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