6 Reasons Why An Extended Warranty Is Not Worth It
Whether you buy electronics, exercise equipment, appliances, or a car. There’s a decent chance the salesperson is going to pitch an extended warranty. Sometimes referred to as a “protection plan,” these services are supposed to give you specific coverage if the item breaks. This includes repairs or replacements. But while it sounds like a good deal. That doesn’t mean it is one. Here are some reasons why an extended warranty is not worth it.
You Probably Won’t Need a Qualifying Repair
Like manufacturer-issued warranties, extended warranties only last for a certain amount of time. Exactly how long a warranty lasts isn’t arbitrary. Instead, the protection is designed to expire well before most consumers would experience covered breakdowns that would lead to a qualifying repair.
Companies offering warranties aren’t being altruistic. Instead, they are betting that you won’t need to use the plan during the time frame they cover. Thus, allowing them to keep your money without any effort on their part.
As a result, most extended warranty issuers analyze repair and failure data to determine how long the item usually lasts. Then, they choose an expiration date that is notably ahead of when something is likely to go wrong.
Generally speaking, consumers believe that the risk of an item breaking is much higher than it actually is. This makes the protection to seem like a smart move. But the companies offering the plans understand the reality of the situation. So they are willing to provide coverage for a fee knowing full well that you probably won’t need it.
The Coverage Might be Limited
When people purchase extended warranties, they often assume that the coverage is pretty broad. However, that isn’t always the case. Many protection plans only handle repairs associated with specific kinds of events. For example, an electronics warranty may cover repairs relating to a component malfunction but not damage caused by liquid spilling on the device.
Others only offer coverage for certain parts of the item. For example, a vehicle extended warranty might include your powertrain but not the electronics associated with your infotainment system.
Now, it is true that the coverage levels vary between warranty issuers. But it’s best not to assume that the coverage is comprehensive. Instead, you would need to read the fine print to see how limited the protection plan is. Thus, allowing you to determine the actual level of coverage it offers.
Many Repairs Cost Less Than the Warranty
Even if your covered item breaks during the extended warranty period. That doesn’t mean you’ll end up saving money because you have the plan. Often, common repairs cost less than you’ll pay for the warranty.
On average, a large appliance repair costs $172. Suppose the extended warranty on a refrigerator, oven, washing machine, or other large appliance exceeds that amount. In that case, you may save money by skipping the warranty and handling the repair costs should an issue ever arise.
However, even if the cost of the warranty is slightly less. That doesn’t mean getting the warranty makes sense. For one, you may not get to choose your preferred repair shop. Instead, you may be forced to use an authorized repair center. If your local shop isn’t one, you have to go elsewhere.
Additionally, there can be costs outside the initial price for buying the warranty. In those cases, that could push your total spending up, making the out-of-pocket repair cheaper.
There May Be Additional Costs
Even if you are eligible for a repair through an extended warranty, that doesn’t always mean you can get it without having to pay more money. Some protection plans don’t cover the cost of shipping your item to an authorized repair center. That means that you have to pay the shipping costs to get the “free” repair.
Now, some extended warranties include the cost of shipping your item. However, since many don’t, you’d need to read the fine print to see if shipping expenses are part of the coverage. If not, then it’s possible the shipping fees alone would cost more than getting a repair done locally, eliminating any potential value you could get from a warranty.
Additionally, some protection plans only cover parts but not the labor required to handle the replacement. While this isn’t as common as coverage that addresses both, it’s important to understand that limited warranties that don’t cover parts and labor do exist. If you end up with a plan that only handles the parts, you’ll be on the hook for the labor costs, an expense that can get quite high.
Warranty Claims Can Be Cumbersome and Lengthy
Using an extended warranty isn’t always a simple process. The warranty issuer may require you to jump through certain hoops to prove that you have a qualifying repair. For example, they may need copies of the original warranty paperwork and purchase receipt. You may be asked to go through certain troubleshooting steps or provide evidence of the issue.
Additionally, some issuers are going to go out of their way to find ways to deny the claim, causing headaches for people who should legitimately be eligible for a repair. While a level of due diligence on the warranty issuer’s part should be expected, some unscrupulous companies will go the extra mile to find a reason to deny you the repair in order to save money.
Even if you are approved for a repair through the plan, getting it done can be a time-consuming process. In many cases, a warranty repair isn’t as simple as taking your broken item to a neighborhood repair shop. You’ll have to use an authorized repair center. If one isn’t conveniently located, then you may have to pay for shipping or make a lengthy trip.
Once you drop the item off for a repair, there’s likely no guarantee of a quick turnaround time. While some small issues that can be fixed at local repair centers may have same-day turnaround. More complex problems may not have such convenient repair timelines. It could be days or weeks before your item is fixed and back in your hands. If that item is a critical home appliance. Going without it for that long could be problematic.
Plus, there are stories of an item being sent back after a repair that isn’t actually fixed. If that occurs, you may have to start the process all over again.
You Might Not Need More Coverage
While a retailer may try to convince you that you need an extended warranty, you may actually have all of the coverage you need. First, the manufacturer’s warranty gives you protection in the beginning, and it may be fairly comprehensive, covering you against issues caused by malfunctions or defects.
Second, you might get extended coverage based on how you buy. For example, some credit card issuers offer coverage as a perk. If you buy the item with that credit card, you automatically get that supplemental protection, all without having to pay anything extra.
Certain retailers are also known for going the extra mile in this area. For example, Costco extends the manufacturer’s warranty on major appliances to two years. Plus, you can get assistance from Concierge Services if you need help using that warranty.
Ultimately, extended warranties just aren’t a great deal in many cases. By setting cash aside for a possible repair and using the coverage you already have, you can often save money by skipping the protection plan.
Can you think of any other reasons why an extended warranty is not worth it? Share your thoughts in the comments below.
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