Do you do extended warranties?

Asked by Jamie from North Carolina

Jamie:

We do not offer extended warranties (also known as service contracts) of any kind, but that won’t stop us from sharing few opinions. You can take them or leave them.

In short, caveat emptor. (That’s Latin for “buyer beware.”) Many extended warranties are not worth the money.

First, let’s get our terms straight. An extended warranty is coverage on a thing (car, appliance, etc.) that kicks in when the original warranty (if there was one) expires. The most common kind of extended warranty is the kind the teenaged clerk at Best Buy tries to sell you as you’re paying for your new lap top or washing machine.

Warranties sound a lot like insurance policies, but the two differ in one important respect: insurance is meant to protect you from financially catastrophic losses. “If repairing your washer is in that category, then you should not be buying a new washer,” says economics writer Megan McArdle. In other words, if paying to repair your new washer would be financially ruinous, then you simply cannot afford the washer, period. There’s no point in discussing extended warranties. Put the washer down and exit the Best Buy.

While the prospect of having to fix or replace a new appliance—one you just shelled out a lot money for—is scary (sellers of extended warranties make a killing by capitalizing on this fear), the odds are actually pretty good that you won’t have to do it any time soon. And even if you do have to repair your new washing machine, the odds are decent that (a) it will be covered by the manufacturer’s warranty or (b) the repair costs will be less than what you would’ve paid for the extended warranty.

Instead of spending money on an extended warranty, consider spending more time reading Consumer Reports and product reviews. That way you can be confident you’re choosing the most reliable car or appliance out there.