When Should You Buy A Warranty?

SmartMoney has added its opinion to the argument of what warrants extended coverage and what doesn’t. Here’s their list of when and why you would want to buy that extended warranty—adjust their advice accordingly based on your own tolerance for risk and your history with dropping and spilling things.

Consider a warranty or service plan if:

  • 1. You’re not tech savvy
  • 2.You’re clumsy
  • 3. You use the device or product above whatever’s considered “normal” use
  • 4. Your gadget is cutting edge, refurbished, or expensive
  • 5. The device is known to be problematic (their example: rear-projection TVs, which are three times more likely to require repairs than other types of sets)

“When Buying a Warranty Makes Sense” [SmartMoney]
(Photo: Getty)

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  1. godawgs7 says:

    The best warranty I ever purchased was the comprehensive one for my HP laptop when i headed off to college.
    About 2 months in, my best friend came to visit and in a drunken stupor confused my laptop for the puke bucket.

    Needless to say, HP replaced it for free and my friend only owed me the $200 for the warranty.
    On a side note, i don’t think HP ever believed my friend was the one who vomited. So it got to the point where I would call them and say, “yea, im the guy who threw up on the laptop” and they would bring up my account w/o even getting the claim #. Apparently, my case was the highlight of their month and everyone had a copy of the claim on their desk.

  2. Parting says:

    @godawgs7: Ha! Ha! I’m sure you’re their legend. You deserve your laptop replaced just for 5 minutes of laugh every agent in the building got :)

  3. Parting says:

    I always get -replacement- for some of small electronics. For example, I never got a WiFi router or an inkjet printer lasting the whole 2 years of replacement warranties I purchased. So in these cases, it’s well worth it.

  4. Parting says:

    @godawgs7: I read somewhere that laptops is one of the electronics that you SHOULD buy extended warranty.

  5. num1skeptic says:

    i hate it when its called an extended warranty. in the car biz, a warranty means FREE! otherwise its a service contract. but i would always suggest buying the service contract for a vehicle (when its an option to finance the cost.) there is not one single vehicle out there, that won’t end up in the garage at one point or another.

  6. balthisar says:

    @chouchou: whoah? What are you buying? My HP inkjet dates from 1999, and my router from 2002. My LCD died after 13 months, though, and it was a good brand name. Sam’s took it back without a question, though.

  7. balthisar says:

    @num1skeptic: The thing with those, though, is they have deductibles. So, you need to replace the alternator, but they’ll authorize a refurb at $100 + $100 for labor, but your $250 deductible doesn’t get touched. One day it’ll need a transmission, but as long as it’s not a Chrysler, it’ll easily last 100,000 miles. If you want a 0-deductible warranty, it’ll be pricey. If you buy an old car, it’ll be pricey. There’s almost no condition in which buying an automobile service contract is a good financial decision. Sometimes, though, I would imagine that “peace of mind” could be worth the money, but it’s still a bad decision from the financial standpoint.

  8. quail says:

    My 3 year Dell warranties on my business machines (1 laptop and 1 desktop) were well worth the littl bit extra. The laptop went through 3 LCD screens and my desktop got a new hard drive, CPU, and motherboard one month before the warranty expired.

  9. Techguy1138 says:

    Apple products are a good case for getting the extended warranty. The less computer savvy the better.

    They provide extra classes at Apple stores, some free phone tech support and you get a lot less hassle when you needs repairs from them.

    It’s really the warranty and level of service you would expect for a high grade consumer product.

  10. hc5duke says:

    @quail:
    My Dell laptop warranty also ended up saving me a butt-load of money. In the 3 years I’ve had it, they’ve replaced the monitor (not because anything was wrong with it, but because the attached speakers went bad), hard drive, two motherboards, and RAM. In all these cases, I fully admit guilt (just not to Dell :-p), so the warranty in the end saved me the price of a whole new laptop.

  11. Parting says:

    @balthisar: Maybe not as much buying, as using way too much. More you use these ”made in china” electronics, quicker they are to die.

  12. ShortBus says:

    Forget where I learned this, but it’s served me well:
    1. Open an ING Direct or other high-interest bearing savings account. (ING currently yields 4.2%)
    2. Every time you make a purchase that you’re considering buying an extended warranty on, instead put that money into your special savings account.
    3. When one your “self-insured” items breaks down, make a withdrawal to either repair or replace it.

    You’re almost certain to come out ahead.

  13. Aladdyn says:

    I bought a projector for watching movies on and bought a 5 year warranty for $125.00. SInce a bulb costs 400 – 500 to replace I figured it was one of those times when it was worth it.

  14. 8abhive says:

    For important notebook computers that see daily movement, definitely.

    In two years my Dell inspiron extended warranty has replaced: HD twice, screen, keyboard, and motherboard.

    They lost money on that warranty.

    If I were doing it again I’d trade the higher price of a tougher system for the downtime. I’d probably still want the extended warranty though; These things go everywhere with me.

  15. spinachdip says:

    @quail: I second the recommendation for Apple Care – despite all the complaints I’ve read on this site, they’ve been nothing short of great for me, and has paid for itself many times over with parts.

  16. socalrob of the 24 and a half century says:

    My friend is the only person I have personally met who has had luck with the warrenty’s from Best Buy. He bought the warranty from best buy 2 years ago when he bought his first laptop. They had to repair it a couple of times, and the third time just decided to give him a new one.

    He picked out a floor model that was a killer laptop, and then just had to pay $300 for a new warranty.

    This warranty we were told covers everything. Im a little sceptical about the manager saying that we could throw it on the ground and break it before the 3 years are up and come and get a new one. But who knows.

  17. Major-General says:

    @Aladdyn: I thought the bulbs weren’t covered because they are (sorry, can’t think of the term) expected to fail and be replaced.

  18. ahursh says:

    nothing is original to this laptop except the plastic body. didn’t pay a dime for repairs with the extended warranty. thanks dell!

  19. trollkiller says:

    @Major-General: The term you are looking for is “consumable”.

  20. Trai_Dep says:

    @spinachdip: Don’t fret. All the people doing the complaining about Apple computers own PCs. Don’t feed the trolls.

  21. laptops yes, desktops, no.

    I’m an apple authorized portable/desktop technician and even get applecare for my notebooks (desktops you should get if you are wary of opening it up).

    BTW-applecare DOES NOT cover stupidity/user damage. When you get a laptop from Best Buy/Circuit City/ETC make sure that you are aware whether or not the “extended warranty” covers user damage or not (AND GET IT IN WRITING).

  22. lemur says:

    @ShortBus: I see it like you do. My wife and I almost never buy any kind of extended warranty and I do think that’s the best choice. And that’s purely based on math. Then I see the stories on Consumerist about people who bought extended warranties and were denied coverage and that gives me even more reasons to avoid them. Do I really want to buy a service contract if it means that I’ll have to fight tooth and nail with the service provider in order for them to honor the contract? No thanks.

    I say I almost never buy because sometimes an extended warranty is a good deal. Dell for instance has in the past heavily discounted their extended service for purchases made through their EPP deals or their educational deals. For one of my laptops I got a really good 3 year extended warranty with on-site service for about $50. I can say that it is really good because I did use the on-site service and it was nothing short of spectacular.

    I’ve usually broken even or ahead with extended warranties on laptops but… I don’t think it is always a good idea to get an extended warranty on a laptop. For the laptop I bought last summer, I did not get an extended warranty because I checked the fine print and found that the manufacturer pays only for domestic shipping. I have to go abroad to do research for at least 9 months during the life of this laptop, most likely at the time when I’ll need to use an extended warranty. I’ll be on the other side of the world so shipping charges would be prohibitive, not to mention the time without a laptop. So I decided not to get an extended warranty on this one.

    @socalrob: You are right to be skeptical of managers who say you can throw the machine to the ground and get a new one. First of all, not all extended warranties cover accidental damage. Then even those that do cover accidents usually have clauses that exclude willful destruction of the covered item, because there’s a difference between “oops! my cat ran over the table and made my laptop fall to the ground” and “I slammed my laptop onto the floor because I want a new one”. Sure, the difference can’t be easily detected by whomever gave you the warranty but a manager who tells you there’s no difference is telling you to commit fraud. Note that once you bought the warranty, that guy has made his commission and doesn’t care whatever happens next.

    @discounteggroll: Darn right. In other words, always read the fine print to know what is covered and what is not and how service is going to be provided.

  23. blackholeinacan says:

    When I bought my (Compaq) laptop about 2 years ago, the Best Buy salesperson (who was a friend of mine) convinced me to get a 3 year warranty based solely on the battery. After about a year, my battery started wearing out (I use it on battery power a lot), and I got a $100 hi-power battery for free, because my battery was lasting only about 70% of typical. I repeated this about a month ago, and will probably do this one more time before the warranty expires. So, I basically got two (so far) free $100 laptop batteries for the cost of the $90 warranty. Plus, I get to keep the other batteries, which still work pretty well.

    That being said, I think you have to read what will actually be covered under the warranty before you decide to purchase it. If it covers common problems and isn’t ridiculously expensive, I’d say go for. Of course, if there are common problems with the product, you might just want to go for a different brand or model. Or you could just buy a problem prone one and get free replacements for several years. “I bought this TV two years ago.” “Is it getting old?” “No, I had it replaced 27 times for free. This one’s only a month old.”

  24. lemur says:

    Oh, and people should also think about the extended warranties that some credit cards offer. As always, reading the fine print and thoroughly understanding the conditions of service is paramount. If you play your cards right (which among other things means always paying your credit card bills on time and not buying more than you can afford) those warranties are essentially free to you.

  25. GearheadGeek says:

    @num1skeptic: You’re not nearly skeptical enough for your handle. Car companies are selling those service policies as a profit center, not to take care of their customers. Even with my VWs I never had enough non-maintenance service work done to come close to paying for a service contract. Buy a car that’s not total crap, and maintain it. Oh, and if you’re wondering, over the last decade I’ve averaged about 18k miles/year on my cars, so it’s not like they’re low-mileage garage queens and I’m avoiding service costs that way.

    Put the money for their “service contract” into a high-yield savings account if you feel like you’re going to have expensive service down the road. Use the money ONLY for non-scheduled service that’s not the result of a wreck and above the cost of the deductible in the plan you would’ve bought. If you take decent care of your car, I’ll bet that the car will be gone before the balance of that account it. That’s the bet that the service-policy company is making, and the house wins overall.

  26. GearheadGeek says:

    @chouchou: The only way you “use” your wireless router more than I do is if you are running a bittorrent server through the wireless side. My old SMC 802.11b router lasted so long I donated it to the EMS service my partner was working for at the time so I’d have an excuse to upgrade to g and so they’d have wireless at the station (the tax write-off didn’t hurt me either.) I’ve had my G router for the 3 years since then.

  27. GearheadGeek says:

    Sprint has finally maneuvered me into their “service plan” insurance policy. It seems that Sprints phones last me about 11 months (this has been the cycle over the last 3 years, at least.) In the past this was never a real issue, because the manufacturer’s warranty is a year and I could just go to the Sprint store and they’d deal with it, since they’re the sole agents for all of these specific models of phones (Sprint-branded, special model numbers for Sprint, etc. etc.) Well, they’ve changed their policy… they’ll handle your warranty work for free for the first 30 days, or you can PAY them do do the WARRANTY work on the phone within the last 11 months, or you can send you phone to the manufacturer and be without the phone for a couple of weeks. At $4/month for the service policy that covers everything except loss and water damage (even after the mfg. warranty) I’ll come out about even assuming a failure every year and the $55 charge for having the phone fixed at a store. Bastards.

  28. spinachdip says:

    @discounteggroll: The funny thing is, Apple has covered “stupid” repairs as well. I dropped my old iBook a couple of times on hard wood floor so it didn’t close properly any more. When it was about 2 years old, I sent it in to have my hard drive replaced, and it came back all fixed and new looking

    They also gave me free data restore after I specifically declined the service but later found out I screwed up the backup and failed to save my data. So they’re cool with me.

  29. @spinachdip:

    that’s cool, they decided go above and beyond in your case. However, they are not legally obligated to do shit about your computer on the warranty-covered end if your computer is cracked, missing parts here and there, or has signs of abuse.

    If your hard drive dies because you dropped the computer, but there’s no signs of abuse to the computer they can’t prove anything other than a faulty hard drive, which they would replace.

  30. cSam says:

    Dell was amazing when it came to my laptop’s warranty. I don’t treat my electronics as well as I should, and one day (about 6 months after getting it) my laptop’s screen just stopped working. Dell got someone to replace it within 2 days, I think, and I liked how efficient and prompt their response was, even though it was probably my fault, to be honest. I’m sure I’ll continue to do silly things that put my laptop at risk, but my warranty with Dell gives me some room to breathe.

  31. spinachdip says:

    @discounteggroll: Well, my point was that I didn’t ask them to fix up the damaged shell (the hard drive dying and me dropping the computer were two separate issues), and I told them I was would pay for the data restore, but they did it for free and they weren’t obligated too.

    That makes me happy, knowing that they went above and beyond without and I didn’t even have to ask, especially when some extended protection plan will make you jump through hoops to get what you paid for.

  32. Atomike says:

    Looks like “Smart Money” magazine is written by hacks that don’t know math, and don’t know jack about “Smart Money”. I mock their ignorance. When should you buy an extended warranty? Virtually EVERY consumer advocate in EVERY medium says NEVER NEVER NEVER! The math reason: The stores don’t sell extended warranties to lose money on them. Statistically, you are extremely likely to lose money on your extended warranty.
    This article proves that “Smart Money” magazine is written by people who are dumb. Plain as that. Why would anyone subscribe to such tripe?

  33. Sndtrkman says:

    Well just recently I had to take my HP laptop back to Best Buy for repair work. I had update iTunes on my computer and after doing that my computer gave me the BLSOD (Blue Screen of Death). I took it in on Tuesday evening and eventually the Geek Squad member just told me that they will hold it and if anything pops up they will contact me. Well after not hearing from them for a couple of days I called them (I was transferred 5 times to the Geek Squad before someone finally picked up the phone). The interesting thing was that the BB employee told me that they called me when I told the lady that I never received a call from them. After that I finally found out that they have to send my 6 month old laptop to get repaired because the motherboard went bad.
    Long story short, I have to wait a week (hopefully) before I find out if I can get it back or if any other repairs need to be done. Thankfully I purchased an extended warranty on this computer otherwise I have a feeling that I would be screwed later on in it’s lifetime.

  34. Aladdyn says:

    @Major-General: no i made sure that they were included. If they werent I wouldnt have bought it. And by making sure i mean more than just asking the salesguy ;)

  35. threlkelded says:

    ALWAYS, ALWAYS, ALWAYS get a cell phone warranty or service plan or whatever they call it. If your phone breaks, they don’t care, you’ll just have to keep paying for service until your contract runs out unless you want to pay a termination fee OR pay full price for a new phone. At the time I had this problem, the cheapest model was $300ish and it was a definite downgrade from the phone I had.

    The next time I signed a cell contract I got the warranty. Last month my phone started acting weird, I marched down to the store and they gave me a new one. Horray.

  36. jeffjohnvol says:

    @ShortBus: Yeah, I’ve always been a big proponent of this idea. EW’s are a waste of money most of the time, and you rarely do. Best to hedge your bets with this approach.

    The only warranty I bought was for My Honda Accord. It was $1550 and if I don’t use it in 3 years I get $1500 back, so I went ahead and got it.

    Another buddy of mine had a good example of when to get it. His dog kept eating his remote control to his TV. At $50 a pop, it got expensive until he got the “no questions asked EW”.

  37. jeffjohnvol says:

    @threlkelded: Unless its an expensive phone from Sprint. A friend of mine had a Treo 650 that went bad and they would only give him refurbs, and they had problems too.

  38. mmeehh says:

    As far as laptops go (hp) if you drop or spill any thing on your laptop it is not covered by warranty .so if you find yourself in this position call your oem hp,dell,acer (do not) mention what happened and ask what options you have for upgrading your existing warranty and if you are out of warranty ask if you can buy a warranty extension (this is available on most hp laptops )then you have to wait 30 days from date of purchase of the warranty adp accidental damage for it to take affect then call in for the repair ,you will be covered .If you think you are ripping of Hp or your oem ask how much it would have been to repair and you will know who rips off who,hp lcd repair Min 698.00,hp hdd replacement out of warranty now this is just for the part ,depending on the drive anywhere from 260.00- to 463.00 and yes they want back the defective one so they can get reinbursed buy the manufacture they get a 3 yr warranty you only get one from them pretty good scam there.