Whether buying an extended warranty on a new appliance makes sense or not depends on a variety of considerations, due in part to the fact that the coverage and protection afforded by these warranties has changed dramatically over the last decade.
Here are some of the considerations that should be assessed to determine the value of an extended warranty:
- Cost versus potential savings and/or replacement – An extended warranty will add to the purchase price of an appliance but the value is a function of the percentage of that increase. The extended warranties on smaller appliances can raise the purchase price by 35% or more, which decreases their value substantially. On the other hand, a warranty on a major appliance will likely be a much smaller percentage of the purchase price.
- The coverage provided by the extended warranty versus the manufacturer’s warranty – While the warranty from the manufacturer will be relatively comprehensive, an extended warranty may have a level of coverage that is much less robust. Be sure to read the fine print to see how you’ll be protected.
- The complexity of repairs – Many major appliances are fully integrated with computerized features that will likely be beyond the skill set of a local handyman to repair. If you’re purchasing an appliance that is loaded with computerized features, an extended warranty can save a lot of money in repairs.
When purchased under the right circumstances, an extended warranty can be a great investment. By avoiding warranties on lower cost items while purchasing protection on your major appliances, you’ll be in a position to replace and repair appliances in the most cost-effective manner possible.