Does Your New Appliance Need a Warranty?
When you've just spent $2000 on a new refrigerator, it seems to make sense to get a warranty, or does it? Salespeople hawk the benefits of warranties, including free repair and free replacements. However, results from Consumer Reports 2013 Online Annual Questionnaire suggest that many people who purchase warranties are not more satisfied than people who don't. Let's look at some of the key findings and what they mean for purchasing warranties.
"Only 15 percent of products in our survey were covered by the manufacturer’s regular warranty when they broke."
There is a common myth that appliances always break as soon as the warranty has ended. Perhaps it's not a myth after all. It appears that 85% of appliances break after the warranty period. Some people did decide to extend their warranty or start a service contract. However, these people only account for another 10% of repairs. This seems to suggest that 75% of appliances break down outside of any warranty period.
"Even the 77 percent of people with those contracts who were offered a free repair or replacement for their product didn’t save much money overall. The median cost for the contract or warranty was $136; the median cost for repairs was $152."
Warranties cost extra money. The idea is that, similar to insurance, you pay a little bit in case of a major repair. However, on average, it appears that the cost of the warranty and the cost of the repair were similar. This is an average, however, so a major repair may still be worthwhile. Consumer Report's survey also includes smaller appliances, like laptops, which are sometimes cheaper to repair. This may be adjusting the average downward. However, it is a little ironic that the average warranty cost and average repair were so close.
"People who used independent repair shops were more satisfied with the repairs than those who used factory service."
Buying a warranty limits the number of shops that you can use for a repair. Factory service shops are certified by the manufacturer and must be used for repairs. Otherwise, you will end up voiding the warranty. However, people tend to like independent repair shops better because they are cheaper and faster. Consumer Reports found that people under warranty or service contracts were more likely to have incorrect "repairs" completed by factory shops, and they waited up to 2 weeks longer for the repair.
In some cases, a warranty may be worthwile. However, the stats show that, on average, it's not worth the hassle. Most appliances break down outside of the warranty period anyway. Plus, homeowners that are not under warranty can contract with their preferred local independent repair shop for cheaper and faster repairs.