Extended Warranties

You will probably never meet anybody who is more hostile to Extended Warranties than I am. To begin with, we see the same deception that we have been talking about in our previous discussions. They give the product a special name that hides the fact that we are really selling insurance: They are “offering an Extended Warranty”.

By now you know what we have to do to determine if this insurance is a good deal. Compare the sum of all of the premiums you pay, over the years, to the claims that you make. I am sure you already know who is the net-winner, and who is the net loser.

It might amuse you to learn that two and a half years ago, I went against my better judgment and bought a TV and just such a policy from Best Buy. My story will prove to be another fine example of why these policies do not justify their cost. For one thing, I should have considered getting my insurance from somebody other than the retailer. One option is DTV Express.

At the time, flat-screen plasma TV’s were the rage. My sons were well-informed on the product and my wife liked the bigger screen, so I swallowed hard and removed the padlock from my pocket. I dug DEEP DOWN, past the security guards and the cobwebs to the lint-level and begrudgingly summoned $1,700 for a brand new 42-inch Panasonic. Fortunately, it was “on sale”.

As we were attending the paper work, the clerk asked the inevitable question: “Would you like an Extended Warranty?” My sons previously pointed out that plasma products were fairly new, and expensive to replace, so if there ever was a time for an Extended Warranty, this was it. (Plasma TV problems) I looked over my shoulder to be sure there were no bad guys watching, and I called the hot-line to the Brinks Truck to summon up an extra $400 for a four-year extended warranty (It hurts my finger tips just to type it).

I have to admit that a big screen changes the dynamics of watching television. Now, all of the action is so close and personal that when Patty and I sneak a kiss in the TV room, the actors on the screen all stop what they are doing and turn their heads to watch us old people smooch. YECH!

Well anyway, a couple of weeks ago, “it” happened. The picture disappeared and I have to admit I missed it. I immediately launched into crisis mode. One of my sons, Justin, helped diagnose the problem. We needed a new SC board, whatever the heck that is. I called two repairmen to determine the likely damage. The lower estimate came in at $275. He told me he could get the part and complete the job in 72 hours.
About that time Patty remembered that we actually bought that Extended Warranty. I mentally noted the irony. The one guy who hates Extended Warranties is actually in a position to benefit from one. “YIPEE, YAHOO, HORRAY, Call ‘em up!!”

After a half hour of verifications and well-planned runarounds an appointment was set for the repair…eleven days later!!! The nice person on the phone advised me that the warranty saved me $400. I spared him the obvious rebuttal. “Oh yeah, I found a local guy who would do the job in 3 days for $275.”

I don’t see how a consumer could expect to get more out of an Extended Warranty than we did, but as you can tell, we are still net-losers. I paid $400 for insurance but it would have been cheaper and faster to just pay the repairman myself. And there was a very real chance that I would have never filed a claim at all and ended up paying for both

Now I am backed into a weird corner. I am in the ridiculous position of hoping my TV breaks down again so I can file another claim and get the full value out of the insurance premium; or, I can hope the TV holds up and I just lose the remainder of the money. Either one is stupid.
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In the end, Extended Warranties are just one way consumers can flush their money away. That is because the cards are ALWAYS, ALWAYS, ALWAYS in the house’s favor.

WEIRD UPDATE: All of the above was written two days ago. Today the same thing happened again. It appears I may get my money’s worth after all… eleven days from now!

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