Are Extended Warranties Worth It? [Archive] - Audio & Video Forums

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snodog
02-09-2004, 11:59 AM
Just wondering everyone's take on the value of purchasing the extended warranty with new electronics. Is it worth the extra cost? Sometimes these things are expensive and the salesperson always tries to get you with it. I just bought a new hdtv and the month I have to buy the warranty is almost up. I have not decided if I should spend the $200 on it or not. What do ya'll think?

kexodusc
02-09-2004, 12:30 PM
Depends on the component we're talking about and the price as a % of cost of a replacement.
On some good receivers, places charge 50-100 bucks for extended warranty.
My personal experience tells me that you'll notice most problems before the original warranty expires on an amplifier or receiver (but not always).
On TV's...the cost of replacing parts is often more than the cost of a new TV, and issues seem to hit at random with TV's.
I always avoid extended warranties though...think of it this way...if the company is willing to sell it to you, they must be making money off it. They set the cost of extended warranty by factoring the probability of claims, the number of claims, and the cost of claims. The company makes money selling you warranty based on the odds that they'll make more than they have to payout for claims...which means your expected return on the extended warranty is lower than theirs, making it not a fair deal for you.
But then you factor in peace of mind, etc...and your expected return increases a bit.

Worf101
02-09-2004, 01:08 PM
Most problems you'll find will occur looooong before the warranty is up. If you're buying used or B-stock on ebay warranties may be worth it if offered. Receiver's and big screens warrant a look at the specifics of the warranty. Other than that, they're usually a waste of money.

Da Worfster

Smokey
02-09-2004, 03:11 PM
If your HDTV is big screen such as RPTV, then extended warranty might be worth it. But if it is a tube TV, it might not be worth it.

skeptic
02-09-2004, 03:24 PM
The extended warrantee is one of the biggest ripoffs in retailing today. Consider that if you bought an extended warantee on every appliance you purchased, you would go broke. Since you have no way of knowing which of the small percentage of appliances you own will fail between the time the manufacturer's warrantee expires and the time the extended warrantee expires, the cost of replacing, not just repairing any which do fail during that period is far smaller than the combined cost of all of the premiums. These warrantees are a huge source of profits for retailers, usually far higher than the slim margin the retailer gets for the appliance itself. Therefore he has a great incentive to sell you one and often pays some sort of commission or reward to salesmen who produce for him. Don't believe it? Wait for the high pressure sales pitch the next time you go into a store and buy one.

woodman
02-09-2004, 06:03 PM
The extended warrantee is one of the biggest ripoffs in retailing today. Consider that if you bought an extended warantee on every appliance you purchased, you would go broke. Since you have no way of knowing which of the small percentage of appliances you own will fail between the time the manufacturer's warrantee expires and the time the extended warrantee expires, the cost of replacing, not just repairing any which do fail during that period is far smaller than the combined cost of all of the premiums. These warrantees are a huge source of profits for retailers, usually far higher than the slim margin the retailer gets for the appliance itself. Therefore he has a great incentive to sell you one and often pays some sort of commission or reward to salesmen who produce for him. Don't believe it? Wait for the high pressure sales pitch the next time you go into a store and buy one.

While you and I are generally "on the same page" on most all threads at this forum, we're pretty much in total disagreement on this one. Some of your statements are quite true - such as "extended warranties are a huge source of profit for the retailer" and that "he has a great incentive to sell you one and often pays a commission or other reward to the salesmen who sell them". Those things are as true as can be, but they don't get to the heart of the matter or answer the original poster's question either, IMO.

These warranties ARE a big source of revenue for the retailers, but the reason why has very little to do with the actuarial tables for consumer electronics products. What it does concern is the fact that a 3rd party (the actual warranty provider) is the guarantor of the policy and therefore is the one taking all of the risk - not the retailer whose percentage of the warranty price is virtually 100% pure profit, with just about zero risk involved.

With that out of the way, the question of whether or not such warranty protection is worth buying can be addressed. Based upon my half-century of experience servicing these products and on the considerable amount of research I've done into consumer electronics pricing, I'd have to answer that very often these policies ARE a worthwhile purchase. It's especially true regarding today's HDTV-ready sets. With those, I personally wouldn't consider buying such a set WITHOUT buying all of the extended warranty protection I could get. Those sets are vastly more complicated than anything we've ever been offered in the marketplace - bar none! Contrary to what Smokey wrote concerning whether the set is an RPTV or a direct-view ... I'd recommend buying a policy on EITHER one. Unless someone has more money than he/she can possibly use - in which case they can afford to buy a new set at any time one craps out, for all of the rest of us any HDTV set should be covered to the greatest extent possible. Why am I so adamant about this? Because competent service personnel is simply not availbale ... either at the retail level or at the mfg. level. At one point in time, the mfgs. (at least some of them) were a source of good support and help when a problem appeared. That is sadly not the case anymore! Add to this the fact that nearly every mfg. has REDUCED the length of their warranties, and it becomes imperative for the consumer to protect himself in any and every way possible.

For other products, it usually must be judged on an individual product basis. For instance, I don't think I'd ever buy a policy on a Yamaha receiver ... but with a Denon or a Marantz receiver, I'd sure consider it carefully before rejecting the idea. Also, the price of the product versus the cost of the policy would be a determining factor. But for HDTV sets, it's virtually a no-brainer in my book.

snodog
02-09-2004, 06:25 PM
Hmmm, interesting thoughts on the subject. On one hand I can see the point of not getting ripped off on a 100% profitable warranty however, if we refrained from buying something every time we were actually getting ripped off hell, we probably wouldn't even buy receivers or speakers! God almighty says me! The tv was 1500, the new hdtv dvi cable was $100, the component cables were $60 the #@$%ing stand is $200 and another $200 for the warranty (it is for 5 years though)! And what's saddest of all is that one can only sit on top of the technology hill for a few months and you are outdated!

vivisimonvi
02-10-2004, 02:58 AM
I'd like to share some stories about the "Extended Warranty."

With a $300 Infinity subwoofer I purchased a year ago from CC... the amp died just a day before the 30-day guarantee expired, so they sent the unit in to Infinity for 'repairs.' A very ironic scenario, the unit came back all beat up lookin'. The subwoofer worked but I didn't accept it (the wood finish was chipped and one of the pegs to hold it up was missing). It couldn't even sit straight. The best they could do was give me a gift card for the amount I paid for. If I was a day late I could have went through some serious hassles. With an Extended Warranty I could have gotten a brand new unit (WITHOUT even getting it repaired, they would have replaced it). I know I'm never getting an Infinity powered subwoofer again.

One thing to think about is this:

How often are you going to use the product you purchased? I would definitely invest a warranty on the things I use very often. For the things I use most often I bought the warranty for it, and for each time the units failed, they gave me a brand new one. I've done this with earphones (they replace it once only, but the warranty is cheap, like buying a new pair for a lot less). My Apex DVD player I paid a little over $200 at the time, failed after 2 years with a 3-year Extended Warranty (I used the wrong power cord on accident that fried the unit). As long as you don't tell them you used the wrong power cord just tell them the unit just failed to work =) Since they couldn't replace the no longer made model, they gave me $200+ credit. I bought a brand new and BETTER Apex unit, with a VCR to go along with it. Would you believe I bought yet another extended warranty with my new DVD player AND VCR with the leftover credit?

If you think you've bought something you can really wear and tear in a short amount of time, GET the warranty!


Except if someone from Best Buy tries to tell you... "It's worth the warranty in case your LCD monitor fails and it's gonna cost over a $1000 to fix"... This was for a $300 LCD monitor...

skeptic
02-10-2004, 05:49 AM
Four years ago, I purchase 4 television sets, three refrigerators, and a freezer. except for one of the refrigerators, none of them was a small item. The TV sets were Sony KV36XBR250, just prior to the introduction of HDTV ready sets. If you read the reviews of this television set on this web site, you will see that many people had complaints about the appearance of scan lines and distortions for which no amount of service calls to Sony could result in a satisfactory repair. Fortuately, none of the appliances I purchased had any problems including the TV sets. In the past, I had a lot of problems with Sony television tuners, having had three fail on three different 13 inch set and 2 fail on 27 inch sets attributable supposedly to well known cold solder joints on outsourced circuit boards. However the failures didn't occur until the sets were about 10 to 12 years old. I cannot remember the last time I needed to have an appliance repaired. Oh yes, 15 year ago, I took my first cd player, a Denon which I still use back for service three times under warantee because the clamper arm would not sit correctly on many discs and eventually in pure exasperation, I had to take it apart and fix it myself by shimming the whole transport mechanism to get it properly aligned. What's the point of all this? That I could have spent tens of thousands of dollars on appliance warrantees and not gotten even one cent of benefit out of it.

My advice on HDTV, don't buy one. At least not for a few years. The prices are much too high and will surely come down. Reliability will improve as well when the guys who make clunkers will get a bad reputation and either clean up their act or go out of business. I can't see paying four or five thousand for a slightly clearer image of Gilligan's Island reruns. If you must have the latest and greatest right now or die, waste your money and buy these overpriced warantees. See if I care.

snodog
02-10-2004, 08:04 AM
I see what you are saying skeptic about not getting any value out of a warranty. I have, however already bought an hdtv and it really wasn't that much more than a sony wega. I paid 1500 for it and it has a phenomenal picture on hdtv and dvd. The regular pic is good but it is a rptv after all. I personally have never had a problem with an electroncic item. Twice with my computer which I will say I bought from a place called BEST to BUY. What a joke that whole store is. From incompetent workers all giving different advice (yet work in the same department) to high prices (considering the size and quantity of stores). Anyhow, I DID buy a warranty for my pc and had some problems and brought it back. They said yeah,,,,,,,the warranty you paid $90 for didnt cover the problem (the $#@*ing HARD DRIVE!) only the motherboard. Screwed I said. I took it home and ended up figuring out it was just a software problem. Good thing I didnt send it in! Another time I had a note saying my modem was not detected and the guy (boy I should say) told me without a doubt my modem was "fried". I basically ignored the idiot and ended up reinstalling it and it worked fine. My point is that from past experience, for some things I would actually rather buy a new product than having to send something back 3 or 4 times to get fixed right or have some degenerate little punk tell me "its fried" when in fact HE is fried!!!!

woodman
02-10-2004, 09:43 AM
Hmmm, interesting thoughts on the subject. On one hand I can see the point of not getting ripped off on a 100% profitable warranty however, if we refrained from buying something every time we were actually getting ripped off hell, we probably wouldn't even buy receivers or speakers! God almighty says me! The tv was 1500, the new hdtv dvi cable was $100, the component cables were $60 the #@$%ing stand is $200 and another $200 for the warranty (it is for 5 years though)! And what's saddest of all is that one can only sit on top of the technology hill for a few months and you are outdated!

snodog:
100% profitable warranty? There is no such thing as 100% profit - on anything! Furthermore, an extended warranty can actually provide some actual benefit to you should your new HDTV set develop problem(s), The REAL ripoff in your transaction were the $100 DVI cable, and the $60 component video cables. If it's possible to return those, I'd sure recommend that you do so. Get a different set of component video cables for 1/2 the price of the ones they "sold" you, and ignore the DVI cable altogether. That will save you $130 which would be much better spent on the extended warranty IMO.