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Part 2: Are You A Candidate For An Extended Warranty?

Like all insurance, extended warranties provide peace of mind, but they’re also a bet. So before you sign up, consider a few questions.

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In the first post in this series, we discussed the various types of extended warranty and service plan options you can purchase to protect your new electronic device. The big takeaway: read the fine print to make sure you know what kind of protection you’re buying. But should you buy one at all?

Like all insurance, extended warranties provide peace of mind, but they’re also a bet. You’re paying for a service in advance that you might never use. So before you sign up, consider a few questions.

Is this a big-ticket item? If you’re purchasing a pricey item, like a fancy laptop, the cost of an extended warranty might make sense when you consider how much you’d pay to replace the device if it fails. But for lower ticket items, an inexpensive tablet for example, the cost of the service plan might actually approach the replacement cost for the device.

How long is the term? As we discussed in our last post, all extended warranties are not created equal. Some begin when the manufacturer’s warranty ends, others start as soon as you purchase the device. So, a three-year extended warranty might actually only give you two years of added protection. And according to Consumer Reports, most electronic devices that fail due to a defect do so in the first year.

How likely is the device to fail during the warranty period? Before you make a call on the warranty question, it can pay huge dividends to research how good the product you’re buying is. If you’re armed with the right information, the decision becomes much easier. Consumer Reports, for instance, suggests that the repair rate for computers (desktops and laptops) is 24 percent. Again, that’s an aggregate rate, and a good percentage of those repairs will occur during the period covered by the manufacturer’s original warranty. But different brands and models have wildly different failure rates.

How are you going to use the device? If you’re purchasing, say, a desktop computer with a good track record for reliability that’s going to sit on a desk and never move, you probably don’t need damage protection. But if you’re buying a pricey smartphone or a laptop that you’ll take with you everywhere, you might want to consider an extended warranty. Some manufacturer’s extended warranty programs, like AppleCare, provided limited coverage for accidental damage such as cracked screens and other failures not related to a hardware defect. If you’re prone to dropping your phone, tend to spill coffee onto your laptop keyboard or are simply unlucky, a manufacturer’s extended warranty might be worth the price.

How important is the device to your business/life? If you rely on a computer, smartphone or tablet for work or fun (and really, who doesn’t?), then you need to ask yourself how easily you could cope with not having it. If, as mentioned above, you’re not sure you’d be willing to pay the original purchase price immediately to replace a broken or lost device, would you be able to make do without it?

Finally, another thing to consider before purchasing an extended warranty is whether you’re already covered. Many credit cards, for example, provide purchase protection that offers some of the same coverages for damage and loss that an extended warranty provides. So you might not be buying much with an extended warranty.

At ComputerCare, we see devices that need repair for all kinds of reasons, some common and a few that are spectacularly weird. But one thing we know is that devices will fail and accidents will happen. An extended warranty may or may not be worth it for you, but you’ll be better off making a thoughtful decision well before you need to repair or replace your device.

Part three in our warranty series will cover how much an extended warranty plan will cost.