Extended Warranties At Retailers

[MannyIsGod]

I HATE being asked over and over to buy these things. I was looking around consumer reports when I saw this article and thought it might help some people to know these things when they go shopping soon.


Why you don't need an extended warranty

Two possible exceptions/ What breaks down and when/ Stingy warranties/ If you must buy an extended warranty /Share your story

This holiday season, shoppers are expected to spend a whopping $1.6 billion on extended warranties for laptops, flat-screen TVs, other electronics, and appliances.

And almost all of it will be money down the drain.

Retailers are pushing hard to get you to buy extended warranties, or service plans, because they're cash cows. Stores keep 50 percent or more of what they charge for warranties. That's more than they can make selling actual products.

"You sell a $400 television set and maybe make $10," Eric Arnum, editor of Warranty Week, a trade newsletter, says of retailers. "But you sell a $100 warranty and make $50."

For the consumer, extended warranties are notoriously bad deals because:

• Products seldom break within the extended-warranty window (typically around three years), our data show.
• When electronics and appliances do break, the repair often costs about the same as the cost of the warranty.

We have long advised against extended warranties. In fact, we feel so strongly that consumers are being misled about them that we took out a full-page ad in USA Today on Nov. 14 to warn shoppers.


Two possible exceptions

There are two caveats to our just-say-no advice: It's worth considering an extended warranty if you're buying a rear-projection microdisplay TV. Repair costs can be high, and these sets have been three times more likely to need repairs than other types of TVs. We also think it may be wise to get an extended warranty (which includes extended tech support) if you're buying an Apple computer, because they come with only 90 days of tech support,


What breaks down and when

For decades, the Consumer Reports National Research Center has tracked the ownership experiences of millions of consumers and thousands of products. Annual surveys ask randomly selected Consumer Reports subscribers if they own certain products and whether they've needed major repairs. From this data, we learn which brands have been more repair-prone than others, and we have reliability information about the following products that are often bought around the holidays:

Flat-panel TVs. They are a magnet for extended warranty sales, says Arnum, of Warranty Week. "Whenever you have product that has cutting-edge newness to it, there's a perception of fragility," he says. "There's something spooky to it, and consumers say, 'I've got to insure this.' That's the solution to the uncertainty."

Flat-panel TVs are so new that their long-term repair record isn't known. But our latest reliability survey shows that those bought in the past two years have been quite reliable--just as reliable as conventional, direct-view TVs. Even if your LCD or plasma set does need to be repaired, it will probably cost you less than you're likely to pay for an extended warranty. Of the small percentage of survey respondents whose LCD TV needed a repair, only 8 percent reported it costing more than $500, the cost at which an extended warranty might make sense. For plasma owners whose set needed a repair, only 14 percent paid more than $500.

Computers. Most desktop PCs come with a year of tech support. An extended warranty typically costs about the same as the average PC repair. Instead of buying a warranty that you're unlikely to use, you'd be better off paying to fix your computer if it breaks. As noted above, because Apple computers offer only 90 days of tech support (a $49 call otherwise), you might consider an extended warranty if you buy one.

Laptops. Laptops have among the higher repair rates of the products we track. Forty-three percent of three- to four-year-old laptops have needed to be fixed, our subscribers indicate; typical repairs cost between $100 and $400. But many of these problems occurred outside the coverage period of a typical computer extended warranty. Also be aware that extended warranties usually don't cover problems if you drop the laptop or spill something on it. If you're worried about that, you should get accident-damage protection. Typically, though, you must buy an extended warranty first.

Digital cameras. Our survey of subscribers has shown that fewer than 10 percent of those who bought a digital camera in the past three years have had to get it repaired or had a serious problem. So the odds that you're going to need an extended warranty are pretty low.

Repair rates for 3- to 4-year-old products Product Repair rate Laptop computer 43% Refrigerator: side-by-side, with icemaker and dispenser 37 Rider mower 32 Lawn tractor 31 Desktop computer 31 Washing machine (front-loading) 29 Self-propelled mower 28 Vacuum cleaner (canister) 23 Washing machine (top-loading) 22 Dishwasher 21 Refrigerator: top- and bottom-freezer, w/ icemaker 20 Gas range 20 Wall oven (electric) 19 Push mower (gas) 18 Cooktop (gas) 17 Microwave oven (over-the-range) 17 Clothes dryer 15 Camcorder (digital) 13 Vacuum cleaner (upright) 13 Refrigerator: top- and bottom-freezer, no icemaker 12 Range (electric) 11 Cooktop (electric) 11 Digital camera 10 TV: 30- to 36-inch direct view 8 TV: 25- to 27-inch direct view 6 Source: Consumer Reports National Research Center, 2006 Product Reliability Survey


Stingy manufacturer warranties

The hard sell for extended warranties is coming at the same time that manufacturers' warranties are getting skimpier. Companies are reducing coverage for everything from appliances to TVs.

At the same time, makers of pricey goods like laptops are scrimping on coverage for labor. Terms have shrunk from 1 year to 90 days in some instances, making repairs potentially expensive even though the parts are free.

Extended warranties are also increasingly aimed at making consumers' lives easier, Arnum says. For example, some plans offer in-home service or instant replacements for products as inexpensive as printers, freeing people from having to ship their broken products to service centers.

It's important that you investigate the manufacturer's warranty coverage before you buy any product, and patronize those manufacturers that offer decent warranties. More important, buy from manufacturers whose products are reliable in the first place. Consumer Reports magazine and its Web site contain brand reliability information for major products we test.

Overall, products have been reliable enough that we don't think you need an extended warranty.


If you feel you must buy an extended warranty

For consumers who want peace of mind and don't mind paying for an extended warranty they'll probably never need, or for those whose chosen brand is repair prone, we offer this advice:

First check your credit card. Before you say yes to an extended warranty on any product, see whether your credit card provides similar coverage. Such plans, most often found on gold and platinum cards, typically lengthen the original manufacturer's warranty by as much as one year.

Shop around. Extended warranties vary in length and terms. Don't pay more than 20 percent of the purchase price for one. Always try to negotiate a better price.

Beware of hidden "gotchas." For heavy items such as large TVs or major appliances, ask whether the extended warranty includes in-home repair or pickup. For TVs, who reinstalls it? And if the product will be repaired, is there a lemon clause such that after a few repairs the product is replaced?


Share your story

Did you get a hard sell from a salesperson pushing an extended warranty? Tell us about it!

[midgetonadonkey]

I bought an extended warranty for a 51' RCA projection HDTV that I bought back in 2002. The main reason I purchased it is because the TV was a display model that was being sold at a discounted rate. I knew that I would have trouble with it because it was always on at the store. Luckily I did purchase the warranty because the convergence board went out on it 4 times in a 2 year period. After the 4th time it went out, I got what I paid for the TV in store credit and used it toward the 28 inch LCD I have now. It really paid off.

[baseline bum]

Best Buy pushes these things hard. When I got my PSP there they asked me, I said no way, then they started outlining how great of a deal it was, I said no, just ring it up, then they said they got a lot of PSPs back, I told them quit pushing the warranty, that I wouldnt pay them $5 for it.

[MannyIsGod]

Best Buy pushes these things hard. When I got my PSP there they asked me, I said no way, then they started outlining how great of a deal it was, I said no, just ring it up, then they said they got a lot of PSPs back, I told them quit pushing the warranty, that I wouldnt pay them $5 for it.

Had they told me that they usually got a lot of them back, I would have asked for a manager. When they brought me the manager, I would have explained to them I was not purchasing their product because I was afraid I would have to bring it back and I appreciated their employees candor about the products problems.

I would have then gone and bought the PSP somewhere else. It would have been more work, but it would have been worth it.

[Kori Ellis]

I was told by the guy at BB that there's a rule that Best Buy employees have to ask you three times if you want the extended warranty. So they aren't ignoring you saying No, they just are doing what they need to do to keep their job.

[baseline bum]

What's funny is a lot of people actually buy these things. Anytime I've bought something and it breaks or works ty due to a defect, it's almost always within the first couple of weeks of ownership. If something screws up after that, it's usually due to something stupid I did (like pulling my computer off my desk... like that).

Everyone looks at me like I'm crazy when I tell them I didn't buy the extended warranty anytime I buy something expensive.

[Johnny_Blaze_47]

I was told by the guy at BB that there's a rule that Best Buy employees have to ask you three times if you want the extended warranty. So they aren't ignoring you saying No, they just are doing what they need to do to keep their job.

It's true. When I used to work there, though, I felt like I had a good feel for the customers, so if I could tell they weren't buying or were getting annoyed, I stopped at two.

[MannyIsGod]

Its basically insurance on your purchase that is really really overpriced. I think accidental damange plans on certain items are well worth it, especially with laptops (but even then I didn't get one for my new laptop) but for the most part you should just take care of your item.

There are times you will get screwed and have to pay for something to get fixed, but if you went out and bought an extended warranty on everything you purchased you'd come out WAY behind.

I'm sure for some people its worth it just to not have the hassle if something goes bad, but otherwise meh.

[Aggie Hoopsfan]

I was told by the guy at BB that there's a rule that Best Buy employees have to ask you three times if you want the extended warranty. So they aren't ignoring you saying No, they just are doing what they need to do to keep their job.

Yep. Both my bosses hated me because I didn't push the extended warranties when I worked there. When I was writing up the package I brought it up to them once and said no pressure, if you are interested I can tell you more if not no biggie.

That actually got me great feedback from customers, but my supervisors looking over my sales nagged me constantly. Oh well, 'em.

The best advice I've read on extended warranties is:

1. Most major credit cards extend the warranties to at least double the initial warranty (usually two years).

2. Put $10 a month into an account that is savings/repairs that is off limits from checks/ATM. When something actually breaks, you'll have the money to take care of it, and in the meantime you're making money off the interest (as opposed to the company you paid for the warranty from making the interest off your money).


The other 'insider' trick I have for you guys is that those warranties are the ing gold for the managers at Circuit and Worst Buy. If you tell them you'll buy the service plan from them if they help you out with the tv/laptop/whatever they will usually accomodate you.

Then go back a few days later and return the warranty and you just hooked yourself up with a better deal.

[ZStomp]

I rarely buy the extended warranties. The times I have- I don't think i've used them but maybe 3 times??? ...if that...

[Johnny_Blaze_47]

Yep. Both my bosses hated me because I didn't push the extended warranties when I worked there. When I was writing up the package I brought it up to them once and said no pressure, if you are interested I can tell you more if not no biggie.

That actually got me great feedback from customers, but my supervisors looking over my sales nagged me constantly. Oh well, 'em.

The best advice I've read on extended warranties is:

1. Most major credit cards extend the warranties to at least double the initial warranty (usually two years).

2. Put $10 a month into an account that is savings/repairs that is off limits from checks/ATM. When something actually breaks, you'll have the money to take care of it, and in the meantime you're making money off the interest (as opposed to the company you paid for the warranty from making the interest off your money).


The other 'insider' trick I have for you guys is that those warranties are the ing gold for the managers at Circuit and Worst Buy. If you tell them you'll buy the service plan from them if they help you out with the tv/laptop/whatever they will usually accomodate you.

Then go back a few days later and return the warranty and you just hooked yourself up with a better deal.

Ah, good old inboarding. What helped me increase my sales presence and my old asshole manager get fired for not realizing the proper way to inboard.

[1Parker1]

I was told by the guy at BB that there's a rule that Best Buy employees have to ask you three times if you want the extended warranty. So they aren't ignoring you saying No, they just are doing what they need to do to keep their job.

Also, they do it because at a lot of places, the employee gets commission on the number of warranties they sell. Back in the day, when I worked at a Sporting goods store, I remember we'd get $10 for every warranty we sold. Which was a sweet deal cuz we sold exercise equipment and lots of fishing gear. I'd ask them twice and say in a sweet voice, "Are you sure you don't want it? You never know what can go wrong with it and our return policy is only for 30 days, sir"

[Aggie Hoopsfan]

Also, they do it because at a lot of places, the employee gets commission on the number of warranties they sell.

You don't get a commission at BB, you get to work more than 10 hours a week Seriously, every manager I saw in both stores I worked at tied the hours you got to how you sold the extended warranties.

Part timer? If you wanted more than 10 hours a week you better sell. "Full time"? If you don't sell, the most you'd get is 34 hours.

Pretty lame, but then again I had good enough relationships with both the home theater managers from hopping across the aisle to help out that I'd go talk to them at the end of the day on Saturday and they'd have enough hours waiting for me to top me out at 40 every week.

[King]

I bought a five year extended warranty on my plasma for 250. Seemed like a small price to pay to cover it for six years (five plus manufacturer). We've had plasmas at work break a few times, and always used the warranty to cover it.

[SpursWoman]

I bought the extended warranty when I bought my laptop from Best Buy and got my money back in spades with it. The power supply got wet from a mini-flood in my house and shorted it out ... I let it dry out and gave them the stupid-girl "I don't know what happened to it...it just quit working " and they fixed it, no charge. I also had to have the keyboard replaced twice.

[Duff McCartney]

I guess I say this in bias...but I've read the Protection Plans that we have my work and they are incredibly good.

They pretty much have a no hassle approach to giving you your money back in a form of a gift card. Sometimes they don't even ask for the product back, they let you keep the one that you had and just give you a gift card for the price you paid.

One of the better things I find is that if you buy something at OD, and it has a rebate, they'll give you the gift card for the amount you paid at the register not the amount you end up paying after rebates.

I've read the Best Buy extended warranties and they are kinda crappy...the only thing they do is extend the manufacturers warranty which is very limited in and of itself. As do most credit cards..they just extend the manufacturers warranty as well...meaning they only cover defects and labor out of the box.

Alot of people say that they can just return it but most places won't let you return them after a certain time. After the return policy is up, you are basically stuff with the manufacturers warranty and you have to take it up with HP or Compaq or whoever.

[ZStomp]

I hate those assholes at Office Depot..they are always pressuring me into extended warranties!

[MannyIsGod]

I hate those assholes at Office Depot..they are always pressuring me into extended warranties!

Whatever dude, its not like you have to live with them...

[KEDA]

I hate those assholes at Office Depot..they are always pressuring me into extended warranties!

then dont shop with us

[ZStomp]

Whatever dude, its not like you have to live with them...

Oh-- could you imagine!!!

[Fillmoe]

dont ever buy that from best buy.... those ers dont honor their at all! they will find the slightest excuse to not fix your .... BEST BUY!!!!!!!!!!!

[missmyzte]

I was told by the guy at BB that there's a rule that Best Buy employees have to ask you three times if you want the extended warranty. So they aren't ignoring you saying No, they just are doing what they need to do to keep their job.

For the record, that's not company policy.

I've read the Best Buy extended warranties and they are kinda crappy...the only thing they do is extend the manufacturers warranty which is very limited in and of itself. As do most credit cards..they just extend the manufacturers warranty as well...meaning they only cover defects and labor out of the box.

Alot of people say that they can just return it but most places won't let you return them after a certain time. After the return policy is up, you are basically stuff with the manufacturers warranty and you have to take it up with HP or Compaq or whoever.

Read the service plan again, not quite true.

[Kori Ellis]

For the record, that's not company policy.

Interesting. 2 employees at the Best Buy here told us it's required for them. Maybe their store manager just tells them that.

[Kori Ellis]

Oh and regarding Office Depot, they once offered us a service warranty that costs more than the item we bought (after rebates).

[Aggie Hoopsfan]

For the record, that's not company policy.

Not company policy, but it is taught to the managers to teach to the employees as a best practice.