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Should you purchase an extended warranty?

Are extended warranties worth buying?
Are extended warranties worth buying? © dotshock/

You're buying a new computer. As you pay, the salesperson asks if you want an extended warranty. The cashier may call it a protection plan, insurance or a service agreement. You're already making a large purchase. Should you pay even more for coverage you may never need?

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It all depends, says James Talaga, Ph.D., a professor of marketing at La Salle University. Look at several factors, he says, including your risk tolerance. Also consider if the product is new or likely to fail.

A traditional extended warranty extends the terms of a manufacturer warranty usually by one to two years, says Ty Shay, chief marketing officer at warranty company SquareTrade, and only protects you against the device failing for manufacturer reasons. It doesn't necessarily cover wear and tear or accidental damage.

Accidental damage may be something you want included, though. "We have claims data from tens of thousands of devices, and most of the claims are from accidental damage," says Shay. His company covers accidental damage under its extended warranties.

Before you make that big purchase, find out if you really need an extended warranty. While some companies give you 30 days to add it, most require that you purchase the extended warranty at the same time as the product.

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Should you buy an extended warranty?


When you buy a big-ticket item, such as a computer or a major appliance, the salesperson will try to get you to spend a little more -- on an extended warranty. Should you ever say yes?

Sometimes an extended warranty is worth the money, sometimes it's not. Experts say it depends on several factors, including your willingness to tolerate the risk that something could go wrong once the item is out of warranty, and whether the product is new or likely to break down. With computers, an extended warranty might make more sense for a laptop as opposed to a desktop, because notebook computers tend to have more small, proprietary parts. An extended warranty on a smartphone might pay for repairs only after you pay an out-of-pocket deductible of up to $199. Consumer Reports advises against extended warranties for appliances because they rarely fail during the coverage period.

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