Should You Ever Pay for an Extended Warranty?

A few weeks ago, I noticed a slight crack on the screen on my Macbook. On top of that, a few letters on the keyboard fell off.  

The good news? When I bought my laptop a few years ago, I had purchased a three-year extended warranty. After doing a bit of research online on what these repairs typically cost, I realized that I had spent $150 more on the warranty and per-incident deductible than what these repairs would cost out of pocket. In hindsight, I wish I had just gone with a different warranty or skipped it altogether.

While getting an extended warranty can quiet those “what if” hypotheticals and offer you peace of mind, at the end of the day is it worth it? Let’s dig in:

What Do Extended Warranties Cover?

The thing with extended warranties? They simply extend the length of the regular warranty, explains Michael Bonebright, a consumer analyst with DealNews.com. In other words, you’re not buying expanded coverage. That’s why they’re very rarely worth the cost.

“The vast majority of warranties only cover manufacturing defects, as opposed to problems caused by misuse or accidental damage,” says Bonebright. “Typically, you're going to notice a manufacturing defect almost immediately.”

When I purchased the extended warranty for my laptop, I also purchased accidental coverage. This covers incidents such as water spilling onto my keyboard, or if someone accidentally stepped and cracked the screen.

Other things to check for: What exactly is covered, and if there’s a per-incident deductible. What’s more, check and see what options you have for getting an item repaired or replaced. Do you have to ship off that phone or laptop to the insurer’s repair center, or can you drop it off at a nearby repair shop and get reimbursed? If you’re itching to get your phone back, the few extra days you’ll have to wait could make a difference.

Use Your Credit Card Warranty Instead

Many credit cards offer extended manufacturer’s warranties. If you make the purchase with the credit card, they’ll usually match the manufacturer’s warranties or extend them for 12 to 24 months.

Some credit cards require that you register the item after you buy it, so you’ll need to upload a copy of the receipt, and pop in some basic details.

Gauge the Likelihood You’ll Need to Tap into the Warranty

Besides the ins and outs of a warranty, think about how likely it is you’ll need to get an item replaced. For instance, depending on your situation, a big screen TV might have a lesser chance of getting trampled on or suffer water damage, than say, your cell phone or laptop.

I travel quite a bit with my laptop, and like to work out of coffee shops and coworking spaces. And as my laptop is the main device I use to earn a living, I thought it would be worthwhile to invest in a warranty.

What’s more, is it a necessity, or is it more of a nice to have? Worst-case scenario: that item gets demolished, and you need to get it replaced. Instead of doling out cash for a warranty, you could save for a new one. Or maybe wait until you snag a good deal on it.

Hang on to Receipts

If you do decide to get a warranty, make sure to hang on to your receipts, recommends Bonebright. “Whatever the length of the warranty, to get your item repaired or replaced you'll need to show that it's still within the warranty period, which means providing proof of purchase,” he says. “Without proof of purchase, the manufacturer may assume you bought the product as soon as it hit store shelves, and that's likely to put you outside the warranty period, extended or otherwise.”

Beware of Retailer Warranties

Another pitfall of extended warranties? They’re usually offered by a retailer instead of the manufacturer, says Bonebright. When a manufacturer’s warranty is offered, it usually offers expanded coverage. “AppleCare is one of the best warranties you can get, as it covers a whole host of problems,” says Bonebright. “Buying a retailer warranty for your Apple device is actually worse coverage in some cases.”

While an extended warranty is usually not worth the cost, you’ll want to do your homework and do an assessment for yourself. The best time is to do it when you’re not standing at check out, and might make a rash decision.

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