Home and product warranties have become quite popular, primarily because they are significant money-makers for utilities, retailers and manufacturers. Before purchasing a warranty, however, you should carefully consider the cost of the warranty versus the value and normal service life of the particular product. Also look carefully at the specific terms and conditions and actual coverage offered Everyone has experienced the hard-sell tactics of a store sales person who has a few dollars to gain for each warranty they sell, but it has become more commonplace to receive a notice in the mail offering a warranty on appliances and other items you already own, even buried water or sewer lines.
Having had a water heater spring a leak in the past, it may initially seem like a good investment to purchase extra protection. But realize at only $6/month, projected for say 4 years, you would have paid close to $300 for a warranty on a water heater that may cost only about twice as much – with only a small chance that you would get a return on your investment. Having second thoughts? Maybe you should, particularly if the fine print excludes everything but the tank itself, and then excludes even that after five years.
For the first year the manufacturer may cover everything anyway; and after that, the tank is often warranted against leakage for at least five years. So the feasibility of purchasing add-on warranties for certain appliances may be questionable. If the warranty company is a third party, and not the original, recognizable and contactable manufacturer or retailer, the risk is even higher.
There is no question that some consumers benefit from these warranties. Legitimate warranties that cover electronics, or offer free replacement of a defective product, are generally better risks, but still, it all depends on the cost and actual coverage and exclusions. Additionally, if you use a charge card for your product purchase, the credit card company may offer similar or additional warranty coverage. The last thing you want to do is pay for what is already included in a manufacturer’s warranty or free protection plan.
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