Are Extended Warranties Worth It? [Ask Lifehacker]

Dear Lifehacker,
It seems like every time I go and buy something these days, the salesman asks me three times whether I'd like to buy an extended warranty. I always thought they were a ripoff, but I've had a few friends that say they were a godsend when their particular gadget broke down. Which is it? Should I be buying these warranties?

Sincerely,
Worrying About Warranties

Dear Worrying,

This is a pretty hotly contested topic, and while you'll hear different things from different people, most of us here at Lifehacker aren't big on extended warranties. There are, however, a few exceptions, so it's worth doing a bit of research beforehand to know what you're up against.

Find Out What the Extended Warranty Covers

An "extended warranty" can mean a few different things. Generally, the things you buy come with their own warranty from the manufacturer. For most devices, this is usually around a year, though it can vary from device to device and from manufacturer to manufacturer (some TVs, for example, have a 90 day warranty while others have a year-long warranty). This usually only covers malfunctions and defects within that short period of time, to protect you from being stuck with a device that might have just been defective. It won't cover accidental damage, and it won't cover anything past that time.

Often, the extended warranties you're offered at places like Best Buy are not only longer, but offer other services, like home repair. They can also cover accidental damage which, if you're a klutz, could be worth it for things like mobile phones that are prone to being dropped, hurled, drowned, or otherwise damaged in other horrifying ways. For stationary devices, like TVs, it starts becoming less useful (unless you're prone to playing football in the living room). It's unlikely that your TV bulb isn't going to go out prematurely. If it lasts through that first year of the manufacturer's warranty, it'll probably last you until the natural end of its life (when the extended warranty would have expired anyways). Keep in mind, too, that you should never pay more than 20% of an item's price for the warranty?if it's more expensive than that and you want the extra protection, shop somewhere else.

Remember also that you can usually extend the base manufacturer warranty of a product by buying it with a major credit card. All American Express cards have an extended warranty benefit, while Visa Signature cards are privy to a Warranty Manager program and MasterCard offers extended warranties to holders of Platinum, World, and some other cards. This won't get you accidental damage coverage and it won't get you as good of service as someone like Best Buy could theoretically offer, but it can be great for piece of mind.

Check a Device's Reliability

The real question here is whether your device is likely to break after the initial warranty expires. Keep in mind that these friends of yours that got saved by warranties are likely in the minority. Most of us with gadgets that work "just fine" don't go shouting from the rooftops about how nothing has ever gone wrong with every gadget we've ever owned, while your friend is likely to tell you the story of his 3-time dead Wi-Fi card. However, things do happen, and some products fail more than others. Consumer Reports goes through products every year and lists the types of products most likely to fail within the first three years (when that extended warranty would come in handy). Some of their recent data, courtesy of WSFA in Alabama, shows the following products are at the top of the list:

• Desktop PC - 37% repair rate
• Laptop PC - 33% repair rate
• Lawn tractor or riding mower - 29% repair rate
• Refrigerator (side-by-side with ice maker and dispenser) - 28% repair rate
• Self-propelled mower - 26% repair rate
• Washing machine - 22% repair rate
• Gas range - 19% repair rate
• Refrigerator (top-and-bottom with ice maker) - 17% repair rate
• Projection TV - 16% repair rate
• Push mower - 15% repair rate
• Vacuum cleaner - 13% repair rate
• Dishwasher - 13% repair rate
• Clothes dryer - 13% repair rate
• Microwave (over the range) - 13% repair rate

That said, an even better idea is to avoid the brands known to fail more often. When you're buying a new gadget, do a bit of research not just on its products, but on its reliability and service reputation. PC World, for example, does a great reliability survey every year that covers all sorts of technology, from phones to TVs to cameras, and they'll tell you which brands are more likely to fail or give you bad service.

Lastly, remember that newer technology is a bit more on the "iffy" side. Many tech companies like Apple have a reputation for buggy first generation products. Similarly, if the TV you want contains revolutionary new technology (like 3D), you might be better off getting an extended warranty since there isn't yet enough data about failure rates. Or, of course, you could just wait until the next generation or two. With more reliable products, it's less likely you'd ever need a warranty (or the hassle of taking it in for repairs) in the first place.

Set Up an Extended Warranty Fund

We've talked about this a few times on Lifehacker, but it bears repeating: statistics are in your favor. For all the tech you buy, chances are most of it is going to live out its life just fine, and if you were to buy an extended warranty on every item, you'd waste a lot of money. Instead, set up your own extended warranty fund. Whenever you're asked to purchase an extended warranty, ask how much it is and save that money away in your own personal warranty fund. If and when something does break, you'll have money from all the extended warranties you didn't buy that you can use to repair or replace it. And if it doesn't break, then you're just a bit richer than you were before.

In the end, the fact of the matter is that when you crunch the numbers, extended warranties are more for piece of mind and profits for those retailers than anything else. If you have a ton of disposable income and you want to feel more at ease, then go for it?but if you shop smart, there's no reason you should ever need to spend that kind of money on something you might not use.

Sincerely,
Lifehacker

P.S. Of course, this is just our general opinion, and we've had good and bad experiences alike with extended warranties. Feel free to share your thoughts and experiences with us in the comments below.

Source: http://feeds.gawker.com/~r/lifehacker/full/~3/EPLbUOcqdMI/are-extended-warranties-worth-it

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