Say "No" to Extended Warranties

Well, it is a betting situation. The warranty provider, guided by some careful statistical analysis, is gambling that the total number of claim payout dollars will be less than some percentage of their gross take in. After all, they are in the business of making money!

As a consumer you need to be aware of what the circumstances ruling your product are. Some items are more likely to fail over time than other items. Most items, if they are going to fail, tend to do so during the infant mortality phase of product life. This should be covered by the manufacture warranty.

Some items are not worth the extended warranty. Ammo probably is one of the least likely to fail over time. However, some complex machinery (i.e., a car) has a much greater potential for failure outside of the manufacture warranty period.

Another factor to consider is the burden of failure. Some products are so inexpensive that the cost of failure is trivial. The motor in my car costs $40,000! That is not trivial. The cost of the extended warranty (which was ultimately paid by the dealer to close the deal) is trivial compared to the cost of a major malfunction. Granted, the likelihood of a catastrophic failure is pretty low, but the cost for the extended CPO warranty is well worth the peace of mind since I can not afford replacing the motor out of my pocket!

Your motor costs $40,000?

I've never gotten an extended warranty on anything I've bought for myself, but I did buy the warranty on a very expensive Korg studio keyboard I bought for my boyfriend - because it was German made, I wasn't familiar with Korg's reliability, and he is technically clueless.

My dad buys warranties on things like PCs - because, in addition to being technically clueless, he is also the touch of death to all things electronic. It's paid off in his case.

I do carry a household warranty that covers the major appliances and systems in my house, and it's been a good deal.

Yes, it does.

OK, brag a little and let us know what the car is!

Porsche GT3

Nice wheels

Thanks, the wheels, themselves, are far cheaper than the motor. :-)

I have been trying to remember ever having heard about a Porsche engine failing in normal service, and I can't! My colleague used to service the things, and he can't. Either you are as hard on your cars as I am (RESPECT), or you're just cautious? Having said all that, if the dealer was prepared to cough for the warranty, nice one, the chances are its not going to fail.

Extended warranties, Brilliant! When you go to buy an appliance, always ask the price of the extended warranty, and then go for the product with the cheapest. The reason for this is you are buying an insurance policy, and insurance is based on risk. Therefore you will be buying the most reliable appliance, and don't need the extension! This has stood me in good stead for many years, and it's quite remarkable how unreliable some of the more expensive stuff is.

That's using the system to defeat their game, Bravo! Absolutely brilliant.

Fine so much about extended warrenty can some one enlighten me about Limited warranty on Backhoe loders to Laptop note books.sold through out the world

murali

That's an easy one. The reason for limited warrrenties is simple. Either state laws require or experience shows that a full warrenty is not "economic" (i.e. the person who offers the warrenty cannot make a profit). In either case look at what is covered and for how long and you will find out how your product will fail and when.

"The reason for limited warrrenties is simple. Either state laws require or experience shows that a full warrenty is not "economic" (i.e. the person who offers the warrenty cannot make a profit). In either case look at what is covered and for how long and you will find out how your product will fail and when."

Although the grasp of warranty definitions and legalisms seems tenuous at best, the quoted post does, perhaps not inadvertently, bring out the central issue regarding warranties which most posts thus far, and perhaps even consumer's union, has failed to point out: that the purpose of all warranties is, first and foremost, to protect the seller, NOT the consumer--any claim or assertion to the contrary notwithstanding.

With this realization everything else falls into place, and the pound foolishness (except in limited, buyer-specific circumstances) of purchasing "extended warranties" (of reimbursing a seller for the mfr's limited warranty) becomes readily apparent--even to the legalistically uninformed. However, warranty and service plan sellers are in no danger; their continued prosperity is assured in the knowledge that it's not what makes sense that motivates spending so much as it's what "feels" good--even if it's only the feeling of possibly not feeling bad later on. So PT does not turn in his grave despite the best efforts of Consumer's Union.

A retailer tried to offer extended warranty recently on a television.

The response he received was along the lines of,

"If it needs extended warranty to cover breakdown then I have purchased the wrong manufacturer's equipment. So, the next time it needs replacing I shall choose another make from a supplier that has a higher level of confidence in the products to be sold."

It really has nothing to do with a lack of confidence. In fact, they are quite confident in the product and in the fact that they make a KILLING on the extended warranty sales. There are some chains where they call it "gravy" and it's a big "ka-ching" when the get "gravy" on a sale. It's a racket. Sears was so blatant about it at one time that they got in trouble over it with I believe the FTC but every generation forgets.

I buy insurance on electronics that will be dropped, and on washing machines that my mother-in-law uses (9 kids @ home, very high use) other than that Insurance is for the people who think that they will break it. If you really think about buying things, all we are doing is renting it from the trash can.

The first extended warranty I bought was for my first laser printer. I was told that all I had to do was bring it back and they would fix it. 2 months after I bought the warranty the nationwide chain that I bought it from went out of business. 3 years later somebody called me to see if I would purchase a further extension and was indignant when I refused.

My wife bought an extended warranty for a washing machine. It broke 6 weeks after the warranty ran out.

Salesmen must get good commissions for the extended warranty as they really push them.

Just bought some non-refundable advance purchase airline tickets. In addition to the tickets, for about another 8 %, they wanted to sell travel insurance. I am not sure what that is. Maybe if the airline goes out of business or if weather forces cancelations I would get some kind of compensation? I have only been stranded a few times in hundreds of flights, so that seems like an excessive charge.

I rarely buy extended warranties and when I have, I have all too often forgot about them or lost the papers, etc., and ended up wasting the potential benefit.

I have heard of someone tell of one quite successful experience, however. About 5 years ago, on the last day of the warranty period ($199 warranty cost), a friend forced the warranting company to finally replace a $1,150 Sony videocam that had been a lemon and had needed the same repair 5 times in its 5 years (each repair taking about 2 months). My friend had to force them because they initially claimed that the warranty didn't cover electrical surges. Unfortunately for them, he had read the warranty and it specifically did cover damage due to lightning and electrical surges (which, he claimed, could be simulated by 5 or 7 seconds in a microwave oven). He paid an additional $350 to upgrade to a better replacement model and has since been enjoying the use of a $1,500 mini DV videocam that has performed perfectly. In this instance, at least, the warranty preserved the value of about $950 of his initial investment. Now, while some may question the ethics of his strategy, teh result was the replacement of a proven faulty device with one that worked as advertised--a benefit explicitly guaranteed by the warranty but which the warranting company had declined to provide.

I second the earlier comment re the enhanced utility of warranties for the more expensive, fragile electronic devices that are to be carried around and have moving parts.

Based on my knowledge of realibility and Statistics, Consumer's Union is correct. Failure of most products follows what is known as a "Weibull" distribution. This distribution is characterized by an early failure rate known as infant mortality followed by a period of consistant failure. At the end of the service life of the product, the failure follows a normal distribution. Given enough data, the manufacturer can predict with considerable accuracy his warrenty cost. The manufaturer then sets the "extended warrently" period within the consistant failure period such that he can predict the overall warrenty cost, and then prices the warrenty for maximized profits. For the producer of electronic equipment in particular, this is a sweet deal. The consumer buys something that he would get actually get for free anyway and the producer incurs no added costs (except administration) but gets another profit stream for his business.

The fine print in extended warranties can often limit the possibilities of a pay-out for repairs. Auto warrenties include exclusion of "normal wear and tear" type repairs. My mom was debating an extended warranty on a Lincoln Town Car and asked my advice. Since she didn't drive much, I expect things like seals failing from dry rot to be a bigger factor than anything, so I suggested she NOT get the warranty. She took my advice.

Because of the good relationship she has with the dealer's garage, she asks each time she goes in for a problem if it would have been covered under warranty. Have the car for 10 years, maybe $2500 in repairs for several small things, and everytime, "No, that would NOT have been covered by the extended warranty".

I would reason with NO in most instances. But decisions are not always reasoned.

However, betting on the "safe side" I took extended warranty on a Honda Civic and on my laptops and some computers.

Honda paid out with a new transmission. Reason that I bought was I had no experience with Honda, and my wife was principle driver in heavy urban traffic which I find hard on transmissions and drive train. It was the major drive train I wanted protected.

About 4 years ago Dell paid out on a Dell Inspiron 5000: 2 keyboards, 2 mother boards, new ram, 2 processors, and a new heat pipe cooling system (I really believe the heat pipe was the only real culprit). Seven workplace visits, and much aggravation on my part. (and I haven't bought a Dell laptop since). Reason for buying was computer was critical to my business and I wanted to have fast turnaround for projected life expectancy of computer. I would probably not buy insurance again since cost of computer is now so low that it would not be a major inconvenience.

Dell paid out on 2 Dell Optiplex GX270's total of 4 hard drives. Again mission critical, but cost of ownership is also dropping, so I doubt I would buy again.

How about life insurance (an extended peace of mind?).
You are betting you will die, they bet you live.
They statistically win.
But do you want to leave 4 kids and a wife without income and large mortgage etc? That is not my style so I buy insurance for the peace of mind. Which makes me insurance rich and cash poor! Worth more dead than alive.
(Is there something wrong with this picture? Or is it noble?)

"Is there something wrong with this picture? Or is it noble?" Both.

The warranty situation is becoming totally absurd: Recently in a UK Department store, a telephone was on sale for the normal price of £4.95. The sales assitant drew my attention to their offer of a 3 year extended warranty for £20. When I pointed out that this was absurd they said well a lot of their customers took up the offer - How dumb can you get!

I'm writing this on a 1½ year old laptop whose backlight is flickering on and off, and screen is flopping around due to loose cheap hinges. Its power cord is taped in place because its connection is intermittent(aluminum wire soldered to a chrome plug) causing sparks and a melted strain relief on the plug, battery falls out whenever its picked up, WiFi cuts out whenever I type(pressure on palm rest shorts antenna). While it was under manufacturers warranty the backlight, hinges, and power supply were each repaired once, now they all require it again. Keyboard was also replaced within the first week because it MELTED. B**t B*y refused an exchange or repair after driving 90 miles to their store(as directed by the 1-800 number on my warranty paperwork), even though I bought their $300 extended warranty. They said it was the manufacturers responsibility for the first year. OK, now the first year is up. I drive back again, this time they say they need to ship my laptop away for at least 6 weeks to be repaired. Also, before they will fix any of the hardware which is obviously faulty they say they need to format & restore my hardrive to eliminate software as a possible cause. And they will charge me $70 for the privilege of loosing all my data. But for another $70 they will back it up for me. I say I can't be without my computer for 6 weeks & I can back it up myself. 90 miles back home again. I read my warranty paperwork & discover the "No Lemon" clause of their warranty. If an item undergoes 3 covered repairs and requires a 4th, they will replace it. I call to remind them of the 4 repairs already done by the manufacturer. Apparently they don't count. The repairs need to be performed by their technicians, which they would have been if they hadn't required me to send it to the manufacturer first. But it currently needs 5 different problems fixed, 3 of which are repeat issues. "No Lemon" clause obviously applies right? Wrong. If I have them fix all the problems in 1 shot, that equals 1 repair. So if I want to get this POS replaced I need to drive to them at least 4 more times, telling them about only 1 problem each time, hoping they only repair 1 problem each time, in a process that should take about 24 more weeks. All this time with no computer, with no access to my ISP whom I pay $54 per month and can't cancel without a big penalty. Despite all this, I still feel guilty for the deception I must perpetrate to get the warranty coverage I paid for. After the first week when they refused to cover the keyboard, I asked to return the warranty. They refused to return it, even though the warranty clearly says that it can be. Later that day I discovered the manufacturer offered their extended warranty for less than half the price. I hope this helps someone with their decision to buy a warranty.

That's an awful experience... I hate best buy and all their stupid antics. They try to get you to buy their stupid extended warranties that are just scams. Best buy is more like WORST BUY. I only go there because people keep giving me freaking gift cards to there... it's annoying.