Do You Really Need an Extended Warranty for Electronics?

Cynthia Wilson
Written by Cynthia Wilson
Updated November 27, 2013
Electronics repair
Buying an extended warranty for electronics often means paying for something you never use. (Photo courtesy of John Zambito)

Beware of the pitch for a warranty on your new electronic gadget. Here's what you need to know before buying a tablet, cellphone, computer, gaming system or TV.

Buying an electronic device this holiday season? Brace yourself for the retailers’ extended warranty pitch. It’s supposed to provide reassurance that if anything goes wrong with your tech gadget, it’ll be repaired or potentially replaced, at no additional charge. But is it really worth the cost?

Dan Zivetz, owner of highly rated West LA Computer Fix in Los Angeles, says many consumers never use the warranty because the product doesn’t fail during the lifetime of the agreement, or the fixes and replacements don’t meet the terms.

Big ticket items versus smaller gadgets

Consider purchasing a warranty for big ticket items like 50-inch screen or larger televisions, and computers that cost more than $2,000, recommends Mack Blakely, executive director of National Electronics Service Dealers Association, an industry group. About 70 percent of the Association’s members do repair work under extended warranties. Blakely says warranties for small TVs, inexpensive notebooks and tablets usually aren’t worth the investment, especially if the out-of-pocket repair or replacement cost barely exceeds the price of the warranty.

Given the cumulative costs from a monthly insurance premium and deductible to replace lost or damaged smartphones, consumer advocates say shoppers could fare better putting that money toward a new model when an older device goes kaput. Selling a damaged phone to a repair company also helps offset the cost of a newer phone.

Whatever you decide, don’t feel pressured to buy any warranty at the register, Blakely says. “You can buy an extended warranty on any product within a certain time frame. And you have at least a 90-day labor warranty from the manufacturer,” he says.

Other options for protection

Consumers who pay with certain credit cards automatically have additional protection for up to an extra year, says Meghan Cieslak, communications director for the Electronic Transactions Association, an international trade group for companies that offer electronic transaction processing products and services. “Many cards offer free, extended-warranty protection for purchases that come with an existing manufacturer’s warranty,” she says.

Cieslak says all warranties have requirements, so contact your card’s warranty processing center for more information. If you’re still considering an extended warranty, members and providers say you should assess your situation beforehand.

Consumer experiences

Member Dan Fassett of Langhorne, Pa., declined an extended warranty on his laptop, iPhone and iPad because he says the manufacturers make reliable products and he plans to upgrade if they fail. “The whole consumer electronics era is changing so quickly,” he says. “Do you need a five-year warranty on a product that you know you’ll trade up in a year?”

Yet Fassett bought a $100 five-year warranty for a 42-inch television because he felt the price was reasonable and wanted the convenience of in-home repair service. He says he had to have the television repaired twice since he bought it three years ago, including within the first couple of months after the purchase. “The screen went bad,” he says. “A year later, the sound went bad.”

Although the manufacturer’s warranty covered the first repair, Fassett says the five-year extended plan paid for the second, which he estimates would have cost at least $100 more than the warranty. The retailer arranged both repairs, which occurred in his home. “I was very satisfied with the result.”

Member Susan Sears of Rochester Hills, Mich., described her latest warranty purchase as a quite different experience. She shelled out $329 for a warranty on a laptop she gave to three pre-tween grandchildren, thinking it was a good deal because the salesman promised the policy covered repairs or replacement if the laptop was unrepairable . She says he promised a refund if she didn’t submit a repair claim before the warranty expired, which turned out to be untrue. “Of course our salesman was long gone from the store when it came time to use that warranty,” she says. “I’m so disgusted. Now they can’t find the battery. I feel like I wasted another $329, which we’ll never do again.”

The fine print

Zivetz of West LA Computer Fix says to never rely on a salesman’s summary of the policy’s terms. “With anything in today’s world, there’s fine print,” Zivetz says. “Pay attention to details.”

After the manufacturer’s warranty expires, extended warranties tend to cover manufacturer defects, such as a failing hard drive, fan and USB ports, but some parts may have zero or limited coverage, Zivetz says. He adds that consumers with some computer know-how can pay less than $80 for some parts, such as a 1,000 GB hard drive, and install it or hire a company like his to replace it for labor. He adds that a local computer service specialist will typically try to save your data before making any repairs, unlike computer manufacturers who wipe the data from the hard drive or keep the defective part.

If you want more coverage for a computer, consider having a local pro build one for you. “An advantage of having someone build a [computer] system for you is that you’re getting a longer warranty on each part from the vendor,” Zivetz says.

Accident coverage

That said, if a warranty gives you peace of mind, Zivetz recommends accident coverage, because the warranty typically covers accidental breaks and water damage caused by the consumer.

Providers and members also recommend researching and comparing warranties before you go shopping. If an in-store offer tempts you into making an on-the-spot purchase, take time to read the terms and make sure the warranty includes what the sales staff told you. “There are too many variables that can affect your repair or replacement,” Blakely says.