Extended Warranty Should Be Named Peace of Mind
You are purchasing a large bill appliance, one that you hope will function for the next decade or so. You hope that you will not have to spend the money on another one for a long time. You are making your final payment at the register (or on the checkout page). Then you are offered an extended warranty. The warranty is not inexpensive, but it is less then the cost of purchasing a new item. Your mind begins to do some quick math and predictions. "How likely is it that this product will break? Afterall, they do not make them like they use to. But what if it never breaks? Is it a waste of money to get a warranty on an item that may never break? But what if it breaks in a year? Or two? I cannot afford another one. What should I do?"
Let's face it. Most home appliances and electronics come with a limited warranty offered by the manufacturer. This warranty often lasts for up to a year. Manufacturers design their products to outlive the limited warranty. In the rare case that the product does malfunction, chances are that the product croaks within the time frame of the retailer's return policy. Even if it does not malfunction immediately, your credit card offers some insurance if you believe your product is fraudulent.
In reality, none of that matters. Extended warranties are not determined by a game of chance or predictions. Instead, extended warranties offer you the peace of mind that you do not need to purchase a brand new product for the stated amount of time. One way to decide whether the extended warranty is worth your dollars is to consider how much the warranty will cost you per year coverage. For example, if a $500 appliance comes with a 10 year warranty for $100, the average cost per year is $10. If your peace of mind is worth that dollar amount then the extended warranty may be worth buying. Your appliance may outlive your warranty, but at least your appliance served its purpose for the decade. If it continues to serve its purpose beyond its life expectancy, well then, consider yourself lucky.