Extended warranty (EW)

[Ashton Crusher]

Like most generalizations it's usually true but not always. For big ticket items where the repair cost would be a killer sometimes the warranty is worth the protection. The fallacy many people make is that they think if they pay $1500 for the warranty and only need it to cover $400 in repairs they were on the losing end. That's not true, the expectation with ANY insurance (that's what these warranties really are) is that for the vast majority of purchasers the insurance will cost more then the financial benefit you get. You don't really buy them expecting to break even or come out ahead, you buy them for piece of mind... Just like you buy homeowners insurance. Just because you'll almost assuredly NEVER have your house burn down very very few people are willing to risk that cost should it happen. Is it worth it on every $100 printer you buy, almost definitely not. However, if you are buying that printer as a give for your grandmother who is living 3 states away on social security perhaps it might make sense so she doesn't fret about the printer breaking and not having the money to fix it.

[trader4]

The problem is that in probably 95% of the cases, the extended warranty is way overpriced and that peace of mind comes at a very high price.

Just like you buy homeowners insurance.  Just because

An extended warranty on a $100 printer for grandma still sounds like a very bad idea to me. If it breaks, you just buy grandma a new one. The comparison to homeowner's insurance isn't a very good one either. Homeowner's covers you for huge losses that most people could not self-insure. Most of the extended warranties in question are in the range that self-insurance is possible and a better choice for most people. If you can't cover the cost of a $400 tv, you probably shouldnt be buying one.

[Ashton Crusher]

I don't have any specific disagreement. But what's acceptable risk to you or me may not be to the guy next door. I see no logic to the idea that if you can't buy a SECOND $400 TV you shouldn't be buying the first one for $400 +a $50 extended warranty. An extended warranty that the buyer can afford may make sense to the person you say should not even buy the TV.

[Ed Pawlowski]

Exactly. I bought a 32" CRT HD TV for about $1200. It was a good deal at the time, but with technology improving and flat screens getting cheaper they became very attractive. Problem is, I could not justify tossing a perfectly working TV.

A power surge from a nearby lightning strike helped. Took out the TV and I was happy to replace it with a 47" flat screen for $400 less than the old one.

[bob haller]

I knew a guy who would buy 3 or 4 identical models of any high value item , like 4 700 buck TVs, and get a extended warranty on only ONE purchased seperately.

he claimed to make $ on this by scaming the company who scamed him .........

i a tv broke it wasnt tied to any serial number, just the model number of the tv which he would make a claim on.

it caught up with him one time when all 5 identical sets had the same exact defect. insurance paid or 2 but refused to cover the rest.......

the fellow is now long dead.....

[Stormin Mormon]

Long since dead. Shows you not to scam people.

Christopher A. Young Learn more about Jesus

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I knew a guy who would buy 3 or 4 identical models of any high value item , like 4 700 buck TVs, and get a extended warranty on only ONE purchased seperately.

he claimed to make $ on this by scaming the company who scamed him .........

i a tv broke it wasnt tied to any serial number, just the model number of the tv which he would make a claim on.

it caught up with him one time when all 5 identical sets had the same exact defect. insurance paid or 2 but refused to cover the rest.......

the fellow is now long dead.....

[trader4]

It's paying for dumb stuff, like an extended warranty on a $400 TV that leads to the person not being able to afford to replace the $400 TV themselves. You already have at least a one year warranty. By that time, everyone knows that a $400 TV will cost $300. If you just put that $50 into a jar for each appliance, you could self insure it and come out way ahead. In short, I just don't buy the fact that someone buying a $400 TV, has to insure it because a year later they can't afford to replace it if it blows up. Even folks on welfare have cable, AC, TVs and playstations. What's next? Rent to own is a good idea?

[trader4]

I could see that working if you own a motel. But not very practical for the typical person who rarely buys more than one of the same appliance at the same time.

[Vic Smith]

On Fri, 22 Mar 2013 14:46:18 -0500, Vic Smith wrote:

Retraction. Though the dealership has a good rep, and I'm pretty sure the would squeeze the warrantee company hard, it's not "GM endorsed." It's a Fidelity Carefree Car Care Warrantee. Not a GM backed extended warrantee like the one I had put to good use on my Celebrity 22 years ago. Anyway, I actually read the warrantee contract after I posted the above. First off, it cost $1804, not $1504.. Thing is, I remember seeing $1504 specifically when I pushed the finance guy to just give me the total warrantee cost when he was giving me different finance monthly payments with different terms and different warrantee plans. I didn't care about the financing. I already knew it was 5% simple interest with Chase, no prepay penalty, and that it would be paid off early. I wanted to know the powertrain warranty cost. He wrote it on a piece of scrap paper he never let go of. Of course he kept that, but I remember $1504 because I did a daily cost calc in my head. You can figure that out. I can't prove it. Anyway, I signed that with all the other paperwork without reading anything. My bad. The extra 3 bills pissed me off, and my "peace of mind" suffered. Suffered enough that I went on the internet and looked for complaints. There were plenty, and I read my contract thoroughly and found way too many loopholes. My "peace of mind" disappeared. I canceled the warrantee today. State law says max charge for cancellation within 30 days is $50. So I wasted $50. But I feel better, and once again have "peace of mind."

[Ed Pawlowski]

Good for you. Maybe I'm just lucky, but I can only recall one car in the past 20 years that had more than $1500 in repairs. If I put aside that warranty money, I'd have a good chunk of the car paid when I buy the next one.

[trader4]

I haven't spent that amount on any one repair either. But I know people who have. But the thing most people who buy these warranties fail to compute, is that the warranty only covers certain items and explicitly excludes a lot of other things. So, you could still have an expensive repair bill and it may not be covered. Which is why I think if you take a self insurance approach to it, you're better off. If you keep the $1500 you have it and you can use it for any major repair.

[Ed Pawlowski]

In the lean years, we had little savings, but still did not waste money on warranties. Fact is, I've spent little on appliance repair over 47 years of home ownership. While I don't have a special account for repairs, there is enough in savings to cover repair or replacement of any home appliance and major repairs to the car. The last two though, I traded before the warranty ran out.

As pointed out already, electronics have come down in price so it is easier to replace in a few years, but you are paying for a service contract that is based on price today.

Insurance companies, nice folks that they are, when done caring about you, they still want to make a profit. Add up the cost of extended warranties on every appliance you have and see if you still want to buy them. Quite a sum that you save.