EXTENDED WARRANTIES - Are they worth it?
Mar 20 '00
This subject stirs up a lot of emotions about pros and cons of buying extended warranties. First and foremost, these extended warranty contracts are a HUGE profit maker for the retail store or auto dealership.
THE GOOD I'd recommend buying an extended warranty on products that are in their first year of production. Me? I wait until the second year and let the manufacturers iron out minor defects and flaws. Read the fine print on the extended warranties. What do they cover? Do they cover both labor and parts? How long does the extended warranty last? I have purchased only four extended warranties (all from manufacturers). They were from Sears (washer, dryer and refrigerator), Jeep (Chrysler), Honda (automobile) and my current vehicle, General Motors (GMC). The only ones I have ever used was Sears, Chrysler and General Motors. So why did I buy these extended warranties? I have been a customer of Sears for years and their warranties can't be beat (no hassles). Sad to say it but I knew Chrysler and General Motors have certain problem areas in their automobiles so it was a no brainer.
THE BAD In the 1990's many extended warranty companies went belly up and left many consumers with worthless pieces of paper. In my business, the photographic/video industry, the typical charge for extended warranties is between $59 to $500 depending upon the type of product and term of the policy. It is my estimation that only 2%-5% of all extended warranties are ever used (this estimation is for the industry I work in).
SUGGESTION: If you want to purchase an extended warranty, ask the sales clerk these questions: 1) May I have the name(s)and address(es) of the extended warranty company? 2) What happens if this company goes out of business? Do I get a refund on monies paid? 3) Will there be a back up insurance policy to cover situations when and if the extended warranty company goes out of business? Also demand that if your product ever has to be repaired that it go directly to the manufacturers factory service center only. Do not allow your product to be repaired by a non-authorized service center(s). If a non-authorized service center tampers with your unit; the manufacturer will almost always charge a major repair fee to "undo" the damage.
THE UGLY Buy extended warranties from the manufacturer. Most manufacturers will not honor third party extended warranties. This means YOU must pay for the repairs and get reimbursed from your extended warranty company. Don't expect the manufacturer or its employees to handle the paperwork and reimbursement paperwork for you. If you buy the manufacturer's extended warranty you know they will back up their service contract. You have the leverage in case anything goes wrong. And besides, who is better equipped and trained to work on your product? The manufacturer, right? Would you take your Ferrari into a Hyundai dealership?
SUGGESTION: Call the manufacturer and ask if they sell an extended warranty for their product. This is a good time to ask the manufacturer what is the life expectancy of the product in question. What is covered under their extended warrant(ies)?
The bottom line is, in general, extended warranties are a waste of money.
"Caveat emptor" Let the Buyer Beware
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viper1963
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Member: Steve
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