Getting started
You might be tempted to buy an extended warranty on your next laptop or dishwasher or a service contract for your new car. But chances are what you spend will be money down the drain.
Retailers push hard to get you to buy extended warranties or service plans because they're cash cows for them: Stores keep 50 percent or more of what they charge for warranties. That's much more than they can make selling actual products.
Extended warranties are notoriously bad deals because:
- Some repairs are covered by the standard manufacturer warranty that comes with the product.
- Products seldom break within the extended-warranty window--after the standard warranty has expired but within the typical two to three years of purchase--our data show.
- When electronics and appliances do break, the repairs, on average, cost not much more on average than an extended warranty.
We've long found extended warranties to be a bad deal for you and advise against buying them. Note that you might want to consider an extended warranty for a repair-prone brand, provided that the warranty is inexpensive and comprehensive and the cost of repairs tends to be high.
Stingy manufacturer warranties
In recent years, manufacturer warranties have become skimpier, especially for labor, on expensive goods such as laptop computers. Terms that used to be one year have dwindled to 90 days in some cases, making repairs potentially expensive even if the parts are free.
It's important that you investigate the warranty coverage before you buy any product, and patronize those manufacturers that offer decent warranties. More important, buy from manufacturers whose products are reliable in the first place. Brand-reliability information for major products we test is available to ConsumerReports.org subscribers.
Overall, most products have been reliable enough that we don't think you need an extended warranty.
Warranties did not necessarily provide better service. Among survey respondents whose repairs were covered by warranties, 60 percent were highly satisfied and 22 percent were dissatisfied with their repair. Those numbers are remarkably similar to the percentages found for those who paid for repairs out of pocket. Notably, repairs covered by warranties had slightly more problems than repairs covered out of pocket. And they were:
- More likely to have taken at least two weeks (28 percent compared with 16 percent for out-of-pocket repairs).
- More likely to have resulted in a repair not done correctly the first time (22 percent compared with 13 percent for out-of-pocket repairs).
Those findings were consistent across the wide range of products assessed in our analysis.
Electronics warranties
Just about anyone who has purchased a personal computer has also heard a pitch for adding an extended warranty. These plans typically cover repairs beyond the standard factory warranty; some also include tech support or coverage for theft or accidental damage.
Buying a computer warranty might be worth considering for the following reasons:
- For a laptop that you're planning to use a lot on the go. But make sure it includes theft or accidental damage.
- To extend your tech support coverage if you're buying a Mac. While Apple has strong tech support, without a service contract its coverage is pretty skimpy.
What about other electronics? Sixty-seven percent of in-store shoppers in our latest survey said that sales staff had pitched them on the idea of buying an extended warranty. Perhaps that explains why in-store electronics shoppers were more likely than online shoppers to buy an extended warranty (14 percent vs. 6 percent). Overall, the median price paid for an extended warranty or service contract was $73 in-store and $64 online.
Those possible exceptions aside, though, we think extended warranties for computers and other electronics items are bad investments. In past surveys, we've found that the vast majority of repairs are made while items are still covered by a factory warranty and that extended warranties typically protect, at relatively high cost, against a very low risk of a catastrophically expensive repair. And bear in mind that buying items with some credit cards extends warranties at no additional cost.
Appliance warranties
Eighty-six percent of shoppers for major appliances in our latest appliance-store survey said their checkout didn't conclude without at least a suggestion that they purchase an extended warranty. At some stores, shoppers felt "strongly urged" to spring for the extra coverage. The median price paid for an extended warranty or service contract was $114 for a major appliance and $39 for a small appliance.
We don't recommend purchasing a warranty or service contract, because most repairs do not occur during the limited time period covered by the extended warranty. But some consumers told us that because of the growing complexity of major appliances and their habit of breaking, they opted for an extended warranty. If you do buy one, be sure you understand its terms, particularly how it differs from the standard warranty and which years it covers. (Some extended warranties overlap with the standard ones.)
Visit ConsumerReports.org for our latest information on Extended Warranties
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