In many cases, a warranty can seem like a sneaky way for manufacturers to squeeze a few extra bucks out of their customers. In some cases, purchasing a warranty might actually be a good idea. Whether you're thinking about signing up for a warranty on a major purchase, or deciding whether to pay a few extra bucks for a warranty on a small appliance while standing in line at Target, here's what you need to know in order to make the best decision.
What is a warranty:
A warranty is basically a guarantee from a manufacturer that their product won't break down or need repairs for a certain amount of time, and that if it does, they will fix or replace it at no charge kind of like a mini insurance policy. Many products already come with some kind of warranty. Oftentimes, retailers will give you the option to purchase an extended warranty so the product will be covered for longer.
Should you get that extra warranty?
While many experts agree that purchasing an extended warranty is often not worth it, there are some instances where it may make sense. Be sure to read the fine print. You want to know what, exactly, the warranty covers; how long it will be in effect; whether you will have to pay a deductible before coverage kicks in; and any exclusions that apply. Here are some additional things to know if you're considering a warranty on the following purchases:
Automobiles:
Whether you should buy an extended warranty on your car depends on whether it's new or used, how reliable it is, how long you plan to own it, how much you plan to use the car, and your current financial situation. If you're in a position to be able to afford a repair that costs a few hundred dollars, then purchasing an extended warranty probably doesn't make sense, and will end up costing you more in the long run. If you buy a used car that's known to be unreliable and are concerned about super expensive repairs, it may make sense.
Large appliances:
Appliances like washers, dryers and refrigerators can be expensive these days, costing in the thousands of dollars. And if they break down, the cost of repairs can really add up. But that doesn't necessarily mean that an extended warranty makes sense. Today's appliances are quite reliable, and even if they do require repairs, it's likely that they'll cost less than the warranty itself. Experts advise consumers to purchase an extended warranty only if the cost of having to do untimely repairs would make the cost of the warranty worth it, or if having an extended warranty is important to your peace of mind. Weigh the cost of common repairs against the cost of the warranty and/or deductible.
Small appliances:
Most of the time, small appliances can be returned right away if they are defective, and already come with a 90 day or one year warranty. So purchasing a warranty on a small appliance usually is not worth it.
Final thoughts:
Most experts agree that consumers have more to lose when they purchase an extended warranty. But under certain circumstances, or if your peace of mind depends on it, purchasing an extended warranty sometimes makes sense.
For any of your insurance questions, call or contact Keller-Brown Insurance Services today.