While you’re doing
your holiday shopping, be prepared for the inevitable pitch to add a service
plan, or extended warranty, to your purchase, especially if you’re buying
electronics or appliances. Salespeople will tell you that a service plan gives
you the peace of mind of knowing that any repairs needed after the
manufacturer’s warranty expires will be covered. What they won’t tell you is
that stores keep 50 percent or more of what they charge for plans – more than
they can make selling actual products. They also won’t tell you these reasons
you almost never need one:
Be prepared for the inevitable pitch to
add a service plan, or extended warranty, to your purchase, especially if
you’re buying electronics or appliances
Products last a long time.
Our reader surveys
show that many consumer products are reliable, making a service contract
unnecessary. If products don’t break while the manufacturer’s warranty is in
effect, they probably won’t’ during the service-plan period, particularly if
you buy brands that we’ve judged to be especially reliable.
Contracts can be expensive.
A service plan can
increase an item’s price by a third or more, and on average it costs not much
less than what you’d pay for a typical repair. You can self-insure by putting
the cost of contracts into a dedicated bank account for repairs and
replacements. That way, even if you have to pay to repair or replace an item,
you’ll still probably be ahead overall. Also, our surveys show that repairs you
pay for out-of-pocket might be handled more quickly and have a somewhat better
chance of being done properly than repairs covered by service plans.
You can self-insure by putting the cost
of contracts into a dedicated bank account for repairs and replacements.
Coverage may come up short.
Because of commissions
or corporate pressure to sell warranties, salespeople might exaggerate the
extent of the coverage or fail to point out the fine-print limitations. We
found plenty of contract-related consumer complaints on online message boards.
Some of those who tried making a claim reported having to wait on hold for long
periods only to be told that there was no repair shop near the or no record of
their contract. Some people reported waiting weeks for repairs or having claims
denied because the damage was deemed to be their fault. And some said their
plan began on the purchase date, covering much of the same period as the
manufacturer’s warranty.
Companies want satisfied customers.
Even if the written,
or “express,” warranty or return period has expired, the manufacturer or
retailer might help if you have a problem with a product. Companies often have
customer goodwill programs that offer a repair, replacement, upgrade, or refund
if your request is reasonable. If your first attempt to get help from the
company doesn’t work, try going higher up or posting your complaint on the
company’s website or social-media page.
Even if the written, or “express,”
warranty or return period has expired, the manufacturer or retailer might help
if you have a problem with a product.
Your credit card may cover it.
Many credit cards
automatically extend a manufacturer’s warranty by up to a year when you use the
card to pay for the entire purchase. Coverage varies by card, and there are
limitations. For example, an item must come with a manufacturer’s warranty to
start with. So check your card’s terms and conditions.
To use these programs,
you typically must have copies of the written warranty and your receipt. If
available, register the purchase with the credit-card warranty program. Visa’s
optional Warranty Manager Service, for example, lets you register and manage
your warranties online.
You have other warranty rights.
For most purchases,
state law gives consumers the right to receive a product that does what it’s
supposed to do, is free of substantial defects, and lasts a reasonable amount
of time. This so-called implied warranty of merchantability can expand your
rights beyond any written warranty. Retailers in all but a handful of states
are allowed to “disclaim” this protection by using terms like “as is “or “with
all faults,” though it’s uncommon in walk-in stores. But hose disclaimers are
often in online retailers’ fine print and in manufacturer’s written warranties.
It may be an easy fix.
Searching the Web
using your model and a brief description of the problem may turn up advice on a
quick, low-cost fix that you may be able to do yourself. In some cases,
something you think is broken may only require a tweak or advice on its proper
use.
Searching the Web using your model and a
brief description of the problem may turn up advice on a quick, low-cost fix
that you may be able to do yourself.
Accidents happen
If you buy a laptop
that will be carried around, a type of service plan that covers accidental
damage might be worth considering. Dell offers stand-alone accidental damage
coverage from $59 to $79 for two years, depending on the model Sony offers a
contract that doubles its basic one-year warranty for $100 to $200; two-year
accidental damage protection can be added for $50 to $100.
Before choosing any of those options,
read the fine print so that you’ll know exactly what is and isn’t covered.
Another option is to
add coverage to your homeowners, renter’s, or condo insurance policy. A
scheduled personal-property endorsement (also known as a floater) can cover a
single computer; a home-computer endorsement can cover all of your computers
and peripherals. Liberty Mutual’s home-computer endorsement is just $20 a year
with a $50 deductible.
Before choosing any of
those options, read the fine print so that you’ll know exactly what is and
isn’t covered.
