How to Buy Extended Warranties on Appliances

An extended warranty or service contract is like an insurance policy --your investment pays off only when the worst happens. But do you really need one? These days, the majority of brand-name appliances are well-built and will last their normal life span with few or no repairs, rendering extended warranties unnecessary. If you do choose to get one, make sure you do your homework.

Instructions

Difficulty: Moderately Easy

1. Research the brand's repair history via independent consumer agencies, such as ConsumerReports.org. Most appliances include a one-year warranty--five years for major parts--and you should have few problems during that time.
2. Consider who is offering the warranty. You'll get the best service from the manufacturer, which is most concerned with your satisfaction. Second choice is a dealer's warranty. Be cautious about third-party warranties sold by the dealer but independently serviced. Should that company disappear, you might be out of luck. Extended Warranty Buyer's Guide (extendedwarranty.info) offers links to independent companies.
3. Read the actual contract, not just the brochure that markets it. Understand what is covered and excluded. Compare the extended warranty to the original equipment warranty to make sure the extended one isn't just repeating coverage offered in the original warranty. Find out what the deductibles are and if you must get estimates or second opinions before repair. Ask what the standard minimum repair charge is.
4. Ask questions. What maintenance must you perform to validate the contract? Can you renew it annually? Do you get reimbursed for expenses such as for clothes ruined by a faulty washer or dryer, or food lost if the freezer fails?

What to Look For:

• Brand and model repair history
• Preferred manufacturer coverage
• Thorough contract
• Terms that fit your needs

Tips & Warnings

• Can't decide at purchase time? Return the registration card; many manufacturers will contact you with an extended-warranty offer when the original warranty nears expiration.
• Many credit-card companies automatically extend a manufacturer's warranty by one year when you use their card.
• Warranties can often set you back more than half the cost of replacing the insured item.