You're about to spend hundreds, maybe thousands, of dollars on a new TV, appliance, or computer. When you reach the checkout counter the all-too-familiar question is popped: "Would you like to purchase the extended product warranty?" The rejoinder, asked silently, of course: "Is it worth spending a little more to buy some peace of mind?"
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Well, that depends on the product you're buying and the coverage that comes with it. Many manufacturer's warranties aren't as comprehensive as they used to be but still may be sufficient to weed out lemons. And if you make a purchase with a credit card you may be entitled to extra coverage. Check the benefits for your card; some double the manufacturer's warranty free of charge and give you extra protection during the first 90 days after the purchase.
For any product you buy, it's important to fully understand both the manufacturer's warranty and the extended coverage. Who backs the warranty? What does it cover (e.g., parts and labor, accidental damage, damage from normal use)? How much is the deductible? Where are repairs performed? Know what you're getting along with the product and know what you're paying for if you opt for extra protection. You don't want to be surprised later.
Also, take stock of your personal situation. One advantage of some product warranties is protection against accidental damage. If you're a construction worker, for example, the chances of a mishap with a smartphone are much higher than if you sit at a desk all day. And if you run your washer nearly 24/7, chances are higher it will buckle under the strain and you may want a product warranty for this eventuality.
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Appliances.
In most cases, an extended product warranty for an appliance is probably not worth the cost. A survey by Consumer Reports found that appliances rarely break during the first three years, which is the period covered by the manufacturer's warranty and by most extended product warranties. And if an appliance does need a fix, the average repair cost is about the same as the price of the extended warranty. So why bother? Spending a little more upfront for a reliable machine from a reputable company is usually the best way to go. Do your homework before buying to minimize the chances of problems down the line.
Televisions.
Televisions are pretty durable products, so breakdowns are rare. But unlike appliances, repair costs often exceed the price of an extended product warranty. However, if you're hankering for cutting-edge technology -- the biggest, brightest, 3D TV, say -- buying coverage beyond the manufacturer's warranty may make sense. Remember, though, prices trend downward as TV technologies age and replacing a bum set with a like model may be more cost-effective than buying extended coverage.
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Computers.
According to Consumer Reports, about a third of all computers fail within the first three years. Tech-savvy types may be able to save money by making repairs on their own, as computer glitches often involve removing malware or replacing a hard drive. The risk of serious damage may be greater with laptops, though, because they get dropped and banged around far more often than desktops. For a laptop, then, a well-priced extended product warranty with generous coverage (e.g., for accidents, tech support, at-home service) may make sense. Still, a good rule of thumb: Don't buy a warranty that costs more than 20 percent of the product's cost.
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Smartphones.
It's tempting to add coverage after the manufacturer's warranty expires on your smartphone because this is one product you probably can't live without. Under certain very rare circumstances (your kids like to play catch with it, say, or you spend lots of time around the water) an extended product warranty may be worthwhile. But smartphones are typically replaced every couple of years, and after doing the math and assessing the risk, you'll likely decide to forego the extra expense. Note that repairing a screen usually costs less than $50.
New Cars.
Vehicles today are far more reliable than in years past, and repairs are often for minor problems. Consumer Reports reported in 2008 that 58 percent of drivers who purchased an extended service contract used it, but the average savings on repairs was less than the cost of the plan. If the trendy sporty coupe you're eyeing has a history of breakdowns, consider buying extended coverage. But do some research and become familiar with the types of problems likely to arise and determine whether they're covered by the manufacturer's warranty and by the extended product warranty.
