Just as concerning is that a service plan can have “fine-print exceptions that a provider can use to deny your claim,” Consumer Reports says.
Meenan points out the advantages. For one, you don’t have to buy the warranty from the store that sells you the item.
Consumers can shop around for warranties online like they shop for the products themselves, comparing prices and coverage. For example, SquareTrade has become a popular choice for electronics service plans.
Meenan added that credit card extended-warranty coverage is becoming less prevalent, and manufacturer’s warranties are getting shorter.
A bonus of many extended warranties is they might have in-home service for large appliances and big televisions, for example, he says. Or for a portable item, it might have a speedy shipping option, such as overnight FedEx delivery, he says.
“The time convenience is probably one of the most attractive features on these,” he says. An extended warranty also eliminates the hassle of trying to find a service person to repair the product, he added. And some extended warranties cover accidental damage or power surges, unlike manufacturers’ warranties, he says.
AUTO WARRANTIES: After buying a new car, you’ll be shuffled into the F&I room, which stands for finance and insurance. That’s where you will be pitched an extended warranty on your vehicle, which is essentially insurance against costly auto repairs. Auto warranties are available for used cars too.
In a recent report, Consumer Reports called vehicle extended warranties “an expensive gamble.” A survey it conducted found 55 percent of owners who bought an extended warranty hadn’t used it for repairs during the lifetime of the policy. The median price paid for coverage was about $1,200. Those who did use the warranty spent hundreds more for the coverage than they saved in repair costs, it found.
A primary argument for buying an extended auto warranty is that people are keeping vehicles longer and auto warranties are getting shorter, Meenan says.
Auto warranties are typically transferable to a future buyer of your vehicle, and sometimes are refundable — giving back a prorated portion of the warranty’s cost if you sell the vehicle, he says.
Gregory Karp, the author of “Living Rich by Spending Smart,” writes for the Chicago Tribune. Readers may send him email at gkarp@tribune.com.
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