The last time you purchased a new home appliance, you probably remember being bombarded by a pushy salesperson pressuring you to buy a store’s extended warranty. The majority of consumers do not do proper research and have little knowledge about the warranty options available. They also have a general mistrust in extended warranties since they are often highly criticized and viewed as a waste of money.
Unfortunately, many consumers don’t realize how invaluable peace of mind is when purchasing an extended warranty for large appliance purchases like refrigerators, washing machines, dryers, AC units, dishwashers or ovens. These big ticket items are more expensive and are made differently than they were 20 years ago. Today, many appliances are energy efficient and the parts to these machines can be very expensive since most of them now contain computer boards. Another point to keep in mind is the cost and frequency of repairs. An average home owner pays around $1700 in home repairs a year. Energy efficient appliances tend to breakdown more easily and some parts can cost $200-$300. One service call alone, for appliances like refrigerators without an extended warranty, can range anywhere from $200-$400. Those figures are well over the amount of what an extended warranty would have cost.
Extended warranties can be serviced by the brand-name manufacturer, the retailer or a third-party administrator. Some credit cards may extend the manufacturer’s warranty, as well. The best way to make an informed decision is through education, so we are going to breakdown the different types of warranties out there.
Let’s start with the basics. Many newly purchased items come with a manufacturer’s warranty. Most manufacturers offer coverage from three months up to a year. If the item breaks after that specified period of time, the appliance owner is on their own as the manufacturer does not claim any responsibility and does not have to repair or replace that broken item. This is where an extended warranty comes in handy. In addition to the coverage, up to a year, many manufacturers offer the option to extend the original warranty beyond this initial period, as well.
Many retailers that sell appliances offer their own extended warranty, also called service plans, for these products at the point of sale. Many people feel pressured that if they buy an item at a certain store then they also should buy that particular store’s extended warranty. The salespeople at these retailers make a decent commission if you buy their extended warranty so it is in their best interest to sell you one right on the spot. The truth is most retailers give you 30 days to decide if you want to buy their extended warranty so you do not need to make a rushed decision. These extended warranties can cost up to 50% of the item’s original price. The length of these service plans can vary from a year or can be extended up to 5 years or more depending on the particular contract.
Major credit card companies like Visa, MasterCard, Discover and American Express offer extended warranties along with a manufacturer’s warranty on appliances purchased with their cards. This sounds like an attractive offer especially since these extended warranties are free to the consumer, but the majority of credit card extended warranties do not cover what the manufacturer’s warranty doesn’t cover and they come with their own exclusions. The features of these extended warranties vary by card, but the vast majority do not cover normal wear and tear, damage from power surges and accidental damage. These warranties do cover amounts up to $10,000, but they only add up to an extra 12 months to the manufacturer’s warranty. Most cards offer warranty protection in some form, but you’ll most likely have to satisfy a long list of requirements in order to even qualify.
Third Party Companies
Last, but certainly not least, is the option to forgo the extended warranty offered at a big named retailer and instead buy one through a third-party company. American Residential Warranty is a third-party company that offers inexpensive, customized plans for new and used home appliances. ARW has a variety of plans to meet most budgets starting less than a $1 a day. Our convenient plans allow customers to pay month to month and they do not require them to enter into a long-term contract. Since you aren’t locked into a plan, you have the freedom to cancel or even change plans whenever you’d like. Their customizable plans also give customers a chance to review their policy for the first 30 days and get a full refund if they are unhappy. The type of technicians that come to your house and do the repairs is a factor that is very important. American Residential Warranty uses only pre-screened, insured and highly qualified professionals that will initiate service within 48 hours after a service request has been processed. Extended warranties are not a waste of money when you have a company like American Residential Warranty offering affordable plans, low service call fees and quick and dependable service.
Purchasing an extended warranty is a personal choice that must be made after you are well informed about your options. It should not be a decision made under pressure with little research. According to Consumer Reports, if an extended warranty costs over 20% of the item’s purchase price then it is not worth it for the consumer. If you are considering getting an extended warranty it is important to ask yourself these questions:
- What is the cost of the plan? Is it more than 20% of the original item’s price?
- How many years does the plan cover? Do I need to enter into a contract?
- What type of technicians does the plan use? Are they fully licensed and bonded?
- How are claims filed?
- How much is the fee for a service call?
- What would a repair and service call cost without an extended warranty?
- Does the plan cover new and used appliances?
- What does the fine print state?
Once you have done your homework and answered these important questions, it will be easier to make an informed decision that you will be happy with in the long run.