Know the failure rate of the product you're buying.

Damn best piece of information.

Better yet, know the MFR's warranty of the product youre buying. A lot of replacement plans simply charge you for the retailer sending the broken product to the MFR, which is something you can do yourself with the product warranty that it comes with.

My Bulova watch that I bought a year ago broke yesterday (a small part, the crown). I took it to the Kay Jewelers and they kept saying over and over again "You should have bought the ultimate watch warranty." Then another associate would say loudly in front of the person near me, who was buying a watch "See! You should have bought the ultimate watch warranty."

It's only going to be a few dollars to fix the little spinner. It was just annoying to be tsk tsk tsk'd for not buying "The ultimate watch warranty" which my husband and I are now going to joke about and elbow each other, anytime we say something that has to do with a watch.

I would also suggest you know what is/is not covered under the extended warranty. While it sounds like common sense, read the fine print.

"Know the failure rate of the product you're buying." -- Good advice.

Also weigh in the amount of work its going to take to get your item fixed when it does break.

Eg. Knowing that is going to take almost a month of your time to replace your laptop via warranty when it goes tits up, you might just reconsider that extended warranty, if not the entire purchase.

I have never bothered with extended warranties except for one thing: our countertop dishwasher. It's a replacement warranty for a total of 3 years and we're on our 4th or 5th machine so far; not one of them has ever made it through the warranty period without breaking down. So, for $50, we get a brand new dishwasher, and when we pay $50 for a new warranty we're covered for another 3 years.

It seems, though, that replacement warranties are pretty rare. I'm not sure I'd be so eager to pay if it was for a repair warranty instead.

The only thing I ever buy extended warranties for are my computers and I've always had to use the warranties at least once. I got at least $1,000 worth of repairs for my iMac. But apart from that they're pretty much a waste of money. Also pay attention to your credit card, they sometimes extend the warranty on your purchases.

@StanTheManDean: Not always readily available.

"To a perfectly rational person, that insurance is worth exactly 2.7 percent of $200, or $5.40"

I must not be perfectly rational.

If my home is insured for $200K and I have homeowner's insurance policy that costs $400.00 a year, and the chance of my home being wrecked is 1%, is the "value" of my insurance $4.00 (1% of $400)?

No, the value of my insurance is the $200K that I have a 1% chance of using.

The vendor has already had their actuaries figure this all out and priced the insurance to make a profit. So if the vendor, which has all the data, is correct, you will PROBABLY not come out ahead buying the insurance. (that's true for all insurance but you still should insure against bad outcomes you can't afford, like your house burning down)

@StanTheManDean: And if the failure rate is high enough to make you consider buying the warranty, perhaps buy a different brand. Often a minimally higher purchase price is cheaper in the long run.

Also, don't forget to consider using a credit card that doubles the manufacturer's warranty for free.

Here's another couple of things to consider:

Is the item repairable by you? Can you get parts for it?

Things like Vacuums, Washers, Dryers, heck, even Cars can fall into this category. If you think you can repair most of it, then you don't need an extra warranty.

Is the item something worth paying to repair?

Your $100 printer is probably not something worth paying someone to repair. In that case, an extended warranty might be worth it, if it's critical.

Actually, to a perfectly rational person, that warranty is worth only the percentage of the failures that occur after the manufacturer's warranty (and any credit card automatic warranty extension) but before the user would likely get rid of the product. If you buy a laptop with a 1-year warranty, and get an automatic doubling of the warranty with your credit card, and typically keep your laptops for two years, the extended warranty is worth nothing.

I'm more curious as to the failure rate not covered by the manufacturer's warranty-that represents the true out of pocket expense. Also, not all repairs warrant a full replacement, so the cost of a new unit isn't the most accurate basis for the value of a warranty plan.

Pay attention to the warranty that comes with the product, and know what it covers. I have seen people buy a 1 year warranty for the Nintendo Wii when it already comes with one from the manufacturer. Most people don't realize that their product already comes with a warranty so they get taken in quickly by the sales pitch. If you buy a 1 year store warranty that starts on the date of purchase for something that has a 1 year warranty from the manufacturer...

Yes the manufacturers warranty doesn't cover everything, but I have seen few store warranties that cover everything as well. There is always something like accidental damage excluded in the fine print. Most of the time what the manufacturer gives you will suffice.

You will be able to live without your Wii for a week or 2 while you are getting a replacement, but you might not be able to live without your computer for long, especially if you use it to run a business or just conduct important business in general and its your only computer. You might want to consider this when purchasing a warranty. How personal is the item in question and how much do you rely on the item in question?

Don't forget that retailers will pull whatever they can to get out of doing a warranty replacement or repair, but they will be EXTRA nice when selling you the warranty and they will tell you it covers everything.

There is always an up to manager's discretion clause, and if your store manager is low on numbers and needs to make up and doesn't want to take another replacement or repair, you may be screwed and they might send you home and tell you there is nothing they can do for you. In this case you will be left with both a broken item and a worthless piece of paper that you paid extra for. Its always a possibility.

Another tip - try to get stuff that you can possibly fix yourself. My iPod video's headphone jack just died, so I ordered a new one and the tools for $30, and fixed it myself. Now, I didn't know this when I got it, but I have applied this at other times - I bought a netbook with a hard drive instead of an ssd because I knew that I could find a 2.5" hd to replace it with, if it ever died.

@Julia789:
That sounds like a gag from a bad sitcom.
So sorry you had to live through it.

Then there's the whole difference of store warranty vs manufacturer's warranty.

I generally find that manufacturer's are better and will result in quicker service, especially when it comes with computers, though store warranties where you can actually swap for a new unit (often hard to do) can be more convenient.

@Julia789: Do you remember how much the "ultimate watch warranty" was?

@phate: Or if your one of those lucky Gateway laptop owners that 3 year warranty you paid extra for was worth squat. Gateway sold the warranties to another company that promptly went out of business.

I buy extended warranties only for laptops, and only from the manufacturer.
My last $1200 HP laptop got replaced after 2-1/2 years. The warranty cost $200... but the laptop was one of those doomed DV9000 series paperweights, with thermal issues that limited its life to an average of ten months per system board.
The DV7t that replaced it has been perfect through four Windows builds (Vista, 7 RC1, Vista, 7 Ultimate RTM). Best $200 I ever spent. However, I still have its original hard drive in a box, with the factory image intact... one of the Lessons Learned from the DV9000 fiasco.

"If you're buying something that gives you pleasure, put off any decision about a warranty for a week or two."

Good call. After a week or two it'll be all used up and I'll be tired of it, ready for a new pleasure something and glad I didn't buy that extended warranty.

@Deranged_Kitsune: Amen... I only buy mfr warranties. The reason is below.

Extended warranties are for the most part a waste of money. The only ones I've been happy with are the ones we bought for all the Dell desktops at our enterprise. We have 5 year old machines Dell still replaces parts on. No clue if it saves any money, but it sure as hell is convenient.

Case in point - I had an extended warranty on a HP PDA - it died like a couple weeks before the warranty was up. I took it in and they couldn't find the PDA in question since it was long since discontinued and gave me an inferior one as a replacement. Apparently the fine print allows that.

Remember - they sell these because they are betting money (literally) that the item will run just fine for the rest of the extension and that they will never see the item ever again and they get to pocket the 100$ or whatever.

@SkokieGuy: You just agreed with exactly what they said. 2.7 % of 200 (the price of the wii), not 2.7% of the $30 warrantee. So yes, 1% of your 200k house.

We buy them on things that we wouldn't be comfortable paying full price to replace once the manufactuer warranty is up, and on things we can't fix ourselves (my husband fixes computers for a living, so no applecare fo us.)

I think we have extended warranties on: washer & dryer (paid for itself already, and they're only 3 years old), Dyson vacuum (bought refurbished from Amazon), and our digital camera.

@SkokieGuy: You may be rational, but your math isn't. $200 is the value of the product, not the warranty.

To use your example. If the chance of your home being wrecked in one year is 1% (really, really, high) then the value of your insurance would be 1% of the value of your home ($200k) or $2,000.

Of course inconvenience factors are much higher when your house is destroyed than when your iPod stops working.

@bohemian: Because it was a year ago I don't recall. If it was five or ten dollars I might have sprung for it on a $200 watch. I recall it was enough that I said "no thank you." Maybe $40 or $50? I tried to look it up on their website but couldn't find it.

I do remember hearing unfortunate things from someone about getting service on their jewelry warranty, like back-ordered parts and jewelry being held for weeks at a time.

For a few dollars to fix the crown, it's not a big deal. We just thought it was silly and now want to say "Should have bought the ultimate watch warranty!" every time we look at our watches.

One must also consider whether the place selling the warranty is worth a crap. Best Buy used to be very easy to deal with, now they do everything to delay, deny, and otherwise make life miserable for those who have the audacity to attempt to claim on their warranty.

Whenever I buy things with small moving parts (tape-based camcorders are a good example) I buy an extended warranty -- but usually not from the manufacturer. There are several places online that sell extended warranties. Onecall.com uses a provider that seems to be very easy to work with on warranty claims. I've also had very good luck with GE extended warranties, available on nearly any consumer product.

But do your homework and search the warranty company that backs the warranty, whether bought at a retail store or online -- some of them are notorious for denying claims, doing crappy repairs, or otherwise causing problems.

I've bought one extended warranty and it was in connection with a car purchase. The car was a first year model (which often have some glitches) and the warranty was from the manufacturer and covered everything. It was a few hundred dollars and was worth the peace of mind.

@calchip: The article mentions that a squaretrade warranty costs about half of a store warranty and I have heard good things about them on the deal sites. If the deal sites like them...

There are also 40% off coupons occasionally for squaretrade and since you can buy within 90 days of purchase you have plenty of time to think about it.

But then again you have to be careful you don't end up dealing with something like Fidelis (the warranty company that likes to sell you bogus car warranties).

Step 1: Ask yourself, "Do I have any extra money that I don't need to spend on something useful?"

@Julia789: I suspect their obvious delight at finding somebody to be Sales Example #1 enhanced the absurdity of the situation. Might have been fun to play with them by acting very woodenly in agreement. "I know! We are so very very regretful that we did not do this thing and we would never go without the Ultimate Watch Warranty in future. Boy have we learned, boy howdy."

@shepd: Good point. Or if you can't repair it, is there somebody, service or friend, who reliably can?

@Outrun1986: Although a warranty doesn't guarantee that you'll get the item back any quicker than a paid repair. If turnaround is what's important, that's probably something to research on its own, as best as you can.

@oldgraygeek: Ditto. I bought the highest-level, longest warranty on my Dell laptop. 2 years later, I spilled soda on it and ruined it. That warranty instantly paid for itself four times over. I have a Lenovo now and a similar warranty for it.

Of course, I also have a $3 warranty on my $22 iron. I don't know what I was smoking the day I bought it, but the Sears cashier must have loved me. "If your $22 iron breaks, why not simply buy a new one?" you might ask. That's a very good question.

14 months after getting it my Sony lcd tv, screen goes black with only audio remaining. A VERY common problem after checking out the various forums about it.

P.O.S tv, how can it be defective only after 14 months when my old bulky tube tv is still fine after 15+ years????

I sweated very hard at work to get it. I checked Consumer Reports for failure rate, it was low around 2-3%, they even said don't bother getting the ext. warranty.

I should have. BAD.

Now, I don't have enough money to have it repaired so it sits in the corner gathering dust. Bye bye free hd.

I'm still extremely pissed. It had to break down 2 months after Sony's warranty. 2 frucking months.

with the exception of the Xbox 360, which I believe has a failure rate of somewhere around 11,000%

That made me LOL. After all, 11,000% seems more or less accurate.

@floraposte: He he, that would have been fun! I was tempted to say something like "Gee too bad I didn't purchase your $40± warranty that would have covered this $10 repair!" But I just smiled and signed the repair slip. ;-)

They weren't being rude or insulting about it at all. It was just so silly and forced, the way they repeated it for the benefit of both the junior salesman and the other customers. They were actually very nice, just corny.

The manufacturer warranty covers everything "inside" the watch and the mechanics. Their warranty covers the crystal face and the crown (the spinny thing that sets the time, which I discovered today is called a crown) and the band. Since repairs on those things usually aren't more than a few dollars, and the warranty was more than the cost of likely repairs, I decided to take a gamble.

@floraposte: Yeah if your looking for turnaround your best bet is probably to avoid the warranty and just stick the money you would have spent into a savings account or just set it aside for future repair then find a reputable local computer repair shop. For computer repairs that is. For appliance repairs many places will send a guy the same day or the next, at least around here. We have done well with that. In these cases you might be better off paying out of pocket for the repairs rather than gambling on a warranty that might have longer turnaround.

I was more satisfied paying for computer repair than paying for a $300 warranty that only covered the computer for 3 years. If something goes wrong it will go wrong after then, which it did. Now if the warranty had covered the computer for 6 years.. If I had purchased a warranty I would be out money, instead I paid about half of the $300 cost to get the one repair I needed done.

Rule of thumb: never buy an extended warranty if it is over 20% of the cost of the item. Always buy AppleCare.

I recall buying a $399 Acer laptop (not netbook) at Best Buy a little over a year ago. The warranty they were offering was something ridiculous like $150 or $200. Hah!

The funny thing is my laptop did have a defect but it was on warranty for one year. I took it to Best Buy first, but since it was a motherboard issue they had to ship it to Acer and wanted me to pay $70 as a "handling fee." I ended up calling Acer myself. It cost less than $20 to ship it to them and I had it back in less than three weeks. The laptop wasn't critical to my life that I couldn't be without it, so three weeks wasn't a big deal for me.

That was back in December '08 and the laptop has been trouble-free ever since.

@Julia789: These are the kind of register peons I love giving government law enforcement phone numbers out to when asked for my own to see what it does to their "system".

I guess more specifically in this situation you can say, "See, you shouldn't harass me like that because now, you can page for your manager". Or call back later, ask for the ASSociate's name and then say on the prank phone call "See, you shouldn't be such an ultimate watch warranty bitch."

@FatLynn: Yes - ask them if bouncing the product off store employees and the subsequent damage is covered in the warranty lol.

My standard policy before they can even issue their standard "hello - did you find everything" line which generally precedes the extended warranty molestation offer, is to GLARE at them hard and say "Don't EVEN ask me, just ring it up!" while giving them the serial killer imitation face.

Works every time.

@ArgusRun: Yup, lousy math, but I still maintain that the value of my hypothetical home insurance is not $2,000.

The value of my insurance is $200,000, that I have a 1% chance of using.

By the article's logic, the value of a $1000 policy on an item with a 5% failure rate is less valuable than the same policy on an item with a 10% failure rate.

The value of the policies are the same, the risk they are insuring is different and therefore a consumer may make a different decision toward purchase.

@shepd: ...in which case a Panasonic falls squarely outside this category. It's nearly impossible to find parts for them for self-repairs and repairs by Panasonic themselves are ridiculously expensive (I paid US$1500 to replace the screen on a T5; I would have bought another computer if it wasn't so important to me for... reasons).

Years ago I bought two extended warranties on separate big purchases, a truck and a big screen tv. It turned out that neither warranty was worth the paper it was printed on since the process for making a claim was arduous and the ultimate payout minor.

Experience since has confirmed what Consumerist advises. Extended warranties are rarely worth the money and you are usually better off banking the cost of the warranty to self insure if you are worried.

I've NEVER purchased an extended warranty. Although I have occasionally repaired things that might have been covered under such a warranty, considering all the money I never spent on warranties for all those cars and appliances and electronics I am still way ahead of the game.