Clark Howard: Be cautious when buying extended warranty

clarkhowardConsumer expert Clark Howard’s column appears here each Thursday in conjunction with Deal Spotter, a new weekly print section in The Atlanta Journal-Constitution.

As we ramp up the Christmas holiday shopping season, you’re likely to get pitches for extended warranties on electronics, appliances and other products. But the latest numbers from the December issue of Consumer Reports say extended warranties are an unnecessary waste of your money.

I’m known to be very outspoken about not liking extended warranties. Whenever I go to a store, I have salespeople who come up to me and tell me that I’m taking food out of their kids’ mouths because of the advice I give.

But it’s not just me. Consumer Reports finds the failure rate of cameras during the first four years of ownership is four percent. That’s 96 percent reliability! Why would you waste your money on an extended warranty when the odds are so overwhelmingly in your favor that your camera will work perfectly for so many years?
With flat-screen TVs, the failure rate is four percent during the first three years of ownership.

Vizio, once the king of off-brands, has a failure rate of three percent. Ditto for Sharp. Samsung, a premium brand, has only a four percent failure rate. Obviously, the failure rate all around is miniscule, whether you’re buying name brand or off brand.

Appliances like kitchen ranges and microwave ovens are nearly as reliable, except for ultra-expensive appliances brands. For example, with kitchen ranges, the Hot Point brand has a four percent failure rate during the first five years of ownership. Yet the high-end brand Jenn-Air has a failure rate right at 20 percent!

So clearly, extended warranties are a waste of money. Don’t be guilted into buying an extended warranty this holiday season when the numbers show it’s not necessary.

Ask Clark Howard a consumer question at ClarkHoward.com. Listen to his radio show live Monday through Friday 1-4 p.m. on AM 750 and now 95.5 FM News/Talk WSB.

18 comments Add your comment

Dee

November 19th, 2010
9:01 am

Where is Rana???

Bayou Chick

November 19th, 2010
9:43 am

Dee, I was going to ask that, too. What happened to Rana?

Dee

November 19th, 2010
10:23 am

I started noticing a different feel to the blog & something told me to check the authorship. I’m hoping that she is just on vacation. If not, I don’t think this blog will remain on my morning read list.

Billy

November 19th, 2010
12:15 pm

I agree with Dee. Where is Rana?

YEAH RIGHT...

November 19th, 2010
12:42 pm

THIS article should be taking for what it is…a article based on 1 individual’s ideas. i purchased a flat screen from Brand-Smart. 2yrs no problem, by the 3rd the tv will flicker for 3-5mins before turning on. Because i have a warranty not only did they come to my home to repair the set they replaced it no questions asked after they noticed it was damaged beyond repair. I IMPLORE YOU ALL TO PLEASE USE DISCRETION! MAKE YOUR DECISIONS BASED ON APPLIED KNOWLEDGE, NOT THE “IDEAS” OF OTHERS!

JB

November 19th, 2010
12:51 pm

I agree in general; HOWEVER, I did actually use one warranty I bought on a laptop for my teenage daughter. The laptop “mysteriously” had an accident and the laptop screen started coming apart, with the plastic breaking near the hinge. Well, it was just 1 month until the warranty expired, and I wound up getting the whole screen replaced for free (well, minus the warranty price). So, in general, I agree 100% with Clark, but if you’re spending $1000+ on something for a child/teenager, you might want to consider it because they are not as responsible as adults. At the same time, I could go out and get her a new laptop now that is 4 times better than her old one, and probably 25-50% of the price, so you should consider that as well. I can’t remember what I paid for the warranty…

mystery poster

November 19th, 2010
1:04 pm

I purchased a camera from Office Depot and they were having a special on the extended warranty so I bought it. He told me that if I dropped the camera broke into a million pieces, all I needed to do would be to bring the pieces back to Office Depot and they would replace it no questions asked.

After less than a year, the charger stopped working. I went to Office Depot for them to make good on the warranty, and they told me that it would not cover the charger. Luckily, I contacted Vivitar, and they agreed to send me a new charger “as a courtesy.”

When I bought my GPS, they wanted to charge $30 for an extended warranty on a $100 item. I told them they were nuts.

I’ll never buy another extended warranty.

mystery poster

November 19th, 2010
1:05 pm

Oops:
He told me that if I dropped the camera AND IT broke into a million pieces,

Warranty Believer

November 19th, 2010
1:56 pm

Don’t agree at all. Yes, I have bought more extended warranties than I have needed, but I have not bought a new laptop in 6 years because Best Buy has had to replace three of them due to hardware issues. They always seem to fail in the third year of the warranty. Also, I had an ipod fail after its 1st year. In all circumstances, I was very happy to have the warranty. If you buy a good one, it’s one of those things that are better to have than not.

No Name

November 19th, 2010
2:00 pm

I hope Rana got fired. She was horrible. I find better deals than her on my own.

MS

November 19th, 2010
2:25 pm

Normally i’d agree with the extended warranty advice, however, I purchased a Roomba vacuum robot and had ‘heard’ they have a tendency to fail within 1 year, so I purchased a 4 year, replace/repair warranty when I purchased it at Best Buy, sure enough, 9 mos. after purchase our first Roomba, Hazel ceased to function. That 4 year warranty paid for itself! Plus, I paid an additional $15 to restart the clock with the replacement Roomba warranty.

Bhorsoft

November 19th, 2010
2:27 pm

I generally agree with Clark on Extended Warranties, but I do make some exceptions. I will often buy them on open box or refurbished items I buy. Often the savings I get on the open box item more than covers the cost of the warranty. That and I just don’t know where that TV/Computer/Camera/etc. has been.
I also have bought one during the 30 days after purchase because I had a bad feeling about the product. It was a dishwasher, and although it functioned fine, it would occasionally make a weird noise when running. I bought the extended warranty and sure enough, one month after the factory warranty expired the machine went kaput. I got a new one (and a newer model) installed at no cost. That replacement dishwasher has been running fine now for about 12 years.

Steve

November 19th, 2010
7:08 pm

Warranty Believer, and others who think they are a good deal. They are not. Virtually every study or “expert” opinion has concluded they do not. There is a reason they are the biggest profit center for a retailer or manufacturer. Do you think your experience change that? That is as lacking in common sense as someone winning the lottery then claiming that the lottery is a good retirement plan. If one goes through life rejecting all warranties, they will have the money to buy the occasional item that fails outside the normal warranty. A story about how you got your moneys worth on one warranty does not change that. It just shows you are not able to look at the whole financial picture.

Warranty Believer

November 19th, 2010
9:20 pm

I see the financial picture more than you realize, but I personally, like the piece of mind of having a warranty for the same reason I have insurance and AAA. I guess everyone is entitled to their opinion, but for me, $129 for a 4 year warranty on a $1,500 laptop makes sense. I have had three laptops fail about 2-2.5 years into the purchase and all three have been replaced with a new one free of charge. I have also had a $400 ipod fail. It too was replaced. I have also had a Dell Desktop fail. Dell provided next day service and repaired the computer. I never had to leave my office. Perhaps, I have worse luck than others, but I like the piece of mind. Now, I am not saying that I buy store warranties all the time. It depends on the item. Further, many people don’t know that negotiation is always a possibility with store warranties. Lastly, I have also had good luck with SquareTrade. Their warranties cover drops and spills too (not that I have ever had to use that part) and are often discounted.

Warranty man

November 21st, 2010
8:06 pm

I work for a warranty company, and all I have to say is: Read the terms and conditions before buying (or thouroughly within 24 hours of purchase as most retailers will let you return a warranty within that time without question)– do not rely on what salespeople tell you the warranty covers or does not cover, and make sure the plan they sell you is what they promised to sell you. Register your warranty IMMEDIATELY online or over the phone– over the phone is recommeded because you can ask questions of a live person. Many warranties start after the manufactuerer’s warranty, many more start the date of purchase because they have ‘blanket” coverage such as protection from power surges, which a manufactuere won’t cover BUT– they do not replace the manufacturers coverage, only augment it. So if you buy a desk calculator with an extended warranty and it stops working the first year while under manufacturer’s warranty, the manufacturer will be who you will be referred to unless it’s plugged into the wall during a power storm. Warranties that cover accidental handling are usually worth it though– we get a lot of claims because someone dropped something or spilled something on their electronic device. They are usually only slightly more than a standard extended warranty and they cover something other than just power surges.

If there is any question about what is covered under your warranty, call the number on the warranty plan brochure or on your sales receipt. It is highly unlikely the store you bought your warranty from actually backs it. Most all of them are done through third party companies like Bankers Warranty Group, Assurant, or National Electronics Warranties, so asking a store employee is fruitless. Be warned that some things that migth be considered “accessories or consumeables” like batteries on laptops, headphones on MP3 players, or the battery charging adapter the guy above mentioned (you could just buy batteries for your camera, after all, so it isn’t necessary for the camera to operate) may not be coverd if the Terms and Conditions state that accessories, consumeables, or parts that would reaonably be up to the comsumer to replace are not covered.

Warranty service reps are not out to “screw you” out of anything, but we can only allow to be covered what the terms allow to be. if you call one of us and say “I broke my iPod” and you don’t have accidental coverage, don’t expect us to cover it– we have to go by what you say, and you can’t just change your story. Also, be sure to photcopy and keep a copy of your receipt during the duration of the warranty. Receipts fade over time, but photcopies don’t, and some warranty companies require you to send a copy of your receipt. Good luck and happy shopping out there!

Q McElroy

November 22nd, 2010
10:52 am

Hi all! Please take a look at the ‘Meet the new Bargain Hunter’ post. Lauren Davidson is going to be the new Bargain Hunter! If you have ideas, suggestions or questions just email her at ldavidson@ajc.com.

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Albearto

November 25th, 2010
9:18 pm

I feel like a moron for reading so many of these moronic posts and even for making a post. Three minutes I’ll never get back