When you purchase a big-ticket item—smartphone, laptop, TV—some kind of warranty is expected. It’s typically called an “express warranty” because it’s supposed to be clearly expressed. Sometimes it’s called a “guarantee” because it’s supposed to guarantee that it works. It doesn’t even have to be written—a TV huckster saying “it’ll last 20 years!” is a legal guarantee.
Whatever it’s called, these warranties are usually limited in time and scope. Thus, you’ll frequently find the item’s reseller (sometimes the manufacturer) trying to (up) sell you on extra coverage. That coverage is called an extended warranty, or sometimes a “protection plan” or “service plan/contract.” The latter are more accurate, as no one can really extend a warranty except the original manufacturer.
Getting a protection/service plan means you pay more upfront, depending on the item and the coverage. In theory, you do so to make sure you have even more time with the product should it break in that pre-set amount of time, be it a few months, a year, or a few years.
Most protection plans won’t break the bank. On a TCL 43S435 Class 4-Series 4K UHD Smart Roku TV purchased via Amazon, a 4-year protection plan via Asurion is $45.99.
Best Buy sells the same set with a 2-year “Geek Squad Protection” plan for $39.99, so it pays to shop around even for extended warranties.
There’s a whole ecosystem of third-party firms that provide extended warranties, especially for consumer electronics and appliances, with names like Asurion, Assurant, and SquareTrade (owned by AllState). You may even have coverage with one of them and not know it, as they’re used by many retailers. Amazon works with several of them.
These companies aren’t offering extended warranties out of altruism. They’re doing it because service plans make crazy amounts of money. The market for such plans (including for automobiles) was worth $120.79 billion in 2019, and during the summer of COVID (in 2020) was projected to hit $169.82 billion by 2027, according to Allied Market Research.
Which probably answers the most important question…
Is an Extended Warranty Worth the Money?
For the vast majority of people, the answer is a big fat no. Even Consumer ReportsConsumer Reports says it’s “money down the drain.”
Here’s the big secret: it typically doesn’t cost that much to repair most items. The cost of a single repair is usually less than the cost of an extended warranty. Consumer Reports once put the median cost at $136 for a service plan for electronics, but only 16 bucks more for the repair. The difference is negligible. Just save the money.
A manufacturer’s express (limited) warranty is typically good enough that if something breaks down in a short amount of time, they’ll do you better than repair an item—they might replace it completely. It’s always worth contacting the manufacturer. Take it all the way up the chain of command to big bosses when you beg for some help or recompense.
By federal law, if you buy something for over $15 new at a retailer, they have to let you see any written express warranty. Do that before you pay for an extended warranty; you may find in the fine print you don’t need to spend anything extra.
The tales of extended warranties paying off are certainly out there, but you are far more likely to find an expert opinion (we read several) that states flat out: saving up a little cash for a possible repair is a much smarter investment than actually purchasing the extended warranty when pressed. At the very least, read the other fine print on any extended warranty thoroughly because there will be plenty of limitations on the coverage.
Frequently, extended warranty repairs take forever or require several tries to get it right—you see that a lot less if you simply pay for a fix outright. You may be directed to send your broken product away for who knows how long before it gets “fixed.” Chances of the warranty allowing a local establishment of your choice to do the fix are very unlikely, so you can’t even reclaim the device if a repair takes too long. You are almost always better off dealing with the manufacturer for repairs—they have a reputation to uphold.
Better Ways to Warranty: Cards and Laws
Your credit card may offer all the extended warranty you need. As long as a product—even a refurbished product—has some kind of manufacturer warranty to start, most major credit cards will offer an extended warranty. The caveat being, you have to use that card to purchase the product, of course.
Even a card with no fees might offer it. You’ll find this perk on cards from American Express, Capital One, Citi, Chase, and many more, but it’s not guaranteed (Discover cards don’t have it anymore). It behooves you to check out the terms of service or give the card provider a call and ask; the number is on the back of the card.
Keep a copy of the receipt and the original warranty when you buy—you may need them to make a claim on the credit card extended warranty if it comes up.
Your local laws—depending on your state—may also offer protection in the form of an “implied warranty” or “statutory warranty,” meaning if you buy something, it is supposed to work, defect-free, for a certain amount of time. That time frame can vary but is typically four years. You see this a lot for cars, especially.
Don’t buy products labeled “as is” or you may not have much recourse to go after a manufacturer via your state’s implied warranty laws. (“As is” doesn’t work in 11 states plus D.C.) Always know the retailer’s return policy as well: don’t buy it if the reseller says you can’t return it in a reasonable amount of time if it breaks.
Your best insurance: buy a product you trust from a manufacturer you trust. You should start by reading lots of reviews.
Should I Get an Extended Warranty on a Phone?
This depends on a major factor: How often are you going to break your phone? In 2018, 66% of owners damaged their phones in the first year, but that research was issued by SquareTrade, one of the major extended warranty companies. New research suggests that two smartphone screens crack every second in the US.
If you personally break a smartphone every year—really break it, not simply crack the screen—then a service plan like AppleCare and Samsung Care, directly from the manufacturer, is probably worth it. AppleCare comes with unlimited phone support for 90 days, so it can be helpful for iPhone newbies. You may also find insurance plans with replacement options via your mobile carrier—many of which are also administrated by third-party companies like Asurion. However, the monthly premiums are typically not worth it once you also pay a deductible.
If you’re the type to scratch or crack a screen once or twice, don’t worry about it. Those are easily fixed for relatively little money (at least in comparison to paying for an extended warranty). You also can turn to your homeowner’s or renter’s insurance in some cases. More on that below.
Should I Get an Extended Warranty on a TV?
The rate of repairs on a modern flat-screen television? About 7%. Skip the extended warranty. Instead, make sure you’ve purchased that big screen on a credit card with some extra warranty protection. (That advice goes for any electronics purchase, period.) The average TV repair only costs $207, which you can save for.
Should I Get an Extended Warranty on a Laptop or Desktop PC?
One of the reasons retailers push extended warranties is that if enough of them are sold, they can push down the retail prices of the products themselves—and sell even more of them. But some of that savings trickles down to you…assuming you don’t then purchase the extended warranty and start the cycle anew.
Consumer Reports puts the rate of repair of PCs at around 24%. That’s pretty high, but consider that PCs these days are not that expensive—you can usually get a laptop cheaper than a high-end smartphone. They’re not going to break in most cases unless you put them in a risky position. Most laptops have a five-year lifespan of usefulness at best.
So, a service plan might be worth it for a laptop—if you’re lugging it on planes, trains, and automobiles; up a mountain; or to a gamer LAN party where drinks are likely to be spilled. Again, carefully consider your personal usage. Read the fine print—an extended warrant might only cover certain things and not others—like “accidental damage,” which means a spilled milkshake on a gaming laptop ends that relationship.
Don’t bother to buy a service plan for a desktop or a gaming console.
Your homeowner’s or renter’s insurance could cover your laptop and other electronics in many worst-case scenarios, such as vandalism, fire, or theft—even if someone steals it when you and the laptop aren’t at home. Then you can replace it with insurance funds (minus the deductible). No extended warranty is going to cover those things. List your laptop, smartphone, and more with your insurer to be sure. It’s not going to cover a cracked screen or battery failure, but that repair might be best out of pocket, as noted above.
Read more about insuring electronics (and everything else) at Lemonade, one of many new app-based “peer-to-peer” online-only insurance providers. It shows the list of perils covered by home-owners or renters insurance can include the usual things (fire, theft, smoke) to the unusual (riots, volcanic eruption).
Should I Get an Extended Warranty on Appliances?
No—most manufacturers’ warranties on big-ticket items go a lot longer than they do on consumer electronics. Like, for a decade.
Should I Get an Extended Warranty on a Car?
Nope. Especially if it’s an offer that arrives in the mail or via robocall weeks or months after you made the purchase. Most of them are scams. Even at the dealership, they’re mostly trying to get you to come back to the dealership for service, when you can probably find a cheaper mechanic you trust elsewhere.
