Which appliance(s) should we get extended warranty on, if any?

Factual Questions
21

I sold them for over 10 years and would say “absolutely not”. Appliances have very reliable long lives, especially the name brands.
Like others have said, if it doesn’t break down in the first year from some manufacturer quirk, it’s going to last a good 10 years.
I’d also second Dewey Finn’s suggestion to save the $500 and keep it for an emergency repair if needed. You’ll come out way ahead.

However, the buy back for store credit does sound interesting. If and only if there is a purchase you know you will need to make from them in 5 years out of necessity. Beware of catches though. Their everyday prices on mattresses and furniture may be considered “sale” prices by them and if you want to use credit they may pull some crap like saying you must pay full retail for the credit to apply.

22

I know people who worked in various electronic and appliance stores. They tell me that the big money was the “extended warranties”. Many of these places barely made any money on what they sold, but they made it up on extended warranties.

Most of these places don’t even bother showing you the extended warranty, they just bill you for it. Many don’t even have a written warranty, and those that do usually try to exempt items that could break (by exempting normal wear and tear).

Even worse, many of these extended warranties simply cover the normal warranty that the manufacturer gives. When we bought our fridge, the salesman tried to get us to buy an extended warranty on the compressor. I refused, then when our fridge actually arrived, I saw in the owners manual that the manufacturer already warranted the compressor for ten years! That grubby little store wanted an extra $100 or so from us for no good reason.

Think of it this way, most extended warranties are for 10% to 20% of the price of the appliance. What are the chances of that appliance really breaking down in that amount of time? If you never buy the extended warranty, you’ll probably come out ahead.

This store is banking on a few things. First, that the appliance probably won’t break down, and if it does, the repair is cheaper than the extended warranty. They are also banking on that you simply don’t have proof of your extended warranty, or that they can convince you that your particular problem isn’t covered by the warranty.

Remember too that if the manufacturer warrants your appliance for 3 years, and your extended warranty is for 5 years, you are pretty much only getting a two year warranty. Check out the manufacturer’s warranty, and see how much longer that extended warranty is actually covering. Ask for a written copy of the extended warranty and see if they actually have one. Carefully check the conditions in the warranty and see if they exempt parts that are most likely to break or they exempt regular wear and tear. Ask if you can use this extended warranty anywhere else in case the store is out of business, and who actually backs the warranty. Take a look at The Brick’s finances over the last few years. It isn’t pretty

The harder they’re pushing that extended warranty, the more money they make on it. If you say “no” to the salesman, and he gets the manager to ask you, and the manager starts making special deals on the extended warranty, the extended warranty is pretty useless.

23

Something to consider is whether you could live with the appliance being broken, and how much time it will take for a service representative to repair or replace it vs doing it yourself. For example (and I know it’s not really the same thing), I have a service/maintenance contract on my furnace for the peace of mind of being able to call the service company on the coldest day of the year. They’ll replace any defective part, so it is at least in part an extended warranty. If your computer is your livelihood, and a service contract will get you going again quickly, it may be worth it. I don’t see most household appliances in that same category, at least for my own life style.

Most washing machine manufacturers are now offering front loading models to save on water. FWIW, my friend had an appliance repairman in the house, and the guy said that these models are far more likely to need repair than the top loading models. I’m hoping this changes as they become more common, but food for thought.

24

Well, that’s true. :slight_smile: The other poster didn’t describe a hard-sell, which is a different situation.
It’s quite timely that I had my first run-in with a customer over an extended warranty today. He bought a $199 desk chair in January 2007 and got the $13.95 gas lift extended warranty on it, which was itemised as “Gas Lift Extended Warranty - $13.95” on his receipt. Today he brought it back because the material on the seat was starting to split. We told him that wasn’t covered by a gas lift extended warranty, he argued for a while, then changed tacks and began arguing over the duration of the warranty. He claimed he purchased a 4 year extension on top of the two year manufacturer’s warranty, but we’ve never offered anything like that. We will only extend cover out to three years maximum - we can offer two years on top of manufacturer’s one year, or one year on top of manufacturer’s two years, but we don’t do more than three years total on anything. If it comes with a three year or greater manufacturer’s warranty - as some external hard drives and monitors do - we can’t offer an extended warranty on it at all.

Anyway, his “evidence” was that he had written 2 + 4 = 2012 on the receipt himself (next to the wrong item, and anyway Jan 2007 + 2 + 4 = Jan 2013, so it’s not winning any prizes for being an accurately recorded piece of information). He’d written down “Scott” and claimed that was the name of the salesperson but we can’t recall a Scott ever working for the store (the original cashier whose code was used to ring up the purchase still works for the store and she doesn’t recall Scott either). This was all completely moot anyway, as the gas lift warranty doesn’t cover wear to the fabric and it was itemised as a gas lift warranty on the receipt. In the end he stormed out yelling “Well that warranty was a complete waste of money!” and I just couldn’t say what I really wanted to say… “Sir, do you really think we offer unconditional replacement warranties on two hundred dollar chairs for six years after the date of purchase for fourteen dollars?”.

It’s like they think we’re not in business to make money.

25

I view extended warranties as the lottery. Somewhere, someone is coming out ahead but the vast majority of people will lose their money. I have never paid for an extended warranty and so far so good. Only ever had an issue with one appliance (washer) and that was fixed under the 1 year factory warranty. Even so, the problem was trivial and even without a warranty I could have fixed it myself for less than $5 (it was just a hose with a tiny crack in it).

26

I know it’s only $13.95 but damn, that has to be free money for a retailer. I’ve worked for dozens of companies, sat in hundreds of office chairs in offices/cubes/conference rooms and have never once come across one with a bad gas lift.

27

Extended warranties are an odds game with the odds always in favor of the house (retailer). Similar to a casino.
Sure some people beat the odds and win and get their warranty to pay out more than they paid in but just like a casino the more you play the more those odds favor the house. You buy 5 warranties and only one pays off you still lost.

28

Perhaps that’s because the chairs with defective lifts get repaired? I know that I had one. I bought a Steelcase Leap chair a couple of years ago, and the lift was defective. When I sat down, it would start to slowly lower. I was a little disappointed with their quality control, but after I reported it to the manufacturer, they sent out a local contractor to replace the lift.

29

Extended warranties have to be free money for the retailer enough of the time that they make a profit from selling them. Gas lifts can be faulty, and if you have one go bad then the warranty is worth it, but yes, for a lot of people this is never going to benefit them. We do actually end up replacing a fair number of gas lifts for people (I just had one go through on my previous shift) so it’s not pure gouging. Think of it as a bet: the customer is betting the gas lift will fail, the business is betting it won’t. Individual customers will win their bet but ultimately it’s always the house that wins.

One side benefit of this for the consumer is quality control: product lines that frequently turn out to be defective get the boot quickly because we end up losing money on them. We demand reliability so that our extended warranties don’t end up being a massive money drain instead of a source of profit.

30

Wow… a lot of territory to cover here. I sell repair plans for an electronics retailer, so I’ve been on both sides of the counter here.

Certainly, theres a pretty wide range as far as service after the sale goes… some are trying to hit you eith every exemption and exculsion when you need it and are really hoping you never actually read the contract.

Others, like our humble establishment know that we make plenty of money on repair plans, want to retian our customers and encourage them to buy more repair plans. When someone comes in with a broken widget, we try our best to believe that there was no abuse and the product just stopped working. I can only remember having denied one… a pair of headphones on which both speakers were pulled from their housings and said housings were filled with mud and sand. As far as a company going out of business, we’re currently taking in products sold by another retailer who recently went bankrupt and closed. They used the same backing company we use, so they arranged for us to handle all future claims.

Selling these is a bit of an art, mostly beacuse other stores have given them such a bad reputation, and also because by the time customers get to the register they tend to be stuck in NO mode. While we will overcome specific objections, I believe belaboring the point after a firm NO has been given is rude and poor service. Although I will admit to occasionally throwing in a “so you’re going to just throw it away if it breaks”? once in a while. One objection that’s particularly hard to deal with is “I’ll forget I bough the coverage long before I might need it”, so if you want to smite the sales guy, go with that one. An honest salesman, when a customer says “I broke my X, I need a new one” will ask, “did you get it from us?” If the customer says no, we’ll tell them we would have covered his problem for free replacement (if true). If he says yes, we’ll check to see if he is covered for free replacement.

Of course, some things are a good repair plan bet and others aren’t.
$20 headphones, plan for $2.99? Headphones break all the time. Good bet.
$30 SD memory card, plan for $5.99? I’ve never seen one break.
$400 flatscreen TV, plan for $59.99? Depends. Our plans at that level are in-home. If someone’s not able to mount and dismount their own TV, that could be huge over not only paying for a new one, but also someone to install it.
And I agree with the consumers’ union, ALWAYS on computers, especially if you aren’t too computer savvy.

Some items are very much worth shopping around for. We won’t sell a cell phone without some coverage becuase a suprisingly small part of the population understands both:
A - to buy a phone outright is often $300 - $500 and no other option is available AND
B- if the phone is toast and you can’t afford a new one you’re contractually obligated to still pay the bill.
The cost of these plans ranges widely though… a lot of carriers now charge $7 per month for a whopping $168 over a 2 year contract, plus a $50 deductable, some also plus shipping. We charge a flat $50 to repair or $70 to replace up front, no other charges whatsoever. Which one sounds better to you?

And to the customer who says “if I really needed the service plan then the quality must be poor” or “if this is so well made why would I need to buy a service plan?”, we say: “Even Rolls-Royce has a service department. We like to stand behind our products for as long as possible, even when the manufacturer can’t. While these are well made, people can be rough on thses and accidents happen.”

In closing, I’ll be the first to admit that murphy’s law applies: If you buy the service plan, everything will go fine. If you don’t buy it, it will certainly fail during the period for which you would have been covered.

31

People are applying an interesting variety of tests in this thread. I think most are of some interest, except the anecdotal stuff (because in a system involving chance, not having a statistical appreciation of their meaning takes away their useability).

Most useful, I think, is the recognition that extended service plans usually favor the vendor, so you should not buy them as a money saving measure, though you should buy them if you need the product to keep working AND you can’t afford the replacement. This is similar to the reasoning behind homeowner’s insurance.

Sometimes, an industry needs to build a customer base while dealing with some special problem, and they wish they could convince consumers that the special problem isn’t reason not to buy, so they guarantee against it. I think this is great business. Offering a plan against it is a sort of halfway measure. Maybe the giant television sets are an example of this. These plans do not necessarily favor the vendor on average, because they may be motivated by something other than profitability for the plan per se. In these cases the consumer probably should buy the plan. The challenge is in figuring out whether a plan is in this special and small category.

What should be called “insurance” and what shouldn’t is of interest here, too. I have what was earlier called “dental insurance” that pays for routine things but not big surprises over $1600, so the twice yearly cleaning is covered but needing caps all around isn’t. This is upside down insurance. I’m paying, but there is no risk management on their part. Oddly, though, the plan costs less than the services generally do. I am pretty sure that is because the “insurance” company strongarms the dentist to do their service for a much lower rate, and then charges me what amount to a somewhat lower rate, pocketing the difference. I am buying this “insurance”, which more recently has been called a “dental plan”, because it is in my economic interest to do so, as my outlay is reduced - and yet I find it reprehensible because the dental plan seller seems to be a leach that adds no value to the system. In fact I think I want to discuss this whole thing with my dentist’s office to see if I understand it right…