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These days it seems like you can get an extended warranty on practically anything. But are they worth it? A lot of articles on the internet say ‘no’. But the answer isn’t quite so simple.
From the retailer’s side of things, an extended warranty seems like a no-brainer. After all, you can get extended coverage for only a small portion of the original cost. But a retailer’s purpose is to make a profit. If that’s the case, why would they offer the extended warranty?
From a statistical standpoint, there is no reason to buy a warranty. It’s like going to the casino – the house always wins in the end. But, most people opt into the extended warranty because of “regret avoidance” – they don’t want to feel foolish if something does break.
Here are a few guidelines for when to say yes and when to say no:
When you SHOULDN’T get the extended warranty
- When you’re purchasing a reliable brand. It may still break, but the odds are in your favour.
- When the cost of the repair is cheaper. If the cost of the warranty is more than 20% of the product’s price, it’s probably not worth it.
- When the free warranty from the manufacturer is sufficient. Be sure to check – what does the free warranty cover, and for how long? Does this make the extended warranty redundant or unnecessary?
- When the extended warranty only covers specific types of damage that is unlikely to happen to you.
When you SHOULD get the extended warranty
- When peace of mind is more important than the cost of the warranty. If purchasing the warranty makes you feel better, then it’s money well spent.
- When you’re purchasing a high-ticket, previously owned product, like a used car. The unknown factor in addition to the
- When the extended warranty offers a replacement for when your product is being fixed – and you don’t want to go without for the duration (like for a cellphone or tablet).
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