2/1/2011 12:07 PM ET|
6 things to know about warranties
Before you sign up for extended coverage, find out which products are most likely to break down. And then make sure you understand what you're getting.
The pitch comes every time you buy an appliance, computer or some other piece of electronics: "Would you like to buy the extended warranty for that?"
Is it worth adding another charge to your tab to know that you'll be covered for two years (or more) if your new purchase breaks down? Possibly -- but, more likely, probably not. Here are six things to keep in mind before spending money on a warranty:
1. Retailers love them. In fact, retailers may reap more profit from warranty contracts on appliances and major electronics than they do on the products themselves (that's why salespeople are coached to urge you to buy the extra coverage).
Typically, you'll pay 10% to 20% more for an item to extend a one-year manufacturer's warranty through the fifth year of ownership, according to the Service Contract Industry Council. Most retailers hand off the contract to a third-party administrator in exchange for up to half of what you paid.
2. Odds are you won't need it. Celia Kuperszmid Lehrman of Consumer Reports says that most major appliances do not break down within the extended-warranty period (among the exceptions are refrigerators with icemakers, electric wall ovens and dishwashers). When they do, she adds, the cost of repair roughly equals the cost of the extended warranty.
3. You may already be covered.American Express cards extend the length of the manufacturer's warranty by up to one year, and Visa Signature and most MasterCard credit cards will double it. Costco extends manufacturers' warranties on TVs, projectors and computers to two years from the date of purchase. Plus, the manufacturer may provide a free or discounted fix for a defect that doesn't reach the level of a product recall.
4. Service? What service? Timothy Meenan, the executive director of the Service Contract Industry Council, says that with an extended warranty, you step to the front of the line. But Steve Sheinkopf, the CEO of Yale Appliance and Lighting in Boston, says he sells and services his own extended warranties because most third-party administrators do not respond quickly to customer complaints. William Purdy, a factory-authorized appliance repairman in Telluride, Colo., says he's found that administrators pay low and slow, and demand burdensome paperwork.
5. It's easy to check the provider's track record. If you're considering an extended warranty, ask upfront who will provide service and vet the provider online, using a source such as Angie's List. Read the contract and look for deductibles, limits to the number of covered service calls, exclusions to coverage and triggers for cancellation. (If the appliance can't be fixed after a reasonable number of attempts, will it be replaced?)
Then check the record of the administrator with your state's department of insurance and the Better Business Bureau. For instance, Assurant, which administers extended warranties for manufacturers such as Whirlpool and KitchenAid, gets an A, the top rating. Warrantech, which sells the RepairMaster warranty through retail appliance dealers and online dealer AJ Madison, gets an F, largely due to lengthy delays in providing service.
6. You can cancel. If you bought an extended warranty, most states mandate a 30-day "free look" period (some contracts provide up to 90 days), during which you can cancel and receive a full refund. (To learn more, contact your state's consumer-protection department.) You may still cancel after that, but you'll receive a prorated refund, and the administrator may charge you a fee.
This article was reported by Pat Mertz Esswein for Kiplinger's Personal Finance magazine.
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Extended warranties are for the most part a real waste of money. For one thing, some retailers don't wait until the factory warranty is expired. They overlap and you are thus losing part of the advantage you want when you purchase an EXTENDED warranty. What is the point of havinga factory warranty for say 12 months and then buying a 2 year warranty. Yes, you get an extra year, that you just paid the price for a two year extension. That's not so good.
Here is one way to beat that entire system. I have now purchased two Vizio LCD tv from Costco. The first one was a 42 inch tv. Very nice and I liked a lot. But I did have a problem with it. So I called the consergiere ( I can't spell the word) service. I called them because the tv was out of factory warranty. But, costco provided for free an extended warranty of one year. Great deal. They offered to replace the tv. I decided to upgrade to the 55 inch and only paid the difference. In addition I still get an additional year of coverage from Costco. So from my perspective the small annual fee you pay at costco is worth it. Especially true if you buy your electronics from them because of the extended warranty and a better price anyway. That's the way to go.
Car warranties. Some are better than others. You should ask your mechanic about them. I found out they are the real authorities on them. For example. I bought an extended warranty from CarChex (they use a different name now) for my Mercedes. I had a 1989 560SL and found out how expensive some repairs can be. When I traded it in on the 2002 SL500 I really didn't think that $2800 was very much to pay. I got the better warranty and it covered just about everything. I keep excellent records and I can tell you that the warranty has now paid for itself. Just last money (2 months before expiration of the warranty) I had my climate control unit with LCD screen go bad. That little unit costs $950 plus $100 remove and replace plus another $150 to program it. The warranty has paid for several repairs and I'm gald that I had it. In truth I haven't had many problems with my car. But, when they come up with a car like this they are expensive. So if you were to buy a used Yugo I guess I wouldn't buy the extended warranty. But if the repairs are fairly expensive, you should conisder it. The better warranties really do cover 90% of the mechanical problems.
Most of the time just a rip off in my opinion. I would however buy one on a washer dryer stackable or refrigerator from most makers that have ice and water in the door. Notorious for tearing up. On a car, never.
I forgot to mention, I am in the appliance repair business. I will not do warranty work, the companies don't pay (it cost me to do their work). Most companies that do warranty work place your service order at the bottom of their list and will work it in when they have other calls in your area, Heaven forbid you live in a rural area you may wait weeks and through a couple of no shows.
I hate GE, the technology is nice, they look good and perform well but get a power surge or brown out, you will be out some green. GE is very protective of their service data, so only a GE certified tech can work on them, which means the cost and wait is greater. Example of GE technology: On the washers the main computer board is built into the motor with an electro magnet that take the place of the transmission, clutch and brake assembly (Sweet) which of course is mounted under a tub of water and at the point of the greatest vibration. If a relay or resistor on the computer board fails you are have to replace the whole motor assembly (not just a 50 cent resistor or $3 relay), big bucks. KISS The low end Whirlpool washers and dryer are still the best value on the market today but the government is taking that away from us too. Stay away from refrigerators with computers, forget all the digital read outs all they do is confirm what you already know (your food spoiled).
If you have to have bells and whistles (which most people don't use) better go ahead and throw more money away on the extended warranty you will need them. The more green the machine the more green you can expect to pay for repairs also!
Remember, when buying, KISS the purchase (Keep it simple stupid) you will get better service and greater life expectancy.
Not really; They do, however give you an idea of the life-expectancy of the product by the dealer and (possibly) the manufacturer depending on who is offering the extension.
I try to look at what the value of the item will be at the end of the manufacture's warranty, (i.e. basic two year old dryer about 150.00) and look at consumer reviews (available on line). I have never bought an extended warranty on an appliance, I bought a warranty on a late model used car a few years ago because the lender lowered the interest .5% if I purchased the warranty.
extended warranties are wasted on most things. always check the coverage dates to be sure they don't overlap the general manufacture warranty you already pay for when you purchase. Electronic warranties are great especially if you don't upgrade when the newest item comes out. Phones warranties are good, extended warranties on cars are good if you plan on keeping the car for a long time. Planned obsolescence is the most evil thing for a consumer, it depletes our resources so the Jones have to replace every two to three years!!!!!
The article was probably written by someone who didn't bother getting a warranty and then something broke and now they are out the money they paid for the item. warranties are good things, that extra 90 to 100 dollars for that warranty means saving 1-2 grand in repairs, for example my laptop from ASUS, the repairs thru geek squad quoted me over 1,041 dollars for a new motherboard for my laptop.
Thanks to that warranty that I purchased thru ASUS, I get it done free, and save money and they pay for the shipping to and from. So really its worth the effort of having those warranties.
I always purchase the warranties on new technology (i.e. I purchased a plasma tv when they first came out and bought the extended warranty because the item can not be repaired and the warranty would allow me to get a brand new tv). All of my kitchen appliances, computers, and items purchased for full family usage(we have 5 kids from age 2-12) have the extended warranties. The best deal is when you can renew the warranties when they expire which is what we just did with all of our appliances. The warranty on the kitchen appliances have already paid for themselves as we have had everything but the dishwasher serviced. I made the mistake of purchasing the warranty for my van several years ago which at the time sounded like a great deal because it covered basically everything, unfortunately the service center was a 25-30 min drive from my home and was only open M-F 7-5 which is the hours i was at work or commuting to work. Depending on what needed to be done, I may have needed a tow that was not covered for about $200 when I could have used a more local mechanic for the cost of the tow.
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