Just looking at the warranty extension offer from Ooma (the VoIP carrier I switched to thanks to this board) on its equipment, and it occurred to me that I’d basically betting $40 that I’ll need to replace the equipment at least once because of something that’s not my fault no less than one year after I bought it, and no more than three. Put that way, it doesn’t sound at first blush like a great bet; then I remembered that’s basically ALL warranty extensions.
When have any of you bought warranty extensions, if ever? On what? Why under those particular circumstances?
A pickup truck. We camp, boat, hunt, and a variety of other pastimes that require pulling fairly large trailers (sometimes two at a time). When I replaced our truck a few years ago, there was only one brand who’s bed height/capacity/etc. matched our trailers*, but it was a Dodge. Since their reliability is rated low by various consumer groups, we bought the lifetime bumper-to-bumper warranty.
Other than that, I almost never get the extended warranties.
*the heights of various kingpin and 5th-wheel setups would have required expensive suspension mods on the trailers. Newer pickups are much higher than older versions.
I just bought a car (2012 model), and I paid extra to extend the warranty to 2019, which is just beyond my loan period. This is the first time I’ve ever paid extra for a warranty.
I don’t think I have ever purchased an extended warranty, although the last home I bought came with one on the major systems. When it came time to renew, however, we elected to let it lapse.
Extended warranties are really an insurance policy - most of them are underwritten by an insurance company, not a retailer, manufacturer or repair business. They are also extremely profitable for the retailer and underwriter. That alone tells me they are a bad bet.
I would buy an extended warranty on my fitness band. They are very fragile and I’ve known so many people who have had problems with them that I’d say it’s all but guaranteed that they won’t last two years. I didn’t know that when I bought my first one; fortunately I had it replaced under the manufacturer’s warranty.
That’s pretty much it. You’re betting it’ll break, the vendor/mfr is betting it won’t - and they’ve studied the failure rates and priced the extension so that on average, they’ll come out ahead and on average, you won’t; for the customer, the expected value of the extended warranty is less than its cost.
An extended warranty is insurance, and generally speaking, insurance of any kind is a bad deal for the policy holder (health insurance is the big exception, since it changes the prices you get for service). The only rational justification is to protect you against a loss that you can’t afford to replace in a timely manner (e.g. your home, a really expensive car, or years’ worth of income of an unexpectedly deceased family breadwinner).
Even a manufacturer’s standard warranty fits into this category; the selling price of a product that comes with a warranty is almost certainly is elevated because the mfr has pledged to repair/replace defective products for no additional charge. OTOH, how many people would buy a brand-new car with no warranty at all, if it saved them $1000 (my SWAG at the price increment associated with a standard mfr warranty)? The odds of needing >$1000 of repairs in the first 3-5 years of a car’s life is pretty low, but you might be the 1-in-1000 owner who has to pay something hideously expensive like a cracked engine block.
I bought the extended warranty on my car. It’s 6 years old with 75k, still has two years and 25k left, and it has never needed so much as a light bulb replaced. Strangely I still don’t feel ripped off and whenever something new and shiny catches my eye and I think of upgrading I’m able resist the urge because I’m “still under warranty.”
The manufacturer’s standard warranty is a good thing because it covers the infant mortality phase of the standard bathtub curve - when things break early due to manufacturing defects. The extended warranty is usually a bad deal because it covers the flat portion of the bathtub curve - after all failures due to manufacturing defects have occurred and already been covered, but before things start to wear out due to age & use.
I got the extra accidental damage protection for my Surface Pro 3, a tablet/laptop hybrid. I’m using it as a lab notebook in a bio lab, meaning it sits on a bench while I’m handling small to medium quantities of liquids, and I’m occasionally pouring things by the liter. Therefore it’s got a pretty high spill risk, so I consider it reasonably priced insurance.
(My renter’s insurance offers accidental damage coverage for computers (specifically excluding cell phones). It costs more and has a higher deductible, and though it would cover all of the computers I own, there’s little risk of accidental damage to my desktops.)
A high end refrigerator and oven. Both paid off. Also a laptop which really worked well as not only did they replace the screen then upgraded it.
On my smartphone I do carry the insurance but didn’t get the applecare. It just seems like the insurance is more practical as it covers more such as loss and theft, as well as it is indifferent to jailbreaking.
A Samsung washing machine (front loader with a complex balancing system) that had some consumer advocates worried about the fragility of the then-new feature. Never used it. Still have the unit and it works beautifully after six years.
The long and broad consensus is that extended warranties are a waste of money. If the product isn’t good enough to outlast the manufacturer warranty, it’s not the right one to buy in the first place. Most extended warranties (particularly automotive ones, and particularly-particularly used car ones) are so loaded with limitations, exceptions, exclusions and gotchas that they proably pay off less often than the million-dollar slot machines.
RandMcnally nails it: they are sold for “peace of mind” that is very often the result of high-pressure salesmanship, because it’s pure profit for the seller and the insurance backer.
If you’re saying it’s a good thing because it gives you peace of mind, that’s one thing. But if we’re talking about an objective financial decision, you can’t say the standard warranty is a good thing without knowing how much the manufacturer has increased the purchase price in order to cover it.
Suppose cars were priced without a warranty, and at sale time the dealer asks if you want to add a 3-year/36,000 mile warranty for a $1000 upcharge. Is that still a good thing?
There’s also the simple question to ask the nice man trying to sell you special paint treatment and security-marked glass along with the extended warranty:
“Is your product such a piece of shit that it needs a fix to the paint and a warranty just slightly longer than the manufacturer throws in?”
They’ll have canned answers about how “this area” is especially hard on paint and finish, or that many people fail to take perfect care of the car under recommended service, and so forth. The bottom line is to stick with “So [insert maker here] is selling cars here in [insert your state or region] that aren’t up to the climate and conditions? And the standard service you give isn’t enough to keep them from failing at [one day/one mile past the factory warranty]? Really?”
When we bought an iPod for my nephew, we sprung for the extended, no-questions-asked warranty. It’s a ripoff for most customers, but my nephew isn’t most customers, and has an unfortunate tendency to break things.
Ironically, he hasn’t actually broken the iPod. This might be because we very carefully made sure not to tell him that we got the extended warranty, and so he thinks that if he breaks it, he’s out of luck.
Cars, washers, dryers, and furnace. Bitter experience has taught me that all will need serious attention long before they should be declared dead but not that long after the usual warranty expires.
I got the extended warranty on my hearing aid on the advice of the audiology technician (who is a friend). It is a $3,000.00 electronic device that i use for 12 hours each day in a dirty, damp environment (the ear canal). Failure is expected. Repair outside warranty is very expensive, while in warranty it is free, as are cleanings and adjustments.
My original aid lasted 9 years and required a few repairs. I saved a fortune with the warranty. Then one of our dogs (aptly named Loki) got a hold of it and crushed it to tiny pieces. That wasn’t covered.
I think I might have gotten an extended warranty on my tablet, but I don’t think I’ll need it. I think Amazon had it for like $10 so it wasn’t a huge problem.
I did buy the unlimited mileage warranty on a Kawasaki motorcycle. Most motorcyclists only put on 2-3000 miles a year. I knew when I bought the thing I was going to put on a ton of miles. I think it cost about $500 and didn’t cover wear items, you know tires, brakes, fluids, those kinds of things. Well the transmission went at about 75,000 miles. When I went to take it in Kawasaki claimed that a transmission was a wear item, really? Basically Kawasaki will not honor anything on their extended warranty with 75,000 miles on it. So it wasn’t an unlimited mileage, just what they felt was too much. Since they refused to honor their warranty I refused to buy any more Kawasaki motorcycles.
Many years ago I sold cell phones during my university days. The commission on the extended warranty was about 1/3rd of the money that went into the till for the warranty. This alone told me that it was a sucker’s bet.
I only have the one store’s worth of info to go by, but a good month was about 500 phones, and there were usually about 2 to 5 warranty claims per month. We only had a handful of loaner phones, and I don’t ever remember running out.
I would say that 80% of those warranty claims were determined to be the user’s fault if it was hardware related, and hardware issues made up the vast majority of the problems. Rarely would it be software.
The only extended warranty I ever took advantage of was when I was an employee of the above store. But I knew exactly what I had to do to get my claim approved. Yay, new phone.
Sorry silenus, but you basically tipped the sales person and the cell phone company when you bought the extended warranty.