Should You Buy an Extended Warranty?

Don’t Throw Bricks At Your TV – Or At Your Finances

But what about buying insurance for, say, that spiffy new bicycle you picked up?

Oh yes, I’m referring of course to the often-bought-on-impulse extended warranty. Extended Warranties are technically insurance policies on your newly-purchased items so that, in theory, if something were to happen to that item, it would be replaced by the manufacturer.

Even though buying extended warranties seems like the fiscally responsible thing to do, it is actually quite to the contrary.

It all seems like a good idea, but extended warranties economically don’t make sense. For something to be worth insuring, the amount of money should be less than the amount of money it would cost to repair or replace the item. So in the case of that new 2000 inch Flat-screen LED HD DVR TV you just bought, it would only make sense to purchase the extended warranty if you were paying considerably less money on the warranty than you would if you had to replace it.

As noted above, insurance policies only make sense for really big-ticket items, and if stores are really pushing consumers to buy them, it means they are making money off of the plans themselves.

According to a 2006 Washington Post article, of the fifteen billion dollars spent on extended warranties premiums in 2004, 7.5 million of that went to the stores supporting them. These warranty providers are simply playing on consumers’ uncertainties.

So unless you like throwing bricks at your TV, extended warranties are never worth the buy. Even if you did happen to throw bricks at your TV, you still wouldn’t be covered. That’s right – accidents and “normal wear and tear” (for which people usually buy extended warranties anyway) – are not covered in most warranties (Washington Post: Unwarranted).

On the whole, extended warranties are a superfluous cost, and should be something to avoid, unless being bought in the form of real insurance policies on items such as cars, health, and houses.

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Chris Buchheit

Chris Buchheit was born under the hot Floridian sun during some year in the 1980s. There he studied school matters until moving to North Carolina in 1999. Possibly due to the fact that his mom had enough of him being inside all the time, he quickly got involved in community affairs via the Boy Scouts of America, where he learned the values of citizenship, morality, duty to God and country, and that the biggest kids get to boss around the smaller ones. Chris attained the rank of Eagle Scout in 2004, and still values the rank as one of his proudest achievements. Beginning in 2006, Chris began attending the University of North Carolina at Chapel Hill, where he quickly learned the value of basketball and poplar trees. Since attending UNC, Chris has been double majoring in Asian Studies, with a concentration in Chinese, and Political Science. When he isn’t slaving over his honors thesis, looking up a bunch of Chinese Characters, volunteering, or mindlessly browsing the same websites over and over, Chris enjoys writing short stories and novels. Much to his roommates’ annoyance, he also spends his free time learning to play the guitar. Above all else, though, Chris values God, his family, and his friends. For the future, Chris plans to apply to Georgetown to further his studies in Political Science, hopefully with a concentration on China. Pending acceptance into Georgetown, Chris would like to study while gaining professional experience in a government job in Washington DC.

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