My general advice is to not buy “consumer insurance” like warranties on appliances. The mantra is that you should insure against financial catastrophe, and self-insure against the rest. I spend lots of money on good disability, life, property, and liability insurance. Then I have an emergency fund that takes care of the rest. But every now and then, I am offered a deal that seems too good to be true. Here are some recent examples.
I was at Home Depot picking up some sprinkler system parts. I've been meaning to get a leaf blower to blow off the walks, driveway, and decks, especially after mowing and to help with fall clean-up. Cheapskate that I am, I took a look at their refurbished stock, where they sell returns for about 50% off. An inexpensive blower, but adequate for my needs, was selling for $50. Now, I've had blowers before, and I know you can really only expect them to last 1-3 years. No one repairs them because it's cheaper to get a new one than to pay for a single part to be replaced. The part that needs replaced is usually the engine anyway. My last blower, of better quality than this Ryobi, lasted only two years of moderate use.
So when I go to check out, the check-out dude offers me a two-year full-replacement warranty for $10. I asked him if that meant I got another refurbished one, and he assured me that no, I would get a brand new one. I told him there was no way this blower was going to last 2 years, and it had already been used for who knows how long before I got it. He didn't care, his job is to sell warranties on everything he can. So I took him up on his deal. This was a bet I was willing to make, especially since I get to control how much the blower gets used, how hard it gets used, and how much bad gas I put in it. I can assure you, it will not last two years. So for $60 I get a blower that'll die in a year or two, then I get a brand new one. I even got a full tank of gas thrown into the deal. I think I'll use it to blow snow off the driveway all winter now. And maybe leave it out there in the snow when I'm done.
Our 4-in-1 printer died a couple weeks ago and my wife is shopping for a new one. She found one with a 3 year full-replacement warranty. I've had 3 or 4 printers in the last 10 years and I don't think one of them lasted more than 3 or 4 years. I don't think they were charging for this warranty, but even if they were, I'd probably take them up on it. Those printers at the hospital get changed out every 6 months it seems. These things just aren't built to last. They make all their profit off the ink anyway. I assume they make their warranty money back on people who buy the warranty but then forget to use it, or perhaps people who are a lot nicer to their stuff than I am.
We just had the roof replaced. It came with a 50 year warranty. What kind of a roof lasts 50 years? I'm confident I'll get a chance to use this one too, at least for a patch job or two.
Some of the unconditional warranties for smart phones seem like a pretty good bet too. I mean, if you're getting near the end of the warranty period and you still haven't dropped it into the toilet or off a cliff I'm sure it can be arranged.
We made the people who sold our house to us buy a pretty standard 1 year homeowner's warranty. That was good for a new $1600 gas range.
So when offered a warranty, you should probably usually say no, unless it's free or if you can get someone else to pay for it. But every now and then, when they make a dumb bet with you, take them up on it (and keep the receipt.)
What do you think? Which consumer warranties are a good deal?
Image Credit: Chicoutimi, via Wikimedia, CC-BY-SA
ill be interested to hear how well you feel those warranties worked out in a few years when the cell phone accidentally breaks a month before the warranty ends. I think you are going to find that very cheap warranties are very difficult to work with and that you wont be able to locate that helpful sales agent when you need them. If you factor in your time, im predicting a money loss. For small to medium priced items such as a TV, if someone wanted a warranty (and im actually not advocating for them), id look at squaretrade. Frequently on fatwallet.com and slickdeals.net in the hotdeals forum there are coupons for significant percents off. This company also seems to have a good track record with the fatwallet and slickdeal community and if anyone is going to game the system, it will be folks from there. While i enjoy finding a good deal, some of the lengths those people go to amaze me.
eh… i really enjoy this blog, but not this post.
I appreciate the fact that i make enough money to buy quality parts that don’t break like the ones you get. Or you’re really hard on your stuff.
I’ve had the same printer 8 years.
I’ve had the same blower 7-8 years.
I do the limited maintenance and the supplies last. This seems like a far better bet to me.
Why do you assign no value to your time that it takes to replace and deal with crappy equipment?
in regards to printers, it is actually really beneficial to just buy a more expensive printer initially and avoid those free printer deals with purchase of a computer. Not only is it typically less likely to break, you can save money on ink/toner since they typically arent as much gas guzzlers. You can also get one that autoduplexs and that saves on paper let alone i typically prefer my printouts to be duplex. If you have any ipads in your house, its just plain easier to get one that has airprint enabled. I also feel having a networked printer either wired or wireless is a huge plus. In our house, we have have a laundry room on the top floor with the bedrooms and i have a wireless network printer and it makes it so easy for the family to print out things for school etc. I previously had a cheap one that my father purchased for me as a gift (he is always trying to help) but i was spending so much on ink that within 2 years ill pay the difference between that printer and my 500 dollar color laser. This doesnt even take into consideration problems one typically has with paper jams, problems accepting different paper sizes, or driver issues which are more common with the cheaper ones.
Car warranties are right up there as well in terms of room for debate and are recommended against by Consumer Reports among others. We’re deciding whether or not to purchase one for our 2011 Jeep Grand Cherokee direct through Chrysler. Chrysler does a lifetime warranty that is basically bumper-to-bumper excluding maintenance items and glass that we could buy for about $2000 (this is a factory-backed warranty and not a third party; I refuse to deal with a third party). Whether one should buy a new or used car is moot for me since we already have the car. Should we buy the warranty? I plan to keep it at least 7 or 8 years. My wife bought an extended warranty on a 2005 Jeep before we were married that did “pay off” when the compressor went and the fuel tank kept leaking gas during fill-ups. Normally I’d advocate against warranties, but that one did “pay off.” Suggestions about getting the warranty for the newer car?
The cost of the car warranty is negotiable. Typically you can even buy it from a different dealer.
Laser printers are the way to go. My networked duplex one is going strong on year 4. It scans over network as well (go Brother). Unless you print color often inkjets are a complete waste.
Rex, That is a negotiated price from a Chrysler dealer through the internet; MSRP is $3500 or more.
There’s an old mantra- “Buy nice or buy twice.” It certainly applies to a lot of things in life. Obviously we can’t buy the nicest stuff for everything, so it is interesting to see where individuals buy nice and where they cheap out. For example, I have the cheap blower but a very nice mower. Cheap cars but some of the nicest outdoor gear you can buy. I wouldn’t hesitate to drop $500 on a tent (or even a sleeping bag) but for a printer? Seems like a lot. Interesting….
To me buying a warranty is like betting against the house. They know that they will make money on them, otherwise they wouldn’t sell them. I guess I’m not cheap enough to try and find the warranties that might actually be good bets. And I agree with other comments that even if you find a warranty that is likely to “pay off” it’s probably not worth the time and hassle.
I’m happy your home warranty worked out for you. My a/c crapped out one month after moving in and they claimed it wasn’t covered due to lack of routine maintenance. I’ve encountered many people who have had the same record with home warranties.
The thing about warranties is you ALWAYS hear stories from those who it “paid off” and saved their tail but no one ever talks about the countless warranties they purchased just to see that money go to waste.