The Pros and Cons of Electronic Warranties

warranty
source: Eric Solheim

The debate over whether extended warranties are worth their cost has been around since they were first introduced. Consumer Reports has maintained from the beginning that these warranties are almost never worth the purchase price, while other consumer electronic sites and experts support the purchase of them on a case-by-case basis.

So how do you decide?

First, let’s look at the Pros and Cons of purchasing a warranty:

Pros of Extended Warranties

  • offers peace of mind when making a large purchase, such as a new computer
  • minimizes unexpected repair costs later on
  • often includes additional benefits such as on-site repair at your home or a loaner product while yours is being repaired
  • may include free phone support as well for non-hardware issues

Cons of Extended Warranties

  • costs more upfront
  • may require you to send your product out for 2-3 weeks for repair
  • may cost more than the repairs themselves would have

Other Considerations

In general, it’s important to remember that extended warranties are promoted so heavily by manufacturers and stores not because they’re beneficial to you as a consumer but because they have an extremely high profit margin for companies. Like other forms of insurance, companies carefully weigh the costs and risks before pricing the warranties, and they count on you not using them.

Of course, there will always be stories of people who have used a warranty to replace an expensive electronic that was outside of the regular warranty period, and I have no doubt that they believe the cost of that warranty was worth it. If you purchase a lot of electronics, though, you may be spending more on warranties than the cost of replacing the one item that might break and be replaced under a warranty.

That said, there are a few situations where you might consider an extended warranty:

  • When the cost of the warranty is very low compared to the cost of the product. You should never pay more than 20% of the price of an electronic for a warranty, but if you’re able to get an extended warranty for under 10% of the price, it may be worth considering.
  • When purchasing a new product or technology. If you like to purchase the latest and greatest gadgets, an extended warranty may be a worthwhile investment for you since the quality and longevity of your next purchase might not yet be proven.
  • When an item has lots of moving or delicate parts. If you’re purchasing an item with a lot of delicate and/or moving parts that have a higher chance of getting broken, an extended warranty may be a good choice. However, make sure that the warranty doesn’t exclude bumps and normal wear and tear from service.

In general, you can minimize the need for an extended warranty by taking good care of electronics, following manufacturer instructions for care and maintenance and using a protective case for portable devices.

How do you feel about extended warranties? Have you ever wished you’d purchased one?

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