Extended Warranty Purchases Up 10% This Year

Hugh Pickens writes "Consumer Reports says that most of the time, extended service contracts aren't worth the additional dollars. But the Washington Post reports that purchases of extended warranties are up 10 percent over last year, according to the Service Contract Industry Council, a trade group. Consumers 'tend to be more risk-averse and are less willing to absorb the cost of an unexpected product repair or replacement,' says Timothy Meenan, the council's executive director. Mark Kotkin, director of survey research for CR, acknowledges that there are instances when the extended warranty can be worth it. 'We recommend getting one for the Apple computer,' Kotkin says. 'The tech support that comes with the extended warranty is great. Without it, the tech support is skimpy.' Another product where extended warranties may be of use are giant television sets, where few manufacturers will come to your home to make warranty repairs. Extended service contracts for big screen TVs often offer in-home repair, says Meenan, who once shipped a Sony TV to the service center for repair under the manufacturer's warranty. 'They fixed it and brought it back 45 days later.'"

Comments

You get what you pay for

[PizzaAnalogyGuy]

It makes sense really.

If you want better service and better quality, you pay a little more. Those who dont, get the main product a little bit cheaper, but not with the extra services it comes with. You pay more to be a premium customer.

This is best illustrated with a good example; Everyone of us go for a pizza sometimes. Many of us go to where the pizza is cheap, even if you know it's not really the best you can get. But it's good enough. However some of us want to go for the extra mile and spend a few dollars more to get really quality service. In those cases you won't be hearing "we're out of ham" or "sorry, we don't serve barbeque sauce with our pizzas". Pay a little bit extra and you get the best service and best ingredients without hearing they don't have them. And the customer support is a lot better - there's no any angry fat italian cook looking and yelling at you and throwing you out of the pizza place if you don't celebrate his pizza's taste. Instead, there's naked ladies serving you the pizzas, lovely and peaceful italian music and live performance. And everyone smiles and as a result you will be happier than ever, and have enjoyed the best pizza in the world, filled with bacon, ham, pineapple and barbeque sauce.

You get what you pay for.

Re:You get what you pay for

[zoomshorts]

90 percent of extended warranty stuff is pure profit for the manufacturer.
All this means is the consumers are getting stupider.

Re:You get what you pay for

[sopssa]

You're probably thinking from the using it or not aspect. It's somewhat accounted in the prices; they don't ask for the full costs of giving such support because they know everyone won't use them. They just calculate how many will and adjust prices based on that.

ISP's work the same way too (and many more areas of industry). There's no way they can provide everyone constant maximum of bandwidth they sell, but it works out ok because not everyone are using the max bandwidth all the time (well, it works with ISP's outside US at least).

Personally I would pay a little extra to get better support and extra services. If you've already paid a high price for the product, you might as well spend a few dollars more on such and avoid shit if you happen to need those services.

Re:You get what you pay for

[sopssa]

To add to this, this is how whole insurance industry works..

Re:You get what you pay for

[JoshWurzel]

I would like to know where you're going for pizza...

Re:You get what you pay for

[Z00L00K]

It also means that the salesmen are getting more and more persistent on trying to push the "extended warranty" down your throat.

And that with no information about that many cases where you expect it to be valid invalidates the warranty anyway. Like when using your mobile phone while sweating...

Re:You get what you pay for

[thetoadwarrior]

Why not just charge the higher price and give everyone a longer warranty?

It's because that warranty isn't necessary, the lower price has enough profit and they can get enough suckers buying an extended warranty anyway.

You'd be better off putting that money towards a decent UPS which will actually do something to protect your electronics.

Re:You get what you pay for

[Anonymous Coward]

I used to think that way and never get the warranty, but these days the sales people give you 'gifts' for taking it. Basically, they give you a 80$ gift for a 100$ warranty. Then it becomes much more likely you'll get the warranty (assuming you need the gift they offer). For me, the latest extended warranty was with my PS3, they offered a 2nd controller with the warranty for just 10$ more than the normal price of the controller. 10$ for some peace of mind? Sure.

Re:You get what you pay for

[Cornwallis]

Which is exactly why we need Extended Warranty Reform. Hopefully, Dear Leader will make this his next target.

Re:You get what you pay for

[obarthelemy]

I worked for a PC manufacturer for a while. The margins on extended warranties are higher than on anything else, even than on catalog upgrades.

Also, warranties are rarely benchmarked. Well, quality isn't even benchmarked, but the experiences I've had with basic warranties (Asus never followed up on a procedure I started for a failed MB, Dell made me kneel below a desk to ... check out a PC that was supposedly covered by on-site service ...), those don't make me want to pay more for more crap.

Re:You get what you pay for

[pmontra]

I got the HD and the screen replaced on my HP notebook during the 3 years warranty period. The replacement of the HD wasn't really needed because the system malfunction turned out being due to a Windows hiccup (and I upgraded to Linux) but they insisted to ship me a new part. Maybe they wanted to get rid of old 5400 rpm disks. The screen started to develop whitish spots close to the end of the 3rd year of warranty and a technician came to my home and replaced the screen with a new one. In both cases I only had to call the customer service and they sent me the parts and the technician. I was more than happy with the service so I bought another 1 year next business day warranty period.

Re:You get what you pay for

[poetmatt]

considering that I don't even see this washington post cite - I'm extremely skeptical that it went up even 10% in some way that would imply that this can be reliably tracked across all products that have extended warranties. I: would find such tracking to be a: impossible and b: grossly inaccurate. Some products have extended warranties included automatically and others have it as an option.

Really, a cite from within an industry says that it's own industry is running strong? Is this supposed to be a surprise?

This is like when MS says that sales are strong, or MPAA/RIAA says that the industry is dying, and fact is directly the opposite. There is no way to verify accurately.

People who buy extended warranties, etc are suckers and the companies are simply banking on that (and have an industry of making bank on said suckers). Of course this depends on the product as to whether it's more or less likely to fail.

Re:You get what you pay for

[MrNaz]

Your non-car analogy is not welcome here.

Re:You get what you pay for

[MrNaz]

I own a mobile phone store in Australia. Extended warranty and insurance are two products that the mobile phone provider is heavily pushing, offering commissions and minimum targets.

I can also say that extended warranty and insurance is essentially free money for the providers. If an electronic item does not break within 12 months on its own, the chances of a warranty-covered issue arising in the 12-24 month or later period is so low that it can be ignored. I don't think I've *ever* serviced a customer with an error that was not user-caused (i.e., outside warranty coverage) after the 12 month mark.

Extended warranty is nothing but an unmitigated rip off.

Re:You get what you pay for

[Anonymous Coward]

It's because that warranty isn't necessary,

Like health insurance. You only need it when things go wrong. This is just TV/appliance insurance.

Re:You get what you pay for

[Mortaegus]

It depends entirely upon the warranty provider and the terms within. Some of them really are worthwhile. Radio Shack had a great warranty about five years back (they've changed it now). And it used to be one of the best anywhere. Now, of all places, Officemax has a well thought out warranty offer. (Which I bought and used last year). Look at how the pricing is done, because that is where you can determine whether it is worth the extra purchase. They usually bracket the prices, in sections like $0-50 and $50-100 and so on. If the product is near the top of that bracket, it's going to give you the best warranty for your money. If it's in the middle, or near the lower end of the bracket, it probably would be best to walk away from it. I know it's hard, but if you read the terms and conditions, you can see precisely which ones are worth the money.

Re:You get what you pay for

[JustOK]

a car analogy is like a pizza, so by the transitive property, we should get a pizza, which, like, might involve driving a car.

Re:You get what you pay for

[Mr. Freeman]

Or products are getting shittier.

My HP laptop is starting to crap out after only 1.5 years of light use. The wireless card went out while it was under warranty. I had to spend a good 3 days on the phone for someone to call me back because the call center supervisors don't work on weekends. Then I had to threaten to sue them for a violation of their own policy when they tried to tell me that reformatting the system voided the warranty (a copy of the warranty hosted on HP's website proved otherwise). Now that it's out of warranty, the hard drive, the battery, and the left hinge are all broken/breaking.

As companies realize that they can spend less and less on parts and make crappier and crappier products, they're going to get more and more smart consumers that buy the extended warranty and then make the company pay to fix every little problem caused by their own greed.

Re:You get what you pay for

[Registered Coward v2]

I used to think that way and never get the warranty, but these days the sales people give you 'gifts' for taking it. Basically, they give you a 80$ gift for a 100$ warranty. Then it becomes much more likely you'll get the warranty (assuming you need the gift they offer). For me, the latest extended warranty was with my PS3, they offered a 2nd controller with the warranty for just 10$ more than the normal price of the controller. 10$ for some peace of mind? Sure.

Two points:

In such cases, read the fine print. While the salesperson may say "you get a new one" the warranty often only paysup to your cost of the device if repairs are more than the purchase price. So if your receipt shows a lower purchase price (due to a full price warranty and discount on the device) you will only get the lower price back; usually as a gift card.

OTOH, some warranties can be returned within a set period for a full refund. Get the discount, return the warranty later.

Re:You get what you pay for

[rhsanborn]

I've found that if I don't buy the extended warranties on my electronics that I've more than made up for the cost of replacing any of them inside their normal service life due to unforeseen failures.

Re:You get what you pay for

[Anonymous Coward]

Here are some real figures from the UK (which is why I'm posting anonymously). This is for motor Gap Insurance (not exactly a warranty, but the idea is if your new car is written off, it pays the difference between the vehicle cost and the insurance companies "comprehensive" payout, which is a lot less because they call it a used car even if its only done 5 miles). A guy purchased a top-end BMW with lots of extras at about £50K and paid £1200 for the Gap cover (can't remember the period, but its irrelevant). The £1200 went to the dealer; the dealer "buys" is from, in effect, a wholesaler, who charges the dealer about £500. In turn the wholesaler pays the underwriter about £50. So, the mark up from underwriter (the insurer) to the car owner is £1150 on something that started at £50.

Then again, anyone who spends £50K on a car deserves to be ripped off for every penny. View it as a form of socialist wealth redistribution:)

Re:You get what you pay for

[Anonymous Coward]

Not really.

When your $1000 thing goes wrong, your $200 warranty fixes it, hopefully up to three, or even five years.

However most electronics fail within 1 month if they're going to fail, and then are fine until some design feature suddenly starts killing all of them off - this is the bathtub model of failure (high at beginning, then very low, then high again).

When you pay your health insurance, you're hedging against that $30k/year cancer/crippling arthritis/etc treatment and all the associated costs of being ill. It's an annual fee, it goes up as you get older. You're not thinking "oh well, if it fails in year four, I'll just get another" because ... "it" == you! Most people will never get what they paid back in health insurance, but for some people, it is the difference between living and death - and people don't want to take that risk.

If my TV broke after two years, I'll just put it down as "oh well", and look at the victories - the stereo components, the PS3, the oven, the phone, etc.

Re:You get what you pay for

[BlackCobra43]

Your analogies brighten my day like an unexpected second pizza.

Re:You get what you pay for

[ciaohound]

Who said anything about pizza?!

Re:You get what you pay for

[Vu1turEMaN]

Dell specifically tells you with their basic on-site warranty that they'll come and fix it after you've talked on the phone with someone and troubleshooted it. If you didn't wanna get on your hands and knees with them, then it would've cost an extra $50 for real on-site service.

I just got an Optiplex 360 with the 3-year basic on-site warranty, and I already utilized it for a bad stick of ram. They had me reseat the ram and troubleshoot a few other things, but the process (from dialing, waiting on hold, and finishing the call) took 25 minutes. I called early enough that we had someone come the same day too.

Re:You get what you pay for

[brusk]

I had a Digital (yes, DEC, back in the day!) laptop that had the following parts replaced under the three-year warranty: keyboard, screen, hard drive, motherboard, CD drive, power adapter (everything except the chassis was new, and some of that was done overseas). You have to ask yourself at a certain point, is this a really good warranty or a really crappy piece of hardware?

Re:You get what you pay for

[gid]

I only get warranties for things that I know I'll ruin anymore, such as office chairs. (protip, tape the warranty to the underside of the chair) For anything under a grand or so, it's just not worth it. If it fails after the warranty period, chances are a similar piece of technology is much cheaper now. And think of all the money I saved by not getting the warranty after over my lifetime so far. So if I have to drop a couple hundred on a new gadget because the old one broke, it's not that big of a deal.

Not to mention what other people have mentioned, what are the chances I'll actually find the warranty and receipt when it's actually time to collect on the warranty. I'd like to get organized, but with a 1 year old--let's get realistic, I'm not.

Re:You get what you pay for

[sharkman67]

In my business I always purchase the HP extended warranties on the laptops. Never on desktops as I consider them disposable. HP's service has always been very good. Next day onsite replacement of any faulty parts with no questions asked.

Re:You get what you pay for

[hairyfeet]

I think it would have to depend on the device. for example, if I were buying a $5000 TV set, yeah get the extended warranty, for the $150 LCD monitor? Not a chance in hell. Plus some devices are more failure prone, like LCDs with the dead pixel problem. In a $5000 TV I'd be mad as hell if I got a few dead pixels in a bad spot. In a $150 monitor? Meh, it would just be relegated to secondary duty while I shopped for a little better one.

So for me it is a classic case of cost VS benefit, but doing my Xmas shopping this year I can vouch for folks getting extended warranties on sub $300 stuff where I'm thinking WTF? I guess with the economy in the shitter some folks don't like dealing with ANY risk at all.

Re:You get what you pay for

[Anonymous Coward]

> Who said anything about pizza?!

PizzaAnalogyGuy. If he was in a tin, it'd say 'makes pizza analogies' on it.

Re:You get what you pay for

[Jeepster77]

I REALLY want to know where you get your pizza!!!!

Re:You get what you pay for

[pmontra]

That one was crappy. Definitely :-)

Re:You get what you pay for

[TheMeuge]

Exactly.

There are people who can't afford to purchase extended warranties for their devices. Therefore, they deserve to have the extended warranties given to them. To do that we will tax the better extended warranties 40%, and will also penalize people who choose not to purchase them.

Re:You get what you pay for

[guruevi]

The thing is, most extended warranties are not worth the cost.

I recently got a microwave from Wal-Mart. The cashier asked me if I wanted a one-year warranty on the frackin' thing - I declined. I came home and opened the box, first page: This device has a 1 year warranty, if you have problems call this number.

The same happened to me at Staples and a few other places. Some even gave me a choice between 1, 2 and 3 year warranties when the box said in big letters: "5 year warranty". I swore never to set foot in Best Buy again after they claimed the gold USB cables were faster than the 'normal' ones (I almost punched the guy) but I would like to find out what they're offering.

Re:You get what you pay for

[Hijacked Public]

All of my major appliances came with my house. The previous owner kept receipts so I know they all between 15 and 20 years old. Except for the dryer, which needed a $60 gearbox a couple years ago, they all work fine every day.

My CRT TV went out a couple weeks ago. I bought it when I was in the USMC so it is ~10 years old. The guy who sold me its replacement insisted I needed his extended warranty. Lots of these TVs break, he said. All made in China. He'd give me the warranty at half price.

To me, that is an insane pitch. I just agreed to give you $1000 for a TV that you now tell me will probably break somewhere between the 1 year warranty that comes with it and the 3 year you are offering. I'm coming off a TV that lasted 10 years. I heard this same pitch while helping a friend buy a laptop at Fry's. Heard someone getting it from a washing machine salesman at Lowe's.

What these people are really selling is fear. And right now people are prone to being afraid, so the pitch works well. Get the idea out there that modern electronics are junk, not just one brand but all of them so there's really nothing you can do about it, then it is easier to sell people warranties they'll probably never need to use.

Re:You get what you pay for

[AvitarX]

From the summary the article mentions this.

45 days ship and wait vs within a week in your house. The warranty is generally better than the factory one.

Re:You get what you pay for

[kalirion]

You could say the same about health insurance. If it wasn't profitable for the insurer, it wouldn't be offered.

Re:You get what you pay for

[Chrisq]

By the same argument 99% of people who buy a term life insurance policy won't claim. Its not the chance of needing to claim that counts but the value comparing the premium to the payout.

Re:You get what you pay for

[FatdogHaiku]

Pizza analogies make me hungry, can you please use an automotive metaphor? And anytime you have ham and pineapple, toss in some sliced pickled jalapeno peppers (nacho style peppers) to really get things rockin'

Re:You get what you pay for

[Anonymous Coward]

In a $5000 TV I'd be mad as hell if I got a few dead pixels in a bad spot.

You should take a look at your extended warranty because it might make you mad as hell. Most only fix a television for dead pixels after there are a certain number, a certain percentage of the screen or a certain amount within a defined area (all in one spot).

Re:You get what you pay for

[The Snowman]

From the summary the article mentions this.

45 days ship and wait vs within a week in your house. The warranty is generally better than the factory one.

True, true. I bought a Best Buy warranty for my flat panel. Not because I was pressured like some people are, but for two main reasons.

1. The dead pixel replacement was a better deal than the manufacturer's.
2. I could have a new TV in less than one week to replace my old one, instead of shipping it out probably across the Pacific somewhere for a month or more for "repairs" only to find out you pretty much cannot repair the actual LCD screen and I would need a new one anyway.

Odds are I will never use the warranty, but for an extra $150 or so it was a good hedge.

Re:You get what you pay for

[Chris Burke]

I think it would have to depend on the device. for example, if I were buying a $5000 TV set, yeah get the extended warranty, for the $150 LCD monitor? Not a chance in hell.

For me it's not so much about price as it is about the type of device. TVs/monitors are the kind of device I wouldn't get an extended warranty for because the general trend in these devices is that they're getting better and cheaper at a rapid rate. Now I don't spend $5k on a TV, but I did just buy a 46" LED-backlit LCD for the same price as the 20" LCD monitor I bought five years ago. It's quite probable that by the time my TV gives up the ghost during what would have been the extended warranty period, I'll actually be looking forward to the chance to buy a better device for less (I do want my washing machine to last 6 or 10 years, and it'd be nice if any problems that came up were covered.

Re:You get what you pay for

[tlhIngan]

45 days ship and wait vs within a week in your house. The warranty is generally better than the factory one.

Better yet, the cheaper brands (think house brands like Insignia, Dynex, Apex and the like) warranty terms can be quite horrible. Sure it's a 1 year parts/90 days labor, but after 90 days, it can be $200 just to see what's wrong. Further, you have to ship the product to the factory (if you're lucky, it's in the country, if not, well, have fun shipping it back to China!). Oh yeah, it'll cost you $100 to ship that TV back, so it's already $300 spent before you even can get it fixed. At least some extended warranties allow you to take it back to the store, and they'll ship it back for you. Or hell, sometimes they'll come to you and fix it there.

It's all a benefits vs cost thing. Sometimes it's worth it (or essential - think financing - you want the warranty to cover at least the finance period).

HD Guru has a writeup on bargain-brand HDTV warranties.

And yes, warranty support is one of the most expensive parts of anything manufactured today. So building it into everyone's product just means someone else will come about and offer a shorter warranty but lower cost.

Re:You get what you pay for

[lotho brandybuck]

I fixed a friend's Westinghouse brand flat panel a few months ago. It quit about 1 month past the warranty period. Problem was a power supply output capacitor had blown.

Overrating capacitors in switchmode supplies is a pretty good way to get short life out of a product... I lost all respect for Westinghouse that day, not that it matters that much.

Reason I bring this up, is that with switchmode power supplies, and cheap manufacturers, there's a lot of potential for failures after around 1-2 years... 1-2 years in a marginally designed product may actually be at the end of the bathtub. Not what you might expect from electronics, after the last 20 years.. where if something ran for 1 year, it'd run forever.

I sadly expect that the new washers and dryers and fridges and TVs, will not last like your old washers and dryers and fridges and TVs.

That doesn't mean the extended warranty isn't a ripoff.. they can weasel out, they make the interest on the money, and your time in doing whatever to get it back to them or the store and explain the problem is valuable. I never buy extended warranties myself.

Re:You get what you pay for

[kiwimate]

Same here with an HP desktop. 11 months after purchase, it started to fail. I had a heck of a time with HP on the line, insisting it was out of warranty. They finally did determine it was still under warranty and fixed everything for no charge.

Now it's just died again. It's 16 months old, very light use, and completely useless. HP support has told me:

• They'll sell me a 1 year extended warranty for $79.99;
• Whoops, they mean that an extended warranty is only valid while it's still in the original warranty period, and it's not so they won't sell me a warranty for $79.99, even after I requested they pull the phone call recording to listen to the offer being made on the phone;
• Sorry, my system is refurbished and doesn't qualify;
• Okay, seeing as how you've realized that means I bought an allegedly new system which was really refurbished they changed their claim and said it isn't refurbished, but they still won't support it;
• That instead I have to pay $49 to get it diagnosed over the phone (after the guy already told me it was a total failure and I'd have to send it in);
• And after that $49 I have to pay all shipping, as well as $302 to get it repaired (even if it's a bad battery).

Forget that; it breaks twice (conveniently the second time about four weeks after the last repair warranty expired) with 16 months of light use? I'm buying a new PC, seriously considering the extended warranties, and it won't be an HP.

Yeah, I'm bitter after spending way too much time on the phone with them.

Re:You get what you pay for

[Maxo-Texas]

It depends on what you buy them for.
I've made a profit on my car warranties ( a huge profit actually ).
I've made a profit on my home warranties ( I use american home shield- every year they cut some benefit- at some point, I'll stop using them- but for now, I've saved more ($350-$1100 a year) than I spent ($480 a year). And it gives me great peace of mind.
My one TV warranty saved my ass on a big screen TV.

I don't buy warranties for electronic objects that cost under $500.
I typically won't pay over 8% for a warranty either.

Re:You get what you pay for

[Maxo-Texas]

When people start dying for lack of a TV, I'll back your argument.

I think that it's not right for one person to have a gold plated plan and millions (billions?) of dollars sitting in the bank while others are dying for lack of health care and food. So I'll vote accordingly.

Re:You get what you pay for

[maxume]

Someone called me about buying an extended warranty for my refrigerator. She told me that she personally thought they were a great deal. I told her she should look into it, they wouldn't be cold calling if the fridge was really all that likely to break down in the period they were selling the warranty for.

Re:You get what you pay for

[cptdondo]

I bought a $320 printer recently. The seller offered an extended warranty for $80. This warranty covered years 2 and 3; it kicks in only after the manufacturer's warranty expires.

So do the math. 320/80 = 4; the warranty costs me 25% of the replacement cost of the product. Or, I'm betting at 1:4 odds that the machine will become useless sometime between 2 and 3 years old.

Now this is a name-brand product, aimed at office workgroups with a duty cycle of a thousand or or so pages per month. My use will be perhaps a thousand pages a year. The printer sits in a hope office, in an area with few electrical storms, in a controlled environment.

I'm not willing to take a 1:4 bet. At a guess, 75% of the price of the warranty goes to the retailer, with perhaps 25% going to the warranty itself.

I'd take the bet at, say, $20.

I bought an R/C boat for my son at Toys-R-Us; it cost $50 and they offered a full replacement, no questions asked warranty for one year for $3. I bought it. 50/3 = 17; chances are pretty good that my son will trash the boat in one year. (Actually, he didn't; I did. But we got it replaced.)

So it's a question of which side of the bet you are willing to take.

Re:You get what you pay for

[TheMeuge]

... and what have you done about the millions dying in Africa?

I think I will go ahead and let them help themselves to everything you own, sans what you absolutely need to survive.

Deal?

Re:You get what you pay for

[SpeZek]

So don't buy a branded box.

Build your own PC. If a part is bad, you just RMA it. No bullshit, no having to send the whole thing in.
I know that companies like Asus have 3 year warranties on motherboards and video cards, AMD has a 3 year warranty on their processors, and companies like OCZ have Lifetime Warranties on RAM, SSD's, and PSU's.

Quit getting ripped off by the computer-in-a-box companies.

Re:You get what you pay for

[geekoid]

Ironically, I ahve found there is no correlation between price and pizza quality.

Re:You get what you pay for

[maxume]

Plenty of insurance companies are essentially coops.

Re:You get what you pay for

[david_thornley]

That's how insurance works. My insurance company is a for-profit corporation, and charges me significantly more per month than it expects to pay out. Were I to live long enough for all the risks to balance out, I'd be better off without the insurance and just paying out of pocket for all sorts of things from the money not spent on premiums.

However, not all the risks balance out. There's eventualities I just can't afford to deal with without considerable hardship that are very unlikely to happen. For those, I pay money to make sure I can afford to deal with them if they happen. I've got fairly high deductibles because I can afford to pay that much, and it saves me money on my policies.

Similarly, you might want an extended warranty on a big-ticket item, since you may not be able to replace it otherwise, but if you can afford to repair or replace something the extended warranty is not worth it.

Re:You get what you pay for

[rhsanborn]

Exactly. I can't afford 400k for open heart surgery if I need it. On the other hand, the 200 dollar LCD monitor or 300 camera I bought, I can afford to eat that cost, and the cost of the loss is not nearly so catastrophic.

Re:You get what you pay for

[Qzukk]

I think that it's not right for one person to have a gold plated plan

"ZOMG COMMUNISM" debate aside, my problem with this specific point is that plans are expensive based on your medical history, not because it's "gold plated" or some BS like that. Someone with a so-called "cadillac" health plan is paying big bucks due to the fact that they have cancer or diabetes or MS or maybe they're just 55 years old and the insurance company is hoping to get rid of them before they have a heart attack or a stroke.

Re:You get what you pay for

[Anonymous Coward]

I think I will go ahead and let them help themselves to everything you own, sans what you absolutely need to survive.

Congratulations, you've just reinvented outsourcing. Enjoy your bowl of rice, it's all you'll get for today after the wealth of American labor is redistributed across the billions of people on the planet and the value of labor equalizes.

But hey, look on the bright side, those billions of people in China will get another whole penny per day in their paycheck!

Re:You get what you pay for

[Maxo-Texas]

All the executives at my company get a plan that is double mine in cost.

I have no problem with that. It's their right- it's a capitalist system and I'm fine with capitalism.

However, I share jefferson's view of many mildly wealthy people over the current view of 1% of the population having most of the wealth and a majority of the income. I think that much concentration is *bad* for our country's political and judicial processes and I'm fine with raising taxes to 50 to 70% on income over a dozen million a year. I'll vote suitably.

I can see your point about the other issue and it should be considered. It's not what most people are talking about when they refer to gold plated plans however. Our executives have options not open to us on our standard plans. For example, 2 grand annual physicals that check *everything* as opposed to our $300 physicals that test a lot of things.

Re:You get what you pay for

[TheMeuge]

All the executives at my company get a plan that is double mine in cost.

I have no problem with that.

For example, 2 grand annual physicals that check *everything* as opposed to our $300 physicals that test a lot of things.

But you just said they pay more for these plans? They may also drive cars that cost $200'000 as opposed to $30'000. Should we punish them for that too?

However, I share jefferson's view of many mildly wealthy people over the current view of 1% of the population having most of the wealth and a majority of the income.

What's "mildly wealthy"? The number corresponding to that definition has been dropping like a rock, to the point where a family making $200k per year is now "rich". Seriously? It's just greed and envy, and not only have we stigmatized wealth, we've now defined is as "anyone who has more than me". As someone who is intimately familiar with that psychology I can tell you that we're a few inches away from a Bolshevik party.

I think that much concentration is *bad* for our country's political and judicial processes and I'm fine with raising taxes to 50 to 70% on income over a dozen million a year.

As recent legislative efforts have shown, that's not what's happening, and rather taxes are being raised across the board on families earning $150k or more. Considering that the truly wealthy have a ...wealth... of resources that allow them to minimize their tax burden, it is easy to see that this is only going to hurt the middle and upper middle class.

Specifically, our current Democratic administration will continue the efforts of the previous Republican administration in eliminating not just the upper middle class, but the very concept of being able to earn wealth through work... not only through taxation, but also through eliminating the concept of high-paying salaried positions (such as doctors).

Re:You get what you pay for

[Anonymous Coward]

Umm, he's saying he'd prefer many "mildly wealthy" people over the current system where the top 1% of the population (AGI: over $2 million) make an increasing amount of our total income primarily through lazy capitalization of their legacy incomes.

Read before bitching.

Re:You get what you pay for

[bemymonkey]

Exactly. If the device is, for instance, a laptop that you actually use to work, $200 buys you three years of assurance that if that thing breaks, the manufacturer will send a technician to take a look at it within a day or two of your call.

If you just leave it at the regular warranty, you're stuck packing the device up in a box and hoping UPS/DHL/* don't make the problem even worse playing Dodgeball (dodgebox?) with the package... I sure as hell know I'm going for extended on-site warranty for my next laptop.

Re:You get what you pay for

[Maxo-Texas]

I think having millions more people making 10-12 million a year would be much healthier for the country than a few dozen making billions of dollars and hundreds of millions of dollars per year.

Clear enough?

I think having 1% of the population owning everything and getting a majority of the income is destabilizing and sets us up for a violent, bloody revolution.

---
However...
http://mediamatters.org/research/200801060004

In fact, contrary to Gibson's suggestion that $200,000 is a typical, middle class household income in the United States, the U.S. Census Bureau's data for 2006 -- the most recent year available -- place the median household income at $48,451, and the mean household income at $65,527. According to the Census data, only 3.4 percent of U.S. households have an income of $200,000 or more.

3.4% is getting into outlier territory. So compared to most americans, they are wealthy. Not fabulously wealthy or millionaires but it's hard to say they are middle class.

Edwards said..
EDWARDS: Thank you. What you see happening in America today -- if you're president of the United States, and you're looking at this from altitude -- is you see very few Americans getting wealthier and wealthier. You see the biggest corporations in America, profits through the roof. Exxon-Mobil just made $40 billion -- record profits. All of that happening at the same time that we have 47 million people with no health care; 37 million who will wake up in this country tomorrow worried about feeding and clothing their children.

---

Arguing about the tiny percentage there at $200,000 is the conservative version of "protect the children and save the old people" game by the liberal side. The fact is the folks making $200,000 are a tiny slice and just past them, there is a population of people who are taking all the wealth of this country. Whose income has gone up 20 to 30 times since the 90's while the other 99% of the country (including the $200k slice) suffers a slow death of a thousand cuts. While bread, gas, housing have gone up 200% to 400%, the other 99%'s wages have only gone up 50%.

The wealthy have successfully propagandized a large block of the poor to voting against their own interests and voting for the interests of people shipping their jobs overseas. I'm not sure how much longer this will go on before folks wake up. I get the impression they are starting to wake up in Michigan at least.

Re:You get what you pay for

[ucblockhead]

It all comes down to math. For the extended warranty to be profitable, we know that:

WarrantyCost > RepairCost * ChanceOfFailure

over the set of all items on which the warranties are sold.

This is simple insurance. We do this for things like medical bills because the repair cost is so vast that it will wipe us out even if in the long run, it costs more. But for electronic devices, the repair cost is generally bearable.

Statistically speaking, you will have more money at the end of the day if you just spend the money to repair items when they break rather than taking bets against the house that the item will break. The only conceivable case where this might not be true is if you literally cannot afford to repair an item. This seems unlikely assuming you are spending responsibly on the item in the first place.

Even worse, by taking the warranty, you are essentially forcing yourself to repair any failures. Suppose you decide that you don't really need that second TV three years down the road...you still paid to get it fixed.

Extended warranties are like lottery tickets. They are for the mathematically ignorant.

Re:You get what you pay for

[ucblockhead]

The big difference is that the insurance industry (for all its faults) insures against things that people have little hope in paying for, but that are rare.

For instance, if the chance of my house burning down is %0.00001 and it'd cost $500,000 to replace it, that's a good deal as I'd have little hope of coming up with $500,000. This is true even though it costs more statistically speaking. In the "long run" if I owned 10,000 houses and could afford $500,000 easily, the insurance would be a bad deal.

On the other hand, if the chance of the TV breaking is 5% and it costs $200 to repair, I can bear the burden of the unexpected cost, and I am much better off going for the "long run" and relying on the statistics.

Re:You get what you pay for

[ucblockhead]

Either you are unlucky, or you are buying from people who are selling the extended warranties at a loss.

Mathematically speaking, it's one or the other, and given the effort that goes into selling I wouldn't bet on the latter.

Re:You get what you pay for

[thetoadwarrior]

Exactly, medical insurance is a must because the cost is too high and, imo, it's not worth gambling your life over some cash. With most electronics that's not the case and you can set aside money in a replacement fund in a savings account, have the money you would have spent on the warranty plus interest.

Re:You get what you pay for

[sjames]

No need for that, just declare a minimum warranty period for consumer electronics. It should allow exceptions ONLY for mis-handling.

There's no good reason a TV shouldn't work for 5 years. It has no moving parts. If it can't make it that far with reasonable care (defined as not left outside, kids didn't spill a drink inside it, etc) then it's utter crap or has a hidden defect in manufacturing.

Things with moving parts like a computer, DVR, or DVD player should make it at least 2 years surely.

For those who will inevitably object that they have a right to by crap if they want to, fine. The new mandated warranty may be disclaimed so long as each face of the packaging contains bold notice covering at least 25% of the area reading "CRAPPY PRODUCT, NO WARRANTY" (or some such). The warranty will be in full force if the warning is in any way obscured on the sales floor or if the customer has not signed a form indicating that they have been verbally warned that they are buying crap with no mandatory warranty.

Given the way warranty repairs are handled though, it'll have to require replacement (not repair) and when replaced, the clock starts again at zero. That is necessary to avoid cases where the product fails a week before the warranty ends so they give you a crappy referb that will last 2 weeks at best.

Re:You get what you pay for

[sjames]

From a purely practical standpoint, when the wealth of a society concentrates too much, the whole society starts to come apart. When it gets bad enough, there is generally a bloody revolution or the society becomes feeble enough to fall to invaders (often because the have nots can't see any reason their life would be worse under the occupation, so they don't fight it).

ohyeah

[Anonymous Coward]

woohoo. smart idea

Not worth the money?

[Max Romantschuk]

If I buy a device and it doesn't break, is the extended warranty useless?

I don't think so. The whole point is that _if_ I have a bad device I can get it repaired. Peace of mind has value too.

It's not like my home insurance is useless just because no one has burglarized us and we haven't had any fires...

Re:Not worth the money?

[MrMr]

I never accept those extended offers; If you have a bad device and it breaks within the reasonable period that you may expect it to work you don't need the extended warranty.
If you expect to beat the insurance company at a game they set up themselves you might be better off gambling with the insurance premium in a casino.

Re:Not worth the money?

[Nerdfest]

I've had good luck and have used pretty much every one I've ever bought, but I discovered something interesting. If the product is replaced under warranty, it effectively 'fulfills' the warranty obligation, and you may need to buy a new one for the new product. This may vary by store and country, but it's something to watch out for.

Re:Not worth the money?

[Rhaban]

It's a statistics and probability problem.

If a device breaks, what would be the cost to have it repaired without the warranty? and what are the probabilities for the device to break between the end of base warranty and the end of extended warranty?

Re:Not worth the money?

[l2718]

Like all other kinds of insurance, the only question is whether you have the capital to pay for the risk. Insurance is a simple transaction, in which you pay someone else to provide the capital necessary to cover you in case of some bad event taking place. It's worth it to you since you don't need to have this available capital.

The expected direct monetary cost of insurance (premium minus expected payout) has to be negative, or the insurance company won't be making money. In other words, you must pay them more than the product of the probability of the outcome times the damage. Insurance nevertheless has positive value since this comparison (permium vs payout) only makes sense to someone who has the resources to make the payout.

Thus it's a good idea to insure your house -- if it burned down you probably don't have the money to buy yourself a new one, so instead you pay the insurance company to have money to buy you a new house. However, buying warranty for most electronics is a waste -- why not act as your own insurer, cutting the middleman and saving on the premium? People who buying electronics so expensive they cannot cannot afford to pay to fix or replace should consider insurance -- but precisely because insurance only makes sense for big-ticket items, the effect of an economic downturn and concern about future finances should be to reduce purchases, not to make the purchases and then add insurance.

Re:Not worth the money?

[Sockatume]

In some parts of the world, consumer protection laws would ensure you get a bad device repaired regardless, on either the store or the manufacturer's dime. This includes several parts of the US that have enacted "lemon laws". Lemme put it another way, why would you buy a product that's so unreliable that the shop's desperate to get you to buy a warranty on it? Find someone reliable and buy their product instead. If you're willing to put up with shoddy products as a matter of course, then they're just going to keep putting out self-destructing garbage.

Re:Not worth the money?

[Anonymous Coward]

It's also a quantity problem. on ten computers, the saving are worth a eleventh.
The apple care for a macbook is 250$, that mean one computer worth in four apple care. If you plan to buy more than that computer in your life, then it's always cheaper to skip insurances costs.
An house however is almost an one off purchase - as even when you change one you resell the previous one. That's where an insurance makes sense.

--
It's a post on the internet. Do not take this as unquestionable advice. I may not held liable f you being an idiot, so send your lawyers somewhere else.

Re:Not worth the money?

[beuges]

Except that the standard warranty generally doesn't last as long as you would reasonably expect the product to work. Notebook computers usually come with a standard 1 year warranty, but I would reasonably expect a notebook to continue working for at least 3 years. My personal notebook is well over 2 years old and still works fine, however, thanks to the extended warranty that I purchased, I got a new screen yesterday because of a column of blue pixels that suddenly showed up last week.

Unless you make a habit of replacing all of your devices every year, the extended warranty is often useful, depending on the device. I use my notebook every day, all day, and the extended warranty was worth the peace of mind knowing that I would only need to replace it after a minimum of 3 years - it's insured against theft and accidental damage, and the extended warranty covers device faults and failures. Without it, I'd probably have had to buy a new notebook in the next few weeks/months, depending on how annoying the screen fault became.

Re:Not worth the money?

[Max Romantschuk]

I my case I have a family of six. So say we buy a washer for 1000€. If I can pay a little more and have warranty for four years instead of two it just makes sense. Even a high quality product can break early from the strain of being used far more than the average. (With four kids in daycare we wash at least one machinefull a day.)

Finland has excellent consumer protection laws, a faulty product I can always get replaced. But failure due to wear and tear is not something covered under those laws.

So sometimes it just makes sense to pay for an extended warranty. Especially when I know I don't have to worry about having to buy a new one for two years longer.

Like I said, peace of mind has a value too... :)

Re:Not worth the money?

[Sockatume]

Indeed, there are exceptions where it's worthwhile, like home appliances. Given that this is a tech site, those didn't occur to me. ;)

Re:Not worth the money?

[xaxa]

That depends on what country you buy the laptop in. I've never bought an extended warranty here in the UK, since the law requires stuff to last "a reasonable time". (That time is left for a court to decide, but for a laptop it would probably be 3-4 years.)

This is one of the main reasons why electronics are more expensive here.

Re:Not worth the money?

[Hurricane78]

Except that if your house actually burns down, they first employ a dozen professional detectives to make up something... anything... to blame you, similar to the “pre-existing condition“ “excuse”, and pay you... nothing at all.

And then you can’t even end the contract, because of a minimum duration of half a century or something.

I never had a insurance (except where forced by law), and I’ll never get one. (Yes, I got as far as to say, that if that causes me to die, that was OK.)

Re:Not worth the money?

[pmontra]

Time also plays a role in the deal: I can have a technician repairing my pc in a day or go out and buy a new one and spend hours reinstalling everything. The cost of my time could be on par with the cost of the hardware.

Re:Not worth the money?

[Anonymous Coward]

In some countries the law includes wear and tear though, or at least what would be expected over a reasonable length of time. I have even had a case where the reasonable length of time worked out to be longer than the extended warranty. (wasn't aware of this at the time of purchase though)

Re:Not worth the money?

[lena_10326]

Have you actually been able to save and locate receipts and warranty papers for some random device you bought 2 years ago? I can't find a receipt after 2 months. After 1 year the thermal receipts really begin to deteriorate. Sometimes they're unreadable after 2 years. Without the receipts, forget it, you don't have insurance even if you paid for it.

Re:Not worth the money?

[demonlapin]

I've always wondered why electronics were so expensive in the UK/Europe. That makes total sense.

Re:Not worth the money?

[cowbutt]

Have you actually been able to save and locate receipts and warranty papers for some random device you bought 2 years ago? I can't find a receipt after 2 months. After 1 year the thermal receipts really begin to deteriorate

Simple solution: buy a cheap home file and use it, and photocopy or scan thermal receipts whilst they're still readable.

Re:Not worth the money?

[MrMr]

As mentioned by others: A reasonable time is set by law and depends on the price of the product; 3 years for a laptop is normal but for a (new) house the warranty period for construction errors may extend to 20 years.

Re:Not worth the money?

[addsalt]

It's a statistics and probability problem. If a device breaks, what would be the cost to have it repaired without the warranty? and what are the probabilities for the device to break between the end of base warranty and the end of extended warranty?

You don't even need to actually work out the math - it's been done for you (by the people offering the extended warranties).

Re:Not worth the money?

[Anonymous Coward]

Whether or not it is useful is not the entire question. The extended warranty is a gimmick used by retailers to increase profits without giving the consumer something of equal value in return. If an independent insurance agency were to offer extended warranties on consumer appliances based on accurate statistics, they would not cost nearly as much.

There is no way to avoid the reality. With extended warranties the customer is getting scalped.

Re:Not worth the money?

[Aceticon]

precisely because insurance only makes sense for big-ticket items, the effect of an economic downturn and concern about future finances should be to reduce purchases, not to make the purchases and then add insurance.

We are where we are (in a downturn following a bubble) exactly because the vast majority of people does not act in a rational way.

It's thus hardly surprising that most people react the way they do. Instead of curtailing their purchases, they follow the same old habits of unthinking consumerism (the same ones from one or two years ago that meant that people spent more than they earned and which inflated the bubble that just burst) were they "really have to have that brand new plasma TV", so they:
- Buy the TV instead of postponing the purchase.
- Buy themselves some piece of mind by paying for insurance in the form of an extended warranty.

PS: Interestingly enough, governments keep pushing the "spend, spend, spend" message as the way to pull us out of the recession. The "interesting" part is that, taken to it's natural conclusion the "spend, spend, spend" will inflate a bubble just like the last one followed by a recession just like the current one ...

Re:Not worth the money?

[Max Romantschuk]

Yes, I have this thing called a filing system... ;)

It's either in the in-pile, in the warranty-receipts -folder, or in the receipts 200X folder.

Re:Not worth the money?

[cbope]

Here in Finland, the law requires the manufacturer to provide a 2-year warranty for many common types of consumer electronics/appliances.

Re:Not worth the money?

[Max Romantschuk]

There is no way to avoid the reality. With extended warranties the customer is getting scalped.

Not if I value my peace of mind highly enough to pay the extended warranty just because of that. I never made the argument it makes financial sense. But for me it might still make emotional sense. ;)

Re:Not worth the money?

[Xest]

It's interesting to see the different perspective here on Slashdot to that I'm used to in the UK.

Here in the UK, if a product breaks in an unreasonable timeframe, you don't have to worry about having a warranty to cover you, if the product was not fit to last it's reasonable lifetime (say, 5 years for something like a DVD player) then you have a right to replacement or repair. The caveat is that after the first 6 months it's upto you to prove you didn't break it, but for electrical goods this is a fairly trivial case of getting an electrician from a repair shop to just write you a quick note stating that's the case. Most retailers wont bother you with this though if it occurs within say, the first 3 years or so and I've never heard a case of them challenging a replacement/repair request within the first year or so for electronic gadgets and such. In the first 6 months they can only challenge the replacement if you're clearly at fault for the damage (i.e. if the gadget has coke all over it for example), otherwise it's upto you to choose whether you want a replacement/repair, or simply a refund for that period.

So in the UK, I wouldn't buy an extended warranty for peace of mind, because I have peace of mind that if I look after my product properly then I'm not going to be shelling out for a repair anyway.

To me this system makes sense, to put the onus on the manufacturer to produce quality products, else you're just encouraging companies to sell shit products so that they can sell you the extended warranty to go with it. They might as well produce quality products for the UK market because they'll only end up shouldering the costs anyway. You're also leaving the door open for dodgy extended warranties that companies try and get out of fulfilling despite you having paid for them due to hidden clauses and such, but when it's law they have little choice but to adhere.

The only reason I'd pay for one in the UK is if I suspected there might be a risk of accidental damage on my behalf, the only thing I can think of in that respect might be my phone if I accidently dropped it, but even that I don't pay for insurance on and take the risk, one day it may come back to bite me, but the amount I'll have saved in not paying it will more than cover the cost of buying a new handset anyway.

Re:Not worth the money?

[stupid_is]

It's 6 years max. Personally, I'd expect any electronic with minimal moving parts to last 6 years - the limitation should be down to the MTBF of the components, eg a Seagate Barracuda has an MTBF of 750,000 hours according to this site, which is 85 years! So, barring hinges on the screen, keyboard, DVD/floppy and connector failures and failures due to user clumsiness - that laptop should last the 6 years easily - or so I would argue if it broke...

Re:Not worth the money?

[InterGuru]

Most credit cards ( at least in the USA ) will double the manufacturer's warranty at no cost for items you buy with the card. That extends a one year warranty to two years.

The card provider is doing it as a free add-on. This shows how little the warranty really costs the provider.

Re:Not worth the money?

[xaxa]

All my receipts (except for food, meals, etc) are in an A4 envelope. They're not very well organised, other than starting a new envelope every year, but when my bicycle was stolen it was easy enough to go through and find all the relevant receipts (for the bike, lock, lights, etc) to send to the insurers, and it probably took less time than keeping it organised would have done.

Also, I usually pay for anything over £30 with a credit/debit card, so there's also a record of the sale on my online banking.

Re:Not worth the money?

[brusk]

Actually it hasn't. The value of the warranty to you personally depends on your own valuation of risk and future money, which differs from individual to individual. That's part of why insurance can benefit everyone.

Re:Not worth the money?

[Anonymous Coward]

I agree. I think extended warranties are very useful now thanks to crappy manufacturing. TVs, laptops and cars should be at the top of the list. I know people who have new cars that have been going back to the repair shop consistently even after the original warranty expired. And laptops? I seem to get ones that start going bad as soon as 3 years are up. Why can't manufacturers just make better quality shit to begin with? I don't know. But get the warranty just in case.

Re:Not worth the money?

[Anonymous Coward]

Here in the USA, apparently a reasonable time frame is 90 days. |rolleyes|

-- gid

Re:Not worth the money?

[sharkman67]

I never purchased them in the past. However in the last five years I bought two that have been worth their weight in gold. The first was a high end refrigerator that I got from Lowes. The extended warranty was less than 4% of the total cost. One month out of the factory 1 yr warranty the refrigerator stopped working. Service came out on a holiday weekend and swapped out all the electronics. It ended up not fixing the problem and the following week I got a brand new replacement. Even better was they reset the warranty to start over again. My Dad has a little lower end refrigerator like mine and had a simple repair that ran him $800. Definitely money well spent.

The other was I purchased a car that was just coming off lease. For 2k I was able to extend the bumper to bumper warranty for 7 more years. About two years later, which was just over the 5 year factory warranty, I had a major transmission problem. Not a penny out of pocket for the tow or repairs. No doubt the total repair cost was more than I paid for the warranty. If anything else goes wrong it's just more money in my pocket.

I think on low end electronics or where the warranty is in excess of 5% of the original purchase price you are better off passing.

Re:Not worth the money?

[CrimsonAvenger]

If I buy a device and it doesn't break, is the extended warranty useless?

I don't think so. The whole point is that _if_ I have a bad device I can get it repaired. Peace of mind has value too.

My wife once worked in a place that sold extended warranties for electronic devices. She told me at the time that the reason they were pushed by the retailers is because the profit margin on them is incredibly high - they're expensive, and they almost never are needed....

Re:Not worth the money?

[Jason Levine]

I think that an extended warranty's worth varies depending on how much the warranty costs and how much the item costs. If a $1,000 laptop computer has a $200 extended warranty, that might be worthwhile. But one time we bought my wife a digital camera at Best Buy for $150. They tried to sell us a $75 extended warranty. I didn't think a warranty that was 50% of the purchase price of a new camera was worthwhile, so we passed. Of course, since then I've made it a policy to avoid buying things at Best Buy unless it really can't be helped or unless they have the lowest price (not counting mail in rebates). Those instances are few and far between.

Re:Not worth the money?

[kannibal_klown]

If I buy a device and it doesn't break, is the extended warranty useless?

Plus, some electronics stores (usually smaller ones) will write you a check for some or all of the warranty cost if you didn't need it through its lifetime.

My parents bought a TV from a smaller electronics store (not a chain) and got the warranty which they wound up not using, and I think it was a little cheaper than if they're purchased the warranty from a chain.

At the end of the period the store sent them a check for 50% of the price.

Re:Not worth the money?

[Anonymous Coward]

I never accept those extended offers; If you have a bad device and it breaks within the reasonable period that you may expect it to work you don't need the extended warranty.
If you expect to beat the insurance company at a game they set up themselves you might be better off gambling with the insurance premium in a casino.

I "almost" never accept them. I wish I had on my HandSpring Visor, since a 3-foot drop onto a carpet was all it took to fracture the LCD, and it's not that hard for a fumble-fingered idiot like me to drop something.

I bought the extended warranty on my LCD TV because it offered lightning protection. I'm in Florida.

Re:Not worth the money?

[PPalmgren]

Parent's last paragraph says it all. At a retailer I worked for as a kid, electronics extended warranties were used in less than 5% of all warranty purchases, but the warranties could go up to 20-30% retail price. If you spend a decent amount on electronics every year, you're better off taking the money you'd spend on the warranty and setting it aside until something breaks. Over time you'd net positive.

The only item I've seen it worthwhile on is inkjet printers. Inkjet printer's wear & tear is usually covered under extended warranty, and if it is commonly used for school/work and is around $75-150, there is a very high chance it will break in under 3 years. The retailers typically give you the newer model at the same price point and you can just buy another 3 year warranty. In cases where color is needed & laser isn't practical, you can make money on this one by not being lazy. I'm on my 4th inkjet for for a total of $170 in 6 years.

Re:Not worth the money?

[misexistentialist]

if it burned down you probably don't have the money to buy yourself a new one, so instead you pay the insurance company to have money to buy you a new house.

Still a bad deal if you are paying for firemen.

Re:Not worth the money?

[j00r0m4nc3r]

Unless you make a habit of replacing all of your devices every year, the extended warranty is often useful

This is a sucker's game and you've played it. It's only valuable if you buy it for a device that fails. The only problem is you cannot predetermine which device will fail, so you end up buying it for all your devices. Let's say you buy 10 devices each for $1000 (just to keep the math simple), and you get the extended warranty for all of them, and you pay a 20% premium for it. You've basically paid and extra $2000, enough to completely replace 2 devices at the same price (but remember prices go down over the next few years so you actually get MORE device for the money in a couple years). The chances of more than one of those devices failing is extremely slim. Modern electronics are extremely reliable (and you usually pre-determine reliability by reading reviews to eliminate the really unreliable brands). I don't have spreadsheets and shit with the numbers, but you can be sure the insurance company does, and would not want you to see it. You're basically gambling, but you're doing it blind, without any knowledge of the odds. For all you know the odds could be 1billion:1 against you. The insurance company knows the odds, and you can be certain they don't work in your favor. You are much better off taking that $2000 and investing it, or even going to Vegas where you know exactly what your odds are.

Re:Not worth the money?

[Bai jie]

However in the last five years I bought two that have been worth their weight in gold.

How much does a slip of paper weigh?

Re:Not worth the money?

[timeOday]

I reckon it has at least as much to do with conscientiousness as with odds. Most people don't send in rebates, and I'm sure the same goes for warranties. Thus you might beat the odds if you're an anal person who keeps all the paperwork and still care for your older tech enough to fix instead of replacing it.

Re:Not worth the money?

[doulos05]

Mod up parent!

To me, it's a question of economics. And for those sorts of questions, I go to people who know something about how it works, rich people. Particularly rich people who made it rich when they were young and managed to hold on to that money. I know a few of those, and none of them buy extended warranties on products, they self-insure. Granted, they have the money to do so. But, if you buy 2-3 extended warranties per year (that's $400-600/year), you could drop all that in a savings account and afford to replace 1 of those 3 big-ticket items every 3 years (I'm assuming a warranty is 10% of the sticker cost), which is probably how many times those extended warranties would have to completely replace your product. And that's full replacement mind you, that doesn't account for when it just needs a $100 or $200 repair, which if that is all you needed, you can do that 3-6 times a year.

Sure, there will be some bad years, but that's why you have a general emergency fund as well to soak those losses. And, all that money is sitting in your bank account earning you interest (keep it in the right kind of account and it could earn anywhere from 8-12% and still be accessible like a checking account), not some big insurance company.

Re:Not worth the money?

[loshwomp]

The card provider is doing it as a free add-on. This shows how little the warranty really costs the provider.

First of all, it's not free. (The credit card vendor's margin comes off the seller's end, but in the end *everybody* pays for that inefficiency.) Most of all, however, the cost is low because very, very few people know about (much less collect on) the extended warranties provided by credit card vendors.

Re:Not worth the money?

[Tibia1]

Yes, well I was thinking of buying at least insurance for my laptop for 1 year, which is 99$. It already broke down this year due to random ram failure, but was covered by the 1 year warranty. Now I'm thinking of extending it since this laptop is required for my completion of university. It cost me about 1200$ and I'd like it for certain for another year, instead of going further into debt with student loans. What would you do in my shoes?

Re:Not worth the money?

[DragonWriter]

Unless you make a habit of replacing all of your devices every year, the extended warranty is often useful, depending on the device.

The extended warranty will always be more expensive than the value of the services it provides times the likelihood of their use. If there is one particular item where the risk of failure is potentially very expensive but the warranty is affordable, it may make sense; it you regularly purchase them, you almost certainly would be better off taking the same money, and putting it in a savings account, and self-insuring against failures outside the standard warranty coverage across the whole set of products that you would otherwise have been buying extended warranties on.

Re:Not worth the money?

[Anonymous Coward]

Devices failures charted over time look like a bath tub. If a device is defective from the factory, it is likely to fail shortly after purchase, so failure rate is high in the device's 'young-life'. The failure rate then drops off and is very low for the device's 'mid-life' and then increases again as the device approaches it's end-of-life-span. You don't need an extended warranty to protect against factory defects, because the device will usually fail while it is still under the standard warranty. Yet, extended warranties aren't typically long enough to protect from 'old-age' failures. Essentially extended warranties only help you out if your device fails in the middle of it's expected life span, which is the absolute LEAST likely time for the device to fail. That's why they are a rip-off.

Re:Not worth the money?

[Anonymous Coward]

You were worried about a washer breaking after only TWO YEARS of service? And to think my family has never had one less than 10 years...

Re:Not worth the money?

[rgviza]

yea but if you buy a warranty for every item you buy, chances are one or none out of 20 will fail within the warranty period. At the end of the day, you are better off taking that warranty money, starting a special bank account, and dumping all the money you would have dumped on extended warranties into it. Then if something fails, you'll have more than enough cash for a new item.

I GUARANTEE, you'll come out ahead, and earn interest on it to boot. Ditto for car warranties.

Waste of money... at least if you put it in your account, and never need to use it, you still have your money.

Extended warranties are a scam. Don't give them your money, period. All you need to do is play the same numbers game the insurance companies do. It works for them and it will work for you.

-Viz

Re:Not worth the money?

[Anonymous Coward]

The whole reason companies offer extended warranties is because they bring in more money than they pay out. If you tend to purchase extended warranties, you will end up losing money in the long run. The only time any type of insurance is a good idea is when there is a catastrophic cost possible if you don't have it, such as in home, health, or car insurance. If you had been smart enough not to buy extended warranties in the first place, you would be able to afford the replacement in the rare cases when the extended warranty would have been useful.

Re:Not worth the money?

[Anonymous Coward]

I don't think living without home insurance is a good idea. The sheer cost of buying a new house if your existing house is destroyed is enough to scare me into it.

Re:Not worth the money?

[maxume]

Really, the first world economies are so productive that the limiting factor on them is the amount of consumption available (Think about the abundance available in your average podunk grocery store).

The killer is that it makes it very difficult for people at the bottom to do anything that anybody wants to pay very much for.

Re:Not worth the money?

[maxume]

"on either the store or the manufacturer's dime" is a long hand way of saying "in the purchase price".

Re:Not worth the money?

[lena_10326]

I tried that. I buy a lot of stuff and ended up with an unmanageable cabinet full of papers. Searching for a single receipt used to take over an hour to locate. It's not worth it for a $50 device. Now I only save receipts for big purchases: > few hundred dollars. I still don't purchase the insurance because it's extremely rare that anything fails on me. Spending a few thousand in mini-insurances over a 10 year span does not pay off when maybe 2 to 4 cheap devices will fail on me. The last time I can remember something failing was a cheap generic wired switch which I bought for $15 and even that died more than 3 years after purchase. Anything else that died was clearly my fault due to dropping or plugging in the wrong adapter (fried a 2 year old $100 printer once).

It's clear to me purchasing individual insurance on every device is not effective. There are much better ways to do it. Option 1: sign up for a credit card with warranty protection. Option 2: sign up for a single insurance plan on home appliances.

Re:Not worth the money?

[Anonymous Coward]

>the effect of an economic downturn and concern about future finances should be to reduce purchases, not to make the purchases and then add insurance.

Unless the plan is to max out your CC on big ticket items now, and default on your unsecured debt in the near future.
You need the insurance, because you won't be able to buy any big ticket items afterwords for a few years.

Re:Not worth the money?

[ucblockhead]

Here's what you do: every time you buy a piece of electronics, put 10% of the purchase price in a bank account called "my personal extended warranty".

If the item breaks, withdraw money from this account to have the item fixed.

Given that extended warranties are sold to make a profit, you are pretty much guaranteed to end up financially better off if you purchase enough goods.

Re:Not worth the money?

[chris mazuc]

$174.80.

Re:Not worth the money?

[Willuknight]

there is a simple solution.

Photograph or Scan all your receipts.

name them by item and digitally store them in a folder.

upload a backup to an online host. done

Re:Not worth the money?

[sjames]

In the U.S., warranties generally disclaim "wear and tear" in the fine print. At the same time, the sales person will claim (verbally) that it even covers deliberate breakage.

Re:Not worth the money?

[mattack2]

The extended warranty will always be more expensive than the value of the services it provides times the likelihood of their use.

I would agree that extended warranties are usually not worth it. For devices with a lot of moving parts, it can be worth it. I got one on a treadmill I bought almost two years ago (after an in-warranty repair), and the low $60s extended warranty has already more than paid for itself. It hasn't needed huge repair again, but belt (in motor) belt replacement and tightening. The in warranty repair was replacement of the walking belt, which would have been very expensive. I suspect that it may need replacement again (there's a very very tiny tear in it now). I'll definitely pay for at least one more year (if I had gotten 2 years then, it would be cheaper per year).

Re:Not worth the money?

[lena_10326]

Or...... "Pay using a credit card with warranty protection."

Re:Not worth the money?

[dgatwood]

Mine lasted six or so before I had to jury rig the door switch shut when the cheap plastic parts broke. They don't make them like they used to, but even still, two years would border on comedy.

Re:Not worth the money?

[Anonymous Coward]

Yes. It was useless.

Home insurance is different: 1) It's required by your mortgage company, 2) It also covers liability, and 3) Replacing a home and contents out of your savings isn't usually possible.

None of that applies to appliances. If an appliance needs enough repairs to justify the cost of an extended warranty, I'd rather replace the appliance with something reliable. That warranty isn't going to replace all the food in your frig that decided to stop cooling.

No company prices any product below profit margins.

I have 3 extended warranties

[JoshWurzel]

Interestingly, they are the two mentioned (big screen TV and Apple computer) and my car.

The first two pay for themselves. I had to replace my TV for some backlight issue and the Apple tech support for 3 years is really handy.

The third was a colossal waste, because I drive a Honda.

does anyone else smell potential fraud?

[CaptainNerdCave]

some extended warranties are a bit vague on the coverages or skimpy on the limitations, which means that more "failures" slip through the gaping holes coughbestbuycough

maybe it's just me, but i expect that many people will experience a significant number of "failures" with these products.

It's the recession

[thetoadwarrior]

Everyone feels their dollar is worth more now that the economy is crap. So they think they're doing the smart thing by protection their already expensive purchase but they're just wasting their money.

Extended warranties are like lottery tickets in that the poor and stupid buy 'em up like they're going out of style.

Re:It's the recession

[Anonymous Coward]

You must have some excellent demographic data to back up your assertion that the poor and stupid buy up extended warranties, quote, "like they're going out of style." I was unaware that consumer surveys even had a checkbox for "poor" on them, much less "stupid."

Blanket statements aside, the kind of protection you're so quick to dismiss can play an important role in protecting a personal budget. I bought an expensive smartphone with a two-year cell phone contract, so I only had to pay $50 for it. Now that I've been using it for a while, it's become indispensable to me: it's my MP3 player and digital camera, it keeps me communicating with my friends, family, and coworkers while I'm on the road, and it keeps me organized. But it would really hurt my budget if I had to pay full price to replace it.

The basic warranty covers very little in terms of repair/replacement, but the extended warranty covers everything, including replacement for water damage or loss/theft. So for $70/year, I don't have to shell out $600 if anything happens to it. Seems like a good deal to me.

Re:It's the recession

[PitaBred]

Depends entirely on the product in question. Most of the time the warranty's are a waste. But there are a few cases (as Consumer Reports notes) where it actually is worthwhile insurance.

By your logic, ALL insurance is a waste and only stupid people should have it as a protection against unexpected major financial expenditures.

Re:It's the recession

[fostware]

Extended warranties are like lottery tickets in that the poor and stupid buy 'em up like they're going out of style.

My Dell 1730 has the dreaded nVidia 8800GTX issue (in SLI no less). Dell admitted they'll replace them for 18mths (std wty +6mths) so naturally they died at 20mths - twice.

The replacement cost was AUD$500 each time, the wty was $400 for an extra 24mths.

Buying an extended warranty 'cos a salesperson suggested it, without research and forethought, is like lottery tickets in that the poor and stupid buy 'em up like they're going out of style.

Fixed it for you...

Re:It's the recession

[thetoadwarrior]

Not all insurance is stupid. Paying a few hundred per month as opposed to a hundred thousand for an operation and hospital visit makes sense. Plus you're dealing with your life, so while some people (with dedication) probably could save enough through their life to cover medical costs rather than buying insurance, it's not really worth gambling when it's your life rather than a TV.

Paying out a few hundred to protect a TV is dumb. The money would be better spent on a quality UPS to protect your hardware.

Yes, it is unfortunately that some people do get stuck with a bad product that dies early but in most cases that won't happen.

You'd be better off putting money into a savings account. If you TV fails, buy a new one. If not, you have that money and interest to do whatever you want. It's a huge money maker for the people offering the extended warranty which is why companies like Best Buy wanted employees to sell so many of them.

Re:It's the recession

[thetoadwarrior]

Alternatively save at least $70 yourself in a replacement fund. Luckily I've never had to replace a phone. Had I done that I would have $560 not including interest for the past 8 years.

An HTC droid with no contract is $469.99 so I could afford a brand new phone and have money left over. That's just for one warranty plan. If you set aside the money you'd pay into every warranty plan, that money would build up faster and you'll earn more interest faster.

Sure some phones that come of the manufacturing line will be faulty and if you started this you may only save $70, the phone will break and it would seem like you're screwed but you'll make out in the long run and you'd have to be pretty unlucky to have that continually happen to you phone after phone in make it not work in your favor.

Contradictory example in the story

[Anonymous Coward]

On the one hand it says extended warranty is good for TVs. On the other hand it says the manufacturer took 45 days to repair without one. The latter actually sounds like the best that could happen to you.

Once you are forced to live a few days or weeks without a TV, you'll suddenly realise how little you need it and how much time you've wasted watching it.

Not buying an extended warranty can save you the money for the warranty AND the subscription fee for your TV company AND future TV set expenses AND an excessive amount of time.

Re:Contradictory example in the story

[Anonymous Coward]

You've seen it before: http://www.theonion.com/content/node/28694

Good enough

[slasho81]

Computers are getting to the point of "good enough" for the current technological cycle. This means people won't be shelling out hundreds of dollars every three years for a new computer when their old computer is good enough and in good shape thanks to an extended warranty.

Re:Good enough

[Anonymous Coward]

I think it's the opposite, hardware is getting good enough, that by the time it breaks your ready for a new computer anyway so there is no need to waste money on an extended warranty. Also if something is going to break it is normally due to a defect and so breaks early and is covered by the standard warranty

Re:Good enough

[guytoronto]

Computers will never be "good enough". Just like 640k wasn't. 486 DX2/66 wasn't. 10GB HD wasn't. 17" monitor wasn't. Over and over again history has taught us that the top of the line computer from three years ago whimpers like a little baby in the corner of the room today.

Re:Good enough

[Anonymous Coward]

Very true, but let's be honest. Apple users will buy each new model regardless of whether it actually offers anything new and windows users generally find to cheaper to replace their machines than pay someone to clear out all the malware and junk turning their latest machine into a 486. Gamers evolve their machines and love to build new hot devices. There's really no slowdown in sales here, except in the office environment.

Re:Good enough

[slasho81]

I did add the reservation "to the current technological cycle". Both of your examples, 640k and 486DX2, were "good enough" for quite some time at their time. The famous 640k should be enough for everyone quote by Bill Gates had the same semantics. Gates did mean 640k were enough for the masses for the time being. His comment is frequently taken out of context to show lack of insight. For example, 250GB hard drives today are good enough for pretty much everyone, where everyone means the masses and not Big Businesses and people with special space needs. Will it change? Of course it will, but for now it's good enough.

Re:Good enough

[Sir_Lewk]

Blanket statements like this are nonsense. Until summer of 2007 I was using a 244 MHz PII with 256 MB RAM. The only thing that compelled me to upgrade (and buy a thinkpad) was that I decided a laptop would be nice for school. I honestly do not see myself buying a new computer for at least 5 more years, probably more. The specs on my thinkpad far exceed my actual usage, the only reason I'll get a new computer is when my current physically breaks.

Now, I don't game, the most I ask of my computers is that they run xterm, vim, and a handfull of other programs. Perhaps my usage isn't exactly typical. Then again, my almost 3 year old computer has far better specs than many computers sold today (you have heard of netbooks right?). Hell, my next computer might even be a "downgrade".

17" monitor wasn't.

My monitor is 15.4", I had no idea 17" was considered obsolete...

Re:Good enough

[maxume]

Computers will never be good enough for everything. That said, they are good enough for more and more things every day.

By some countries' laws, they're useless

[cerberusss]

By some countries' laws, these extended warranties are mostly useless. Under Dutch law, a product is expected to work for a couple of years. Customers who return with a broken device after two years are still entitled to a working device. A negotiation should take place between the seller and the buyer, and one outcome could be a repair, for which the costs cannot be too high.

Some chains like MediaMarkt have put this negotiation down to a few rules and customers are protected by these. On the other hand, international chains like Apple have been found guilty for refusing Dutch customers help with their broken device just outside the warranty.

Re:By some countries' laws, they're useless

[1stvamp]

I believe this is actually EU law, however -> [citation needed].

Re:By some countries' laws, they're useless

[cgomezr]

In Spain we also have a law like that, but in practice it's totally useless: in theory you should have warranty for two years (or even three, I can't remember); but then the law says that after the first year the burden of proof of not having broken/misused the item is on the customer. Obviously it's impossible to prove that you haven't misused the item, so the law doesn't work and the companies just ignore you if you invoke it. I guess you could get a refund in court, but that's as always, we laymen don't have (or aren't willing to spend) time/resources to go to court, so people just keep buying extended warranties.

I personally try to buy things that have a warranty of at least 3 years by default, since this seems to indicate that the manufacturer is somewhat confident that it won't break. For example Thinkpad laptops have cheap models with 1 year warranty by default, and more expensive models with 3 years warranty. I buy the latter.

Re:By some countries' laws, they're useless

[Anonymous Coward]

Under EU law, you may be entitled to a working device, however, you may find out that the level of service is much worse than when you had an extended service contract. Like waiting two months for a repair, compared to a week.

Re:By some countries' laws, they're useless

[Anonymous Coward]

We have this in australia too it is called a statutory warranty, although most retailers in Australia will still try and sell you an extended warranty.

http://www.fairtrading.nsw.gov.au/pdfs/About_us/Publications/ft230.pdf

A lot of people don't realise...

[GrubLord]

... that those Gold and Platinum credit cards they're collecting 'reward points' on also oftentimes provide extended warranty on purchases made with said credit card.

Before you shell out for an extra year or two of warranty, try reading through the terms and conditions of your favourite rewards card. Chances are, you can get that extra year or so of peace of mind for free.

My rule of thumb...

[BlueWaterBaboonFarm]

My rule of thumb is anything that can be 'self insured' should be. For example, I don't insure my own truck (about $5000) if it's wrecked*. I know that if this happens I can buy a new one with my savings. Not ideal but that's how life goes. All the money I would be spending on insurance goes towards my savings/investments.

However, my house is insured. If it was burnt, I'd be in tough financial shape. I can't 'self insure' it. *if I hit someone else, they are insured.

Re:My rule of thumb...

[Anonymous Coward]

Liability insurance is different from (higher costing) replacement insurance. With a cheap (since your vehicle is likely old and lower valued) liability plan, it is not designed to replace your truck in the event of a crash, but everything else you damage in your drunken stupor. If you hit someone's brand new ferrari and were found at fault, you would be responsible for the replacement (and the liability insurance you could get would cover those costs for you).

*if I hit someone else, they are insured.

This only works if it is their fault. If it is *your* fault, you foot the bill, not their insurance company. If you claim bankrupcy to avoid paying the costs, thats where "Uninsured / Under insured motorist" clauses help pick up the bill, but only after they have sucked every cent they can out of you.

Re:My rule of thumb...

[Overzeetop]

I usually go with the 5%/3 year rule - if it costs less than 5% per year to insure and I'll keep it more than 3 years, it's probably worth it. Some things break, some don't. Anything more than $1000 is a fairly major purchase for me, and I'm pretty likely to consider insuring it beyond the original warranty period. It also depends on the cost of service. If something breaks in my car, I'm not out $20,000 - nor will it cost a significant fraction of $20,000 to fix. On the other hand, if my TV dies, it's a paperweight that will likely cost nearly it's entire current value to fix. Anything that's less than $200 is almost certain to be a waste of warranty extension simply because of the cost of initiating the transaction.

Now, I will say that I bought an extended warranty with my last TV. It was a floor model, in good shape, and it was a good deal. I spent about 12%/yr of the value of the TV for the warranty - way too much, and above my threshold. However, the terms of the warranty stated we would get warranty work done through the provider network, and it would be "in home" service. Also, I could cancel - for a full refund - any time before the manufacturer's warranty ran out. Well, I put the 360 mark (of the 1 year mfr warranty) in my planner. It turns out it did need service after about 3 months. TV cost - $800, Repair cost (2 visits - one to diagnose, one to install a new board) $750 with parts and labor at "rack" rates. I paid nothing, then canceled the service after 360 days, and a clean 9 months of operation. I lost the use of $229 for a year, but the few percent I might have made in that time was very cheap insurance for in-home service.

If I can, I'll likely buy an extended warranty on the camera I just got off ebay. It should run me $125 or so, and I don't have any other warranty (it's not new, so no automatic CC extension), and it would likely cost me upwards of $3k to replace with another used one. I could replace it from cash reserves, but for $40/year I won't have to care.

There are things it's wise to insure

[Canazza]

It's probably wise for someone to insure their TV (as that is all the Extended warranty is really) if it was rather expensive, but there are a few things that I will not purchase the warranty for, and have been pressured by sales people.

MP3 players (they're small, portable, likely to break, but honestly, you can buy a half decent one for 20 quid)
Digital Cameras (The home-market ones, not the Professional level ones.)
PCs and peripherals (Myself, personally, if shit goes wrong with my PC I know how to fix it, I don't need some tit 100 miles away replacing every component and wiping the OS when I know it's a driver issue)

Honestly, I got pressured by a bloke in Curry's about getting Extended warranty on a £15 USB Mouse that cost twice as much as the mouse itself. I've been using it for 7 years and it's still perfectly fine (and it's by Microsoft :O)
Same with my MP3 player (5 years) and my phone (3 years so far, and only a bit of the front casings come loose, Sellotape FTW). My last phone fared less well, it lasted two months, but I *did* slam it in a car door. Accidents happen, but the phone only cost £20 and it was PAYG so I only lost about £3 in credit.

Re:There are things it's wise to insure

[Anonymous Coward]

CowarD! Neigh!!!

I purchased a new home theater projector and along with it the extended warranty. (This included buld replacement!) The projector cost $999 new and the bulbs cost approx $260 a piece to replace. The warrany replaced 5 bulbs over a six year period. You do the math...

Sample selection bias?

[Anonymous Coward]

A recession will knock out the marginal purchasers, but those rich enough to purchase it could also be risk averse.

As the tide moves out, the barnacles appear to move up the jetty post.

Applecare is worth it

[Anonymous Coward]

I've purchased extended warranties on prefab PCs before, from BestBuy, CompUSA, and Frys over the years and sort of felt cheated at the end. Not because the machines didn't break, but because I violated at least 10 stipulations in the warranty contract by year 1. Things like breaking the seal and popping in all kinds of hardware inside of it; replacing original parts with better parts, wiping the HDD (along with backups) and dual booting it, etc.

I could never take the frankenPC to the store and ask for any warranty. The nature of the scam in these retarded contracts is that they require you keep all kinds of things intact, plus have the warranty papers, the original sales receipt, and the same OS it shipped with.

With Apple you have the serial stamped on the hardware and inside the magic ROM thingie. Take it to the store and they'll punch it in and make the necessary repairs. And they try to fuck you over like the BestBuys of the world do, or ask you to "restore from Tiger" when Snow Leopard is the new cool thing.

Re:Applecare is worth it

[kannibal_klown]

With Apple you have the serial stamped on the hardware and inside the magic ROM thingie. Take it to the store and they'll punch it in and make the necessary repairs. And they try to fuck you over like the BestBuys of the world do, or ask you to "restore from Tiger" when Snow Leopard is the new cool thing.

I just dropped off my almost 3-year old MacBook Pro to the Apple store a few days ago. The asked which OS I had installed on it and had no problem with the fact that Snow Leopard (the latest OS from around 2009) was installed. They just wanted to know which OS they had to dive into.

They asked if I changed any hardware "recently," and I said no (original RAM and harddrive). Had I replaced something non-user replaceable (like the HDD on the MacBook Pro) then I'm sure they might have made a fuss.

In the end it's either the CPU or motherboard that's fried, so they had to ship it out to. I only had about 3 months left on the Apple Care.

Re:Applecare is worth it

[imakemusic]

My Macbook Pro came with instructions on how to replace the hard disk. I didn't look very closely but would that really invalidate my warranty? I'm just curious - it doesn't matter much to me because I'm a smoker and therefore touching the inside of my Macbook is apparently too dangerous for Apple employees.

Re:Applecare is worth it

[bill_mcgonigle]

And they try to fuck you over like the BestBuys of the world do, or ask you to "restore from Tiger" when Snow Leopard is the new cool thing.

Don't take it to an Apple store, call the 800 number and talk to a real tech.

I've turned over each of my last two Apple laptops for 50% of the hardware purchase price by getting a complete makeover on them during the last month of AppleCare, most recently in October.

AppleCare is a fantastic deal, I just left the company over increasingly poor QA and unconscionable judicial actions.

Re:Applecare is worth it

[PitaBred]

90% of people don't do that with their computers. If you can do that competently, then the warranty is a waste of time. But for the majority of the population where a computer is just a Facebook appliance, it depends on how much it'd cost for them to pay for service. If a hard drive goes south outside of the basic warranty, most people will end up paying hundreds of dollars to get it replaced. May as well get a warranty at that rate, especially if you need faster repair turnaround than sending it off to China for service.

I never buy the extended warranties. But that doesn't mean that nobody should. It depends on your competency and inclinations.

Re:Applecare is worth it

[cffrost]

[...] non-user replaceable (like the HDD [...]

LMAO... Is this real?

Extended warranty?

[Anonymous Coward]

How can I lose! Together with investing in timeshares, lotto tickets, etc., what better investment is there?

Jealous and sorry at the same instant....

[macraig]

I'm both jealous of people who are so ridiculously well off that they can afford to throw money down that Rabbit Hole without a second thought, and at the same time sorry for the people who absolutely can't afford to do it but don't have the personal wherewithal or common sense to avoid it.

Re:Jealous and sorry at the same instant....

[Anonymous Coward]

I juat got one on a bike.
$7 for 18 months. Seems reasonable. I would have paid up to $12 or so for it. Past that, i'll fix it myself.

Re:Jealous and sorry at the same instant....

[Anonymous Coward]

Have you ever considered minding your own business and worrying about own financial plan?

Re:Jealous and sorry at the same instant....

[macraig]

Oddly enough, dear chap, I can manage to do exactly what you suggest and spout off on Slashdot at the same time.

BTW, how is it not my business when the purchasing habits of others directly affect the prices that vendors choose to demand of me? If you and 10 million other people are pound-foolish enough to be willing to pay $50 for an item that only cost $10 to produce, then guess what price will be demanded of me? It won't matter if I know better; I'll still have to pay the extorted price if I truly need the item.

Collective ignorance or stupidity is very much my business, since it affects my wallet even if I don't share in the ignorance. This is why it's so damned important to have educated consumers, and why we need more efforts like Consumer Reports and people like Ralph Nader (the early Ralph, not the political sellout we have now). As Nader once said, "The consumer must be protected at times from his own indiscretion and vanity." Well, *I* need to be protected from that indiscretion and vanity, too, lest it affect the prices I have to pay.

Why extended warranties are useless

[Cereal Box]

It's not usually explained in articles like these, but extended warranties are useless because the product reliability tends to follow a "bathtub model". If you chart the number of expected repairs a product (y-axis) against time (x-axis), you'll see a large number of them initially (i.e., initial product failure) which quickly slopes downward towards zero and plateaus for several years. Then, many years out, you'll see that number quickly ramp up again (i.e., end of life product failure). Extended warranties aren't for that period of time, they're for the period of time when product reliability is highest.

Re:Why extended warranties are useless

[cgomezr]

Do you think that is a general law? In my personal and subjetive experience (I don't have any reliable data, but neither do you in your post) it is the case for laptops, for example, but not for digital cameras. It seems pretty common for digital cameras to fail during the first year, the second, or well, pretty much any year.

This seems to be reflected on the prices of extended warranties, at least in my country the extended warranty for a laptop may add something like 10% to the price, but the extended warranty for a camera may very well add 50%.

Re:Why extended warranties are useless

[Cereal Box]

Hmm I would lean towards it being a "general law", otherwise extended warranties wouldn't be so profitable, now would they?

Re:Why extended warranties are useless

[guytoronto]

If I can have piece of mind for three years for a couple hundred bucks, I'm okay with that.

Re:Why extended warranties are useless

[Stenchwarrior]

Is the extended warranty still useless if I only pay 50% of the "new" price on a "opened item" that's been refurbished or was on display? I get the same protection that a consumer would get if they bought a new product but I pay a fraction of the price for something that, with the warranty, is as good as new. Wouldn't the end of life on an opened item make the bathtub shorter and thus fall within the protected time line?

Re:Why extended warranties are useless

[Anonymous Coward]

On a $100 digital camera? please sign this here, sir!

Re:Why extended warranties are useless

[Anonymous Coward]

Its called a Weibull distribution. Its used in engineering to failure design types. It will be in my upcoming book. "Electronics in America: Why they Suck! A scathing insiders look into who messed it all up."

Re:Why extended warranties are useless

[systemeng]

What he is saying is that electronic system failures often follow the Weibull distribution. It is a mathematically precise statistical distribution that was developed to model such things as equipment failures. The Weibull distribution has many parameters and the curves can look like many things other than just a bathtub. What the exact time distribution of failures is requires a lot of data which either has to be estimated from previous systems or calculated by determining the joint cdf of component parts which were tested individually.

I've never seen components that had enough data to assume anything other than a normal distribution and the joint cdf of normal distributions is not a Weibull distribution. This would lead me to believe that a Weibull distribution is probably fit empirically from historical data. Given that this is actually work, I sometimes wonder if they use a seat of the pants approach instead although there seem to be a lot of stories about devices failing right after the warranty is over.

Re:Why extended warranties are useless

[mrmeval]

3yr warranty on my LG Flatron has come in handy. It's not extended but stock. Thing died in less than one year.

More than just an Insurance Question

[klahnako]

My biggest consideration when getting one of these warranties is how long it will be gone for repair. Look at the fine print to find how long the company has to make the repair. It has been my experience that the maximum allowed time *will* be the time it takes to repair. Can you go that long without your device? I know I can not wait the requisite 60/90 days, so I do not purchase the warranties.

iMacs, I will not go without extended on mine

[Shivetya]

I am on my second iMac now, since Apple finally made one I wanted to upgrade too. The first one convinced me that the extended warranty is required. My old white iMac got the black screen of death 29 months after it was made (I bought it used a little over six months old). When I purchased it the original owner had the three year extended warranty on it.

Approximate $1300 for the main board and $300 for the daughter card (7600gt). The bill didn't include the labor cost. The final total was zero because it was under warranty. If this had not been covered it would have been cheaper to buy a new one.

I look at the warranties this way, what is your impulse buying threshold and what is your "I can afford that" threshold. Very similar to how you buy insurance for home, auto, and such. What is the amount your willing to be out if case something goes wrong. For me that stops at $500 minus the cost of the extended warranty. So its a $700 item and the warranty is over $200 I won't get it.

If you finance it, insure it or get a warranty. Don't bother with extended warranties on cars and if you must, only from the manufacturer

Re:iMacs, I will not go without extended on mine

[Rotting]

The problem I have with buying an extended warranty on a mac is that they are already charging a premium for the hardware. If they expect me to pay that then I expect them to deliver a product that is engineered to last. We all know they are using fairly standard pc hardware now though so that expectation is a little unreasonable. I suppose it's for this reason that I have a problem with being expected to pay an additional $200 so my overpriced hardware is covered should something go wrong... or maybe I'm just cheap.

Re:iMacs, I will not go without extended on mine

[hattig]

Damn right.

My next monitor is a Samsung, simply because they offer a three year warranty on their monitors. If it broke after three years, I would be annoyed, but at least I would have got three years use out of it. Why should I buy a monitor with a one year warranty? Especially since the Samsung monitors are pretty good overall anyway (I'm just waiting for a P2370HD monitor with DVB-T2 built-in (current one only has DVB-T, but UK is using DVB-T2 for HD Freeview)).

A premium product should have a premium warranty included by default, to show that it isn't just overpriced tat. To be honest with Apple if the computer broke, I would invoke my rights under the sales of good act, which mandates that a product should work for a reasonable amount of time (up to six years) after purchase.

Anyway, Macs seem to have a 1:10 fail rate at most (including year one, which surely has the highest figures), from various stories published over the past year. That means the warranty would have to be 1/10th of the product cost to be worthwhile, consolidated over time.

pick & choose

[clickclickdrone]

I tend to steer well clear of these things but do occassionally take out extended warrenty for items more likely to break. I was an early adopter of LCD TVs and took out a 3 year warrenty and sure enough, 2 years down the line, it died and I got a new (better - w00t!) one which has been fine since. I recently upgraded to a new Samsung from John lewis (UK) who do a free 5 year warranty on all TVs which is cool.
Generally, anything with moving parts that might fail, I tend to get extended warranty and to date, I've been lucky (?) inasmuch as the device died during the extended warranty so it wa smoney well spent.
Luckily, in the UK you get aminimum of 1year anyway and potentially a further year under EU rules but most retailers are ignorant of the newer rules and try to kick pack (but fail).

Most people are already protected under law...

[Anonymous Coward]

In most countries there is a law like Australia's Trade Practices Act that allows you to return a defective item that is not "fit for purpose" to the retailer for a refund. Thus the problem of broken equipment is between the retailer and the manufacturer.

If the retailer arcs up, as they sometimes do, that's what the small claims court is for. They pretty much always find in favour of the consumer for reasonable claims.

I'm amazed to hear that the USA doesn't have this level of consumer protection.

Respect goes to ebuyer

[Anonymous Coward]

I recently bought a 37" full HD from ebuyer. It was one of their own brands, that is to say, a no-name that they buy from the far east and rebrand here in the UK, sold exclusively by ebuyer.

The problem with this is, when it broke, 2 months after purchase, I couldnt find a single website or support number for this brand of TV. I called up ebuyer and they took care of everything. After I described the problem they came and collected it, and within a week I had a brand new TV as a replacement.

As far as I could tell they didnt offer to sell me an extended warranty. The TV is under manufacturer (ebuyer) warranty for 3 years.

Re:Respect goes to ebuyer

[hattig]

I don't think you can sell electronics with a shorter than 1 year warranty in the UK anyway, and that is the liability of the *seller* anyway, under the Sale of Goods Act.

http://news.bbc.co.uk/1/hi/magazine/8253915.stm

So that was standard practice.

Credit Cards

[Registered Coward v2]

A number of tehm automatically double the manufacturer's warranty, so for many items buying an extended warranty is pretty much duplication of existing coverage.

Re:Credit Cards

[bryansj]

I've used this a few time already on my Visa. It worked out well and it give up to an extra year on a product purchased in full with the card. You submit the receipt, product warranty, and credit card statement show the purchase along with the cost of repair or replacement. They will send you a check for the lesser of either the original purchase price or repair/replacement cost. I've replaced a Harmony 890 remote twice using this warranty, a dead external HDD, and had a laptop repair after its warranty had expired. One thing that I found interesting was that the Circuit City (R.I.P.) Visa card that you used for the not interest purchases was eligible for the warranty coverage. I would turn down their warranty and tell them that I'm already getting an extra year using their card.

Bought one on my new washer...

[EmagGeek]

After my 5 year old washer died, and they wanted $126 service call plus $170/hr plus $350 for the part to repair it, it was cheaper just to buy a new one.

I've not had a washer last 5 years in my lifetime, so I figure if I could just "pre-buy" a new one for $280, as I did with my new $900 LG washer, it's worth it. Repair is not an option because for some reason, fixing a washer costs $170/hr for labor and astronomical dollars for parts.

Re:Bought one on my new washer...

[hattig]

My stupid Bosch washing machine hasn't died after ten+ years yet, apart from the on/off button falling off (but the switch behind still works). I cannot satisfy my need to purchase holdhold white goods because of this! I'm pining away, waiting for it to fail, but it doesn't, so my needs remain unsated.

My tumble dryer, on the other hand, although it is now six years old, failed in the second year, and I had to pay around £87 for that to be fixed.

Stupid Stupid Stupid

[bsDaemon]

I once had an Office Max employee try and sell me an extended warranty on a mouse pad, which wasn't even $10. If my mouse pad somehow managed to malfunction (seriously?), buying a new one would be cheaper than paying for a damned warranty. Recently, I purchased a Nikon D300 and a 13" MacBook Pro, about 2 months apart from each other, at BestBuy. In each case they attempted to sell me the extended warranty, but gave me 14 days within which to think about it. I told them I'd think about it, then just left, but there was no way they were going to bilk me for an extra $2-300 when the purchase was expensive enough. I'm careful with things, and I can afford to replace them if necessary anyway.

Asus G1S

[Hal_Porter]

I've got an Asus G1S. Originally it had an Nvidia 8600M graphics chip which failed. First time it happened they swapped the motherboard for another one with an 8600M. Next time they swapped it for a motherboard with a 9500M GT. Both swaps were free, even though the replacement motherboards are probably pretty expensive. At that point I was quite close to the end of the two year warranty so I asked if they'd sell me an extended warranty. Needless to say they declined. Mind you the 9500M GT is supposed not to have the defect the 8600M had.

Still there are cases where an extended warranty makes sense. Still efficient companies don't sell products where it does.

Extended warranties are mostly profit

[Anonymous Coward]

I worked on a data migration project for a major insurance company. As part of that project one of the Business Analysts was asked to give us an over view of the business model represented in the systems we were handling. He started his talk by stating that their most profitable line was the type of insurance which people are asked to take out when they make a purchase. He observed that the customer was rarely able to claim because of the way in which the warranty was worded, and that often the retailer made more money from the warranty than they did from sale of the product. We all laughed. Ha ha.

Since then I have not taken out a warranty of any kind on any product. If it breaks then so what. I have saved more over the years than I might loose from the replacement of repair cost of something breaking.

Consumers, or salespeople?

[beatsme]

Maybe this has less to do with consumers, and more to do with the pressure salespeople are under to sell extended warranties (i.e. Best Buy, where I've heard each salesperson has a quota to meet)? As a salesperson, and if I were morally bankrupt, I would certainly use the recession to persuade a customer to get a warranty.

Not a very convincing argument

[FranTaylor]

"I never had a insurance (except where forced by law)"

Somehow I don't think your observations about insurance are based on experience.

Its purchasing a quality drop option...

[vlm]

Consumers 'tend to be more risk-averse and are less willing to absorb the cost of an unexpected product repair or replacement,' says Timothy Meenan, the council's executive director.

Sounds pretty bogus to me. My logic in buying an extended warranty is its an option on low quality. Has the quality of the product dropped enough to now make the warranty a good deal? In the past, sure, it was a ripoff, but now the papers are full of stories about junk from china, inedible food, lead paint on everything, etc. And everyone has the experience of buying something from China-Mart that instantly falls apart or is simply unsuitable for any purpose.

Would I buy an extended warranty on a Milwaukee Tools Inc genuine made in America Sawzall, from perhaps the 1980s? No, that would have been a waste, that saw will run until my great grandkids use it. Note, Milw Tool website declares they're now a "globalized" company so I would assume (perhaps incorrectly) that they only ship Chinese trash now, I'm referring to the products from the good old days. Would I buy an extended warranty on a generic sun-moon-star Inc reciprocating saw from china that doesn't even have instructions in English nor a genuine UL listing? Heck Yeah, that thing probably won't even last thru one complete job!

So the real focus of the story isn't some "adsorbing cost" BS, it is a story about downscaling quality because of lack of spending money. Store brand, or generic, instead of the real deal. And even the real deal is all outsourced to the point of uselessness.

Re:Its purchasing a quality drop option...

[vcgodinich]

There are good products out there, but if you shop at walmart and expect amazing quality you are setting yourself up for failure.

Walmart has good prices, that is what they do, and do well.

Go to another store if you want better quality, but it will cost you more. If you think that quality is declining over the years, perhaps you are just looking in the wrong places, I assure you from personal experience that manufacturers in the 80s' knew that the better the product that they made, the less of a chance people would buy a new one, and they engineered their products accordingly.

They are very aggressive

[GauteL]

Last year I bought a freezer. Recently, just as the warranty ran out I received a letter urging me to buy a £35 three year extended warranty for it for "peace of mind". The letter told me that replacing the engine on it could cost as much as £100. Given that the freezer only cost me £95 to begin with, I wasn't impressed.

When I didn't respond to this shambolic offer,
the insurance company sent me another letter to reinforce how important it is for me to "protect my investment".

I'm pretty sure there are people around who do go for these offers, otherwise why would the insurance company even bother?

It's about the sellers, as well as the buyers

[1sockchuck]

The increased sales of warranties are driven by the difficulties faced by electronics retailers. In an environment where there are fewer customers, stores look to increase the revenue per customer, and the easiest way to do that it to pressure sales associates to sell more warranties. It's an emotional decision ... the conversation takes place at the checkout counter, and rarely in a context where the shopper can take time to make a reasoned, fact-based decision. The desire to get extended life out of the product is no doubt providing an incremental sales boost. But the upsell is getting more forceful, and that's certainly about the economic concerns about the retailer, not the consumer.

Re:It's about the sellers, as well as the buyers

[vlm]

stores look to increase the revenue per customer, and the easiest way to do that it to pressure sales associates to sell more warranties. It's an emotional decision ... the conversation takes place at the checkout counter, and rarely in a context where the shopper can take time to make a reasoned, fact-based decision.

One of the MANY reasons shopping online is better than brick and mortar. I no longer buy "technology items" at B+M stores for this reason, I'm simply tired of arguing with minimum wage clowns about not paying $30 for an extended warranty on a $5 mouse.

Check you state laws

[majesty2180]

This was mentioned in an earlier reply from a Slashdotter in Australia, but I live in the US (ME), and we have similar legislation. We have a state law called the "Implied Warranty Act", where all goods, including used goods (except used cars, unless otherwise contracted by the seller), are protected for 4 years from date of purchase from manufacturing maladies. This is to say, as long as the item is used normally from day to day, the manufacturer is responsible for the costs at a LOCAL repair facility. For instance, my father has a 3 year old microwave (major brand over the range model) in which the magnetron went bad. Since he is protected by this law, it cost him nothing but time to get the microwave repaired.

Another option for increaded coverage

[nolife]

Use an AMEX card to pay for your stuff. They doubles the factory warranty up to an additional year and provides 90 days of accidental breakage or loss. I've used it several times to get stuff fixed and replaced. The AMEX I have does not have a yearly fee and I pay it off every month so the additional cost for this coverage is nothing. I know this is not the same as what some extended warranties offer but this is additional coverage and it is free.

I got screwed over by BestBuy on an extended warranty for a under cabinent microwave before so unless I can get the extended warranty for free or for a very small % of purchase cost, I don't get them any more.

       

Where the hell do you go for pizza?

[standbypowerguy]

I could sure use some naked lady waitress action...

Re:Where the hell do you go for pizza?

[kalirion]

Doesn't sound very hygienic though...

Re:Where the hell do you go for pizza?

[maxume]

Naked ladies are at least as likely to wash their hands as clothed ladies. Being that they are naked, there is even some chance that they are more likely to have taken a recent shower.

Re:Where the hell do you go for pizza?

[Arthur Grumbine]

I could sure use some naked lady waitress action...

Doesn't sound very hygienic though...

Only on /. - where OCD trumps ribaldry.

Any Decent Warranty Companies Out There?

[Slashdot Parent]

Are there any decent warranty companies out there, other than the rip-off ones that the Best Buy clerk is hawking, that deliver good value at a fair price?

I could see paying for one that would come to my home to fix big-ticket items, like the HDTV example in the summary.

Re:Any Decent Warranty Companies Out There?

[WiiVault]

I have no clue if you are a Mac user, but AppleCare is superb compared to many of the others I have read. From what I've read they are pretty flexible and don't usually take ever chance to screw you over. I'm strongly considering it when my 1year ends.

Up ten percent!

[Anonymous Coward]

So does that make it 11% this year.

worth it w/ some cars

[Anonymous Coward]

If you're buying a car then it may make sense to get extended warranty. I definitely got my money's worth out of Ford and Audi (though Audi is CPO, but it's close enough to "extended warranty").

Simple Statistics

[archer, the]

A year ago I purchased a $1200 TV. The store offered a $300 extended warranty. This means they expect at most one in 4 of these TVs to fail in the 3 year period. A consumer review service indicated one in 30 of the TVs failed. At these failure rates, it's much cheaper for me to buy a new TV if one fails: $37,200 for 31 TVs (30 without extended warranty + 1 replacement), or $45,000 for 30 TVs with the extended warranty. (Obviously, I'm not buying 30 TVs. But 10 over the rest of my life would not be unreasonable, saving me over $2000.)

Re:Simple Statistics

[nedlohs]

Insurance is always a bad bet, otherwise the insurance company will send itself into bankruptcy (thereby making those policies bad bets anyway).

So that's not the issue, the issue is can you afford the repair/replacement cost if you are the unlucky one with the failing item.

Insuring your house is a bad bet too, statistically it is cheaper to just pay to build a new one if it burns down then it is to have insurance. But most people can't afford to do that so paying more, statistically, is beneficial. I doubt a cell phone or TV falls into the same category :)

Re:Simple Statistics

[archer, the]

Yes, the insurance should cost more than the replacement. The key is, how much more? 10:1 for the TV isn't worth it. I don't have statistics for probability of loss of a house :)

Persuasion carried out by different means.

[LoyalOpposition]

Yeah, I never buy extended warranties on appliances and electronics because I've heard that the companies rake in about ten times more than they pay out in repairs. But now that lots of people are buying extended warranties, maybe something has changed that makes it reasonable.

~Loyal

p.s. Wait a minute! Who's telling me this!

DLP

[digitalsolo]

I almost never buy these warranties, with a singular exception:

Big screen DLP televisions.

The ability to have a bulb replaced for free pays for the cost (150 dollar bulb, 90 dollar 5 year service plan). They will replace two bulbs. If I lose one, it's worth it. If one hasn't failed in 4.5 years, I'll just kill it. Woo, profit.

When I used to work in sales

[hamburgler007]

The store would push employees to sell warranties more than anything else. Even to the point where they had week long training seminar specifically for selling warranties. There was one salesman who would pull some dirty tricks like adding the warranty to the sales ticket without even asking the customer. Despite this, and his abhorrent body odor, he still managed to outsell most of the other people on the floor.

Best add-on for my Big Screen

[Anonymous Coward]

12 days after the official warranty expired on my 57 inch 250 lbs TV it broke - no video. But at the time of the purchase I could get $500 off the price if I paid for the $250 extended warranty. So I took the extended warranty and saved $250 instead of saving $500. Not a big deal on a $5000 TV.

They came to my house to repair it. They double check every line on the the extended warranty and their was no faults. So the $2500 repair bill was paid for by the the extended warranty! Happy me. The TV repair guy was at least honest and said the issue was common on my TV and occurs nearly 100% of the time after the manufactures warranty. He said the replacement part are just that so he expect it to fail again in about 3 years time and he gave me some advice on what to look for before it totally fails.

Right on Schedule failure signs are starting to appear. So thanks to the TV repair guy I have some time to look for a suitable replacement TV instead of spending a tone of money on another repair bill.

Not gonna buy them

[russotto]

On electronics, I think extended warranties are pretty much always a bad idea, because of the effective depreciattion. I could have spent a few hundred for an extended warranty for my $3000 TV a few years ago.... but if it breaks today, worst case I can spend another less than $1000 for a better TV. Same goes for computers; by the time the computer is out of its regular warranty, one can buy an equivalent or better model cheaper if it breaks. So the possible payoff of the extended warranty is much less than would appear based on the retail price of the product.

For durable goods, a service contract might be a better idea, but in my case I'm reasonably confident of my ability to diagnose and repair a lot of the common things which go wrong, so I still skip them. If you're not at all handy, the extended warranty might be worth it.

There's also the inconvenience. Getting a new device is usually much easier than jumping through the hoops required to get warranty service. And often faster, too.

And a lot of times, extended warranties (particularly when not from the manufacturer) are simply complete ripoffs. For instance, I once got a digital watch as a gift, with extended warranty from the store (Sears, to name names). Which in the small print excluded case, crystal, battery, and band. Aside from the battery, that pretty much covers everything likely to break. Sure enough, the case did break where it attached to the band -- not from abuse, either. I brought it to the store and they pointed out the warranty didn't cover the band. I pointed out the band was fine and it was just where it attached that it was broken... fortunately they didn't recognize that that was part of the case.

No kidding

[SmallFurryCreature]

Extended warranty on earphones. Oh they break fast so it SEEMS like a good deal, free replacement. Except wear and tear are not covered and what do they break off? Wear and tear... AND often within regular warranty too.

I think people got jealous of the lawyers, what with them surviving the nuclear holocaust and all, and thought "how can we be lower then the lawyers". And the answer "sell mobile phones". Good luck!

Used to work for Circuit City

[Anonymous Coward]

After working commissioned sales while putting myself through grad school, I will never purchase an extended warranty on anything. I pushed the extended warranties very hard on customers not because I was concerned for them, but because of the commissions on them and the pressure from management to sell a certain percentage of them or lose my job. Whenever we sold a computer or television with an extended warranty, we would say we got it "with cheese on it." Commission rates on computer hardware sales were 1%, Televisions were 2%, home audio 4%. Accessories sold gave 10% commission (can anyone say Monster Cables?), and the extended warranties paid us 15%. It's no wonder your salesman thinks they're the greatest thing since sliced bread.

I quit that job when they closed the store down for a day, and called us all in for a meeting to kill commissions. They offered me an hourly wage that was 1/2 of what I was averaging on commission, and I told them where to stuff that job. The pressure from sales of warranties at Best Buy comes from management. The sales employees must maintain a certain percentage of warranty sales just as I did, except now the store keeps the 15% commission for themselves. The employees are only paid straight hourly wages.

Business class warranty uplift on a notebook

[Rastl]

That is the best investment I could have made. Buying a business class notebook through work's discount program got me a much better product than the consumer one. The warranty uplift cost $79 for three year, next business day, onsite warranty service. I've had to use it three times. The last time was 2 years 10 months after I bought the notebook and they sent a new one rather than fix the old one.

Best of all they hosed the warranty transfer so I could buy a new warranty uplift (buying one off the 'old' warranty was much more expensive) so I've got a new notebook and 3 years of great warranty service. I see a non-fixable hardware failure happening 2 years and 10 months from the replacement date.

Extended warranties can be worth it if the warranty actually improves the service you receive. Spending a little money to go from taking/sending the product to a service center to having in home service is great for things like large appliances and other items where it's just a headache to try and get the thing anywhere or when you don't want to or can't be without whatever it is.

Then there's the warranties for stupid products that will cost less to replace when they do break than to deal with trying to get it fixed. Microwaves, keyboards, stuff like that. Sometimes the price of the warranty is the same as the item. I despair for humanity when I see people buying them.

Warranties

[gurps_npc]

The basic problem is that a product should not need a warranty. The producers originally include them for free as 'proof' that their product is not a piece of crap. People don't buy a warranty for clothing.

Warranties/insurance for expensive items make sense. If your home burns down or your car breaks, you might not be able to afford to fix them. But it doesn't make sense for cheap things. You see the companies selling them (as opposed to giving them away for free) are making a profit. So the money everyone gives them exceeds the money the money they will give out. PLUS you have the rather large inconvenience of attempting to get your money if the product breaks. Not easy.

So the idea of paying for a warranty for something less than a month's salary, seems extremely counterproductive. You can afford to replace it if it breaks down due to bad luck. The only reason to do so is if you think the chances of the piece of crap breaking down is GREATER than the warrant-er thinks + the inconvenience of dealing with them.

Especially considering you probably buy more than 10 pieces of 'warrantable' items a year. It makes FAR more sense to simply put an extra 10% of the cost of each item into a 'warranty jar'/bank account and when something breaks, take the cash out of that.

Re:Warranties

[geekoid]

My TV was less then 1 months salary; but the extended warranty covers accidental damage as well, like someone tossing a Wii controller and breaking the screen.

Re:Warranties

[gurps_npc]

Assume you had self-warrantied like I suggested. Also assuming you are the average american. So you get:

10% of the cost of your TV

10% of the cost of your Nintendo Wii

10% of the cost of your mobile phone

10% of the cost of your PC

10% of the cost of your mobile entertainment device (Ipod/kindle/etc.)

10% of the cost of your GPS/digital camera/camcorder

10% of the cost of your DVD player

10% of the cost of your sound system

Now for the non-electronics

10% of the cost of the add ons you bought for your mobile entertainment (Ipod music, e-books)

10% of the costs of all your home add ons (Wii games/DVDs/etc.)

10% of the cost of your most expensive worn item (jewelry/winter jacket, etc.)

Now, add back in the cost you saved by NOT buying that crappy over-priced 'warranty'.

Does this pay for a new TV? It does for me.

Frankly, unless you are really clumsy/unlucky, it makes more sense not to buy those warranties.

Requisite Simpsons' Reference

[bradgoodman]

[Dr. Hibbert: Nailing a nail into Homer's brain to restore lost brain damage brain damage, while trying to assess the amount of damage]

Homer: "Extended Warranty? How could I go wrong?!"

Lisa: "Perfect!"

Worth it on printers

[halcyon1234]

You know what's worth getting the extended warranty on? Ink jet printers, if you use them with any frequency.

The home models are pure crap. I can almost guarantee you that it will die within about 3 years. It'll break a roller, or get clogged with ink, or some stupid scrap of paper will get caught way down there, or some dumb thing. The lights will blink in an unhelpful manner.

Then you march down to the Worst Buy you got it from and get it serviced. Except no one there has any knowledge, let alone knowledge of printers. They can't fix it, and the thing is so damned disposable it isn't worth the freight to ship it back.

They'll punch some buttons then tell you it'll be a few days to fix the thing. If they can't, and they won't, you'll get a new comparable printer as a replacement.

When they give you that printer, offer to buy the extended warranty again. It'll cost you another $20, but you'll get a newer model, and it will come with a "full" set of cartridges.

Do this right, and you'll never have to buy a new printer again.

Most post seem pretty myopic when it comes

[geekoid]

to extended warranties.

There value depends on several factors:
Cost of the warranty, Service, Cost of the item being purchased, and risk they item you buy will break in a manner covered by the warranty.

Some example:
I have an extended warranty on my Big Screen TV. The warranty cost 100 bucks. It covers pretty much everything, including my kids hucks a Wii controller at it, or it falling off the stand. Pretty much everything. If it breaks it gets replaced.
Since I have an active household, Two kids ages 9 and 11 plus a lot of their friends, plus a lot of my gaming friends.

Looking at the risk v. reward it was worth it to me.
If I lived alone, probably wouldn't have gotten the extended warranty.

One of the 2 times I bought a pre-built PC was from CompUSA*. I bought the extended warranty. Why? because it was 30 bucks and covered 5 years. (this was in '97). 4 year later my computer wasn't functioning properly. I shipped it to them and they shipped a new top of the line model back. All at their expense. Again the risk reward was good.

I have had people try to sell me extended warranties which is exactly that, a manufacturers warranty with an extended deadline. Those are almost always a waste.

*It was a fantastic deal, and to this say I still suspect it was mistakenly reduced 80%

Your analogy fails

[LateArthurDent]

Exactly.

There are people who can't afford to purchase extended warranties for their devices. Therefore, they deserve to have the extended warranties given to them. To do that we will tax the better extended warranties 40%, and will also penalize people who choose not to purchase them.

Heh...Are you aware of the large body of customer protection laws dealing with manufacturer warranties? Extended warranties are just that...extended. Above and beyond what everybody already gets.

I don't think the people you are arguing against would have a problem with the laws ensuring they all get health care coverage, but allowing for people to buy supplemental insurance for additional benefits. That's would be the proper analogy for extended warranties.

Re:Your analogy fails

[Ethanol-fueled]

Having worked for a desktop/laptop repair contractor for Best Buy, I do not take even warranty service seriously (though I'm not bashing my former employer, we all were competent people who did the best we could even though people often had no resources or idea what was going on ;)

Go into a BB store and look at their "no lemons" policy. If a new item has to be returned four times you get credit or a new computer. An item should have to be returned no more than once!

...And you never know when a popular chip maker will ship a bad batch out the door leaving the computer vendor's Indian or Filipino tech support to lie about it and try to blame it on the customer (ahem, HP). Meanwhile, my ancient Dell Latitude D600 still chugs along nicely after all these years, even after having been dropped, left in direct sunlight, and splashed poolside. I haven't even had to blow air through it yet.

It's a sad state of consumer affairs when older electronics outlast newer ones.

I bought one.

[Anonymous Coward]

I bought a Toshiba 52" DLP from Best Buy in 2004 and got the $400 extended warranty, because at that time they covered all the lightbulbs. They replaced the bulb 3 times, which more than covered the cost of the plan. Then, about 8 months before the warranty ran out, the light engine went out, and Toshiba quit making the DLPs, so they couldn't replace the part. I ended up with a 67" Samsung LED DLP as a replacement set. Needless to say, I bought the warranty again.

You already get an extended warranty

[r_jensen11]

Visa Signature, Mastercard, and AMEX already provide extended warranties when you purchase items with their branded cards. It's just that nobody ever knows these benefits. If you want to find out what benefits your cards have, see the links below (benefits vary by the bank and card- Citi may include different benefits than Chase, etc)

Mastercard
VISA Signature

Sears

[200_success]

I recently bought a dishwasher at Sears Canada, and was offered an extended warranty. If you end up making no claims within the five-year term, you can call them and get your money back as store credit. Seems reasonable to me, so I went for it. Now I have to remember to call them after five years.

We need a plague

[Anonymous Coward]

We need something to kill off all the stupid people. Even people right here posting on this page are stupid enough to defend extended warranties even though it is easily proven that they are a bad idea. The problem is stupid people are being protected too much, and they keep on breeding ("Do you have protection?" "Don't worry, I'll pull out." "Oh, ok then."), so we end up with more and more of them. What we need is a good old-fashioned plague. Now I'm not talking about these recent (bird flu, hamthrax) "epidemics" that everyone panics about, but that has no real impact on the population. Nor do I mean AIDS; that's just too slow. I mean we need a good, solid, wipe-out-two-thirds-of-the-population, carried-by-rats-and-mosquitoes kind of plague. People smart enough to obey quarantines and take proper precautions: better chance to live. People who don't: better chance to die. Statistics will eventually prove itself. Sure, we'll lose most of our politicians, and California will be mostly empty, but in the long run, we'll be stronger for it.

Are you telling me this is no good

[FrankHS]

When I get the "You need to buy the extended warranty" pitch I look incredulously at the salesman and ask, "Are you telling me this is no good?". The vast majority of these extended warranties are just plain rip offs.

Do the math

[FrankHS]

At the risk of stating the obvious, do the math.

Do a rough calculation of the percentage that the warranty costs vs. the value of the item. Then make an estimate of the probability that the item will need repair during the period of the extended warranty (say year 2 and 3) of a 3 year extended warranty. This often looks like a toss up.

Add to that the fact of depreciation. The computer you pay $1100 for today will be worth $100 in 5 years. In this example it drops in value about $200 per year.

Add to that the hassle in getting a warranty repair ( your time involved in finding your paperwork, getting the warranty company to actually honor the warranty, your own willingness to persist in getting the repairs completed, etc).

It almost always turns out that you would be better off saving the warranty money in a replacement account that you could use when some item failed.

Understand something simple:

[Whuffo]

The cost of the extended warranty is sufficient to cover any expected repairs the item may need - and also provide a nice profit to the issuer of the warranty and the retailer that sells it.

Modern electronics are very reliable and the extended warranty industry has grown up to take advantage of this. You'll never hear from the 99.9% who have no trouble at all with their "widget" and that one that does will squeal loudly - and maybe collect on his warranty. Recently, the warranty companies have been trying to trim even that liability from their operations and consumers are finding that the warranty they bought has conditions and "gotchas" that prevent them from receiving the coverage they thought they bought.

If you're buying something that's known to be failure prone, then the warranty MIGHT be a good idea - just remember that the warranty company knows it's unreliable and has priced the coverage accordingly. It might prevent a large bill that surprises you - but in the long run you'd be much better off to just say NO to the coverage.

Here's my rule: if the extended warranty is important to your purchasing decision - you can't afford the item. You can either pay for the repairs, or you can pay for the repairs plus a nice fat profit for the retailer and warranty company. Does this sound like a good deal to you?

72 hours

[Anonymous Coward]

The estimate is that a device (solid state electronic with no moving parts) will fail in the first 72 hours of operation - or never.

Most warranties cover you for at least that long.

Another consideration with high tech devices is that in two or three years, getting your two or three year-old device fixed as 'good-as-new' may be less desirable than getting the latest/more powerful/lighter/faster model. (Which may even cost less than the cost of the warranty!)

Be careful

[bostongraf]

When purchasing my last iPod, the BestBuy salesman wanted to sell me the ext warranty. I declined, and he expressed concern, because "they generally don't last much more than a year". To which I responded by showing him my generation 2 iPod that I had been using for somewhere around half a decade. I explained that it still worked just fine, I just wanted more space.

The point is, be careful with the things that you buy. Don't treat your portable devices like they are indestructable. Don't throw your WiiMote at your TV. Use an air canister on your computer. Change the fluids in your car.

And don't spend money on something you can't afford to lose or replace or repair.

You may know about "that psychology"....

[jotaeleemeese]

"I can tell you that we're a few inches away from a Bolshevik party."

But clearly know nothing about history or politics for that matter.

If you are so disorganized is nobody else's fault.

[jotaeleemeese]

I am sorry, but this is a bullshit excuse.

Get a filing cabinet, put aside 2 or 3 divisions for receipts and guarantee papers (electronics, software, others, whatever!) and then file them in chronological order.

Unless you are buying something every day (are you?) I fail to see how somebody can't stick to such basic method of archival.

Same old Apple: "something non-user replaceable"

[jotaeleemeese]

The only things that are not user replaceable are things soldered to the board, and this only because it was made by a machine in all likelihood,

But an HDD?

Really?

You have read!.

[jotaeleemeese]

So you don't know ...

Peace of mind?

[jotaeleemeese]

I have seen the term mentioned several times in the thread.

Do people really get peace of mind by buying overpriced, unnecessary cover?

My "peace of mind" (whatever that is really) I am sure is not going to be disturbed if I am unlucky enough to have to replace something that breaks out of its statutory covered period (quite long in the UK).

So far I have never been in that position, when something has broken it is normally between the warranty period.

If you just sit down and do the math the numbers simply don't add up. Now, knowing I am not wasting my money unnecessarily certainly gives me "peace of mind"

What people selling you guarantees are counting on is that you don't have time to make an objective judgement, which it seems many people don't do.

Re:If you are so disorganized is nobody else's fau

[lena_10326]

Bookkeeping was only one reason. There are other reasons why purchasing insurance at the cash register is bad: claims filing is more difficult with multiple companies, cost-wise it doesn't pay off, effectively works like a tax, better single policy single company insurance plans are available for all your stuff, no comparison shopping of insurance plans.

Re:Same old Apple: "something non-user replaceable

[amake]

It depends on the model. I once had an iBook that required an almost complete teardown in order to get at the HDD. But these days most Apple machines have easily-accessible HDDs that are of course considered to be "user-replaceable."

Consumer vs Commercial Electronics

[darkmayo]

A good portion of my job is to asset risk and advise on extended coverage and warranty enhancements for small/medium and enterprise businesses on there fleet of servers, desktops, laptops etc. From what I know from that and what I see I tend to only buy warranty on electronics that I spent a fair bit on and that I would be inconvienced if they were to fail.

You have to look at it how important is the device to you, how long to you expect to be using, and of course how much would it cost to replace the unit completely.

In business when it comes to servers for example you have to figure out how critical the server functions are, how long of a life the server is expected to have as well as the cost impact to the company if that server was to go down. Its the last one that usually has the most impact to a client, especially when they compare the cost of it down for a hour to how much the enhanced warranty is. Of course things like a test/dev server would likely get a reduced warranty compared to an exchange server or a domain controller.

Just take the general idea there and apply it to your own purchasing habits. Extended warranty on a cell phone... what you are fucking stupid will you even want that phone in a year after the newest of the new comes out? A TV or washer dryer that you want to last for 5+ years, I think its a good idea.

Be smart about it, listen to the salesman, ignore his pitch but listen to the details, what does this warranty do for you.

overpriced

[Anonymous Coward]

retailers make a big chunk of their profits selling "warranties"

www.wholesalewarrantyclub.com