leisure until now i have a 7950gt which i will be trading for a 8800 when I get paid. Keep in mind you do have to pay the difference
and buy the warranty again but its a good upgrade plan plus if they don't carry your card anymore (they usually carry it for 6 months) they give you in-store credit you just need to ask!

PS of course AppleCare is A good Idea Apple Takes Good Care Of Their Warranty Buyers

[Josh Treadwell @ Nov 15th 2006 7:22PM]

I work at a camera repair facility (http://www.criscam.com), and I can vouch for some particular warranties. Manufacturer extended warranties cover only that: the typical "malfunction under normal wear and tear", but some companies choose to offer much better service plans. Ritz camera, for example, offers their own plan that covers ANY damage other than fire or theft (which can be covered by homeowners insurance). Plus, cameras aren't cheap to fix. They may be small, but a typical compact camera repair runs around $200+. Think about it, not many other consumer electronics involve calibrated optical arrays and prisms, CCD's, intricate zoom mechanisms, bulb flash systems, LCD displays, and memory storage. After working here for as long as I have, I would be caught dead without one.

[Bhaughbb @ Nov 15th 2006 7:29PM]

The only extended warranty contracts I've ever purchased were for a TV and a DVD player through Circuit City and each of them more than paid for themselves in the one repair I needed on each device with no extra out of pocket expense. I usually pass but on those two occasions they actually were worth while. I also liked that when I got the warranty they recommended bringing the tv in just before the extended warranty expired to have them tune it up and return it to factory spec at no cost to me, or if they couldn't they would replace it with a current equivelant based on purchase price.

But most of the time I blow the warranty off for the vary reasons stated by consumer reports and in the summary above.(example: recent xbox 360 purchase where I decided against it)

[Phour ZwanZig @ Nov 15th 2006 7:29PM]

Yep.. I agree.. I never get the extended warranty that BestBuy offers me all-the-time.. Only time I have ever dropped the cash was for my 360.. I felt in this case it was a must, seeing M$ doesnt warranty them that long and with all the rash of problems..

Otherwise, from my POV (cable service tech), I would say that with TVs either your gunna have a problem right outa the box or in the first week or 2, or well after the warranty has expired (prob even you extended warranty)..

Most electronics are this way.. My Samsung SATA HDD died on my just about 1 month after the warrenty expired..

Again this is just coming from me, What Do I Know?

[coldsauce @ Nov 16th 2006 1:45PM]

Hmm... Phour, your SATA drive died 1 month after the manufacturer's warranty expired, or your extended warranty? It sounds like you never buy extended warranties, so i'm guessin you're talking about your manufacturer's warranty expiring?

Well, if that's the case, wouldn't that mean that had you bought an extended warranty on your SATA drive, it WOULD have been a good idea for you, since you would have gotten it replaced/upgraded for free?

/boggle

[Steelwurm @ Nov 15th 2006 7:45PM]

While we're on the topic,
In some states (I believe California is one), you can return extended warranties at any time for a prorated refund. So if your fancy new purchase turns up missing, at least you get can that part of your money back.