Should You Get the Extended Warranty on Appliances?
Edited by Eve Fish
It’s one of the first things you’re asked when you buy an appliance like a refrigerator or a dishwasher: Do you want to protect your purchase and buy insurance? Nearly every salesperson will ask you this, and a lot of their reasons make sense a lot of the time. However, insurance is extra money that you’ll need to spend and that makes it a tough decision. Should you get the insurance (spend more money now) or go without (and risk spending more in the future)? Does it make sense to consider the protection plan at all?
Much like with most decisions, it depends on the specifics of the purchase, the details of the insurance plan, what you’re buying, and your financial situation.
What Does Appliance Protection Plan Insurance Mean?
Sometimes called an extended warranty; service contract; or protection plan, appliance insurance essentially extends the support period after the manufacturer’s warranty expires.
Most manufacturers support their products for a year or so after you buy them, meaning repairs and replacements are typically covered. Some only offer a warranty of a few months, such as 90 days. Buying insurance usually adds more time to this coverage. You’ll often get about four years (depending on the plan) added to the support period.
The plan usually covers problems that occur due to normal wear and tear as well as many mechanical issues, but it doesn’t cover everything. You can't throw your fridge down the stairs and have it be covered.
However, some insurance plans offer additional benefits (such as reimbursement for spoiled food, in the case of a refrigerator) or protection from damage caused by power surges or other scenarios.
Payment is sometimes a one-time fee, but there are insurance plans that work through monthly payments as well.
In general, if your appliance breaks during the protection period through no fault of your own, some or all of the costs to repair it will be covered. If it cannot be repaired, it will typically be replaced with another appliance or similar unit. In some cases this replacement will be a brand new item, while others may replace your purchase with a factor refurbished option.
It’s important to note the difference between home insurance and specific appliance insurance. Home insurance often covers appliances in situations of fire, theft, or disaster. Appliance insurance covers situations where appliance break down or stop working during regular use.
When You Should Consider Insurance
Now that you know what appliance insurance is and what it often covers, it’s back to the original question: should you get it?
The answer depends on many factors.
The first is how difficult it will be to repair the appliance if it breaks. When you have a protection plan, you’ll usually also be connected with qualified repair technicians through their service. This can be very valuable, since some appliances require specific skills and it can be difficult to find qualified professionals to work on them.
If repairing the appliance involves expensive or complex parts or expertise, it’s a good idea to consider insurance. Many smart appliances or other high-tech tools (such as devices with touchscreens or expensive control boards) can be very costly or difficult to fix. Having insurance resolves these problems because you simply don’t have to worry about them.
You’ll also want to consider the length and scope of the manufacturer’s warranty before you buy extended protection. Some manufacturers only offer repair or replacement if something goes wrong within the first 90 days, for instance. If you want additional peace of mind for longer, you should consider the insurance. However, if the manufacturer provides a longer warranty (some include protection for a year or longer), then an extended warranty may not make as much sense.
The overall cost of both the appliance and the warranty matters as well. If you are buying a very expensive appliance that will be incredibly costly to repair or replace, the protection plan could be a good option. Of course, it depends on how much this additional coverage costs. Do some math and figure out if it makes financial sense to choose the warranty and compare that to the cost of just buying a new appliance in the future if needed.
It’s also worth considering your own financial situation. Many appliance repairs cost hundreds of dollars and replacement costs even more. It might make more sense to opt for the peace of mind of being covered, even if that costs you up front. It’s nice to know that you won’t need to deal with a big repair bill in the future.
When You May Want to Say No
There are a lot of reasons to consider forgoing additional insurance. The first is for less expensive appliances. If something won’t cost you a great deal to repair or replace, it may not be worth protecting. The same is true for situations where the extended warranty makes up a signification percentage of the purchase price.
For example, if you’re buying a $500 appliance and the protection plan costs $300, it might not be worth it. The same is true if you’re buying a $50 toaster. It’s probably not worth paying extra to protect this item, even if it’s likely to break in a few years.
You may also want to consider the reliability of the brand. If you’re buying an appliance from a brand that is known for reliable products that don’t break down often, that may be a good reason to skip the extended protection. However, in this instance, you’ll need to make sure that the brand’s reputation is accurate. There are a lot of brands that once had strong reliability scores but no longer do. Research the brand and specific product to learn more.
It’s also a good idea to consider the reputation of the company and the store you’re shopping at. Some manufacturers and retailers have high customer service standards, and they will replace appliances that break (or offer you a refund) even if they’re not technically covered by warranty because they want to keep customers happy.
On the other hand, some warranties are very restrictive. Before you buy a protection plan, think about what it actually covers. For instance, some plans don’t protect you if they determine that you caused the damage. This means they can deny your claim even in situations of accidental damage and what “accidental damage” means can vary. In some cases, it may extend to not following specific maintenance instructions, for example. In other cases, you may be expected to ship your product back to the manufacturer to repair and not all plans cover shipping and handling costs.
If the warranty seems very restrictive or inconvenient, it might be a good idea to skip it.
Finally, if you’re shopping with a credit card, know that many card issuers offer additional protection on products that are purchased with credit. Talk to your provider to find out if they offer this option. If your credit card provides additional insurance, you may not have to buy it.
What You Can Do Instead of Appliance Insurance
If you decide not to buy the insurance, you don’t have to resign yourself to struggling with a big financial hassle in the future. The first thing you can do, instead of buying insurance, is build up an emergency fund. This will ensure that you’re able to cover the cost of repairs in the future without getting into financial trouble.
Another thing you can do is learn to fix small repairs on your own. This doesn’t mean you’ll have to become an appliance repair expert, but learning a little can go a long way. You’ll probably be able to find videos online and tutorials that can help with many common repairs. If you’re able to do small fixes on your own, you’ll save some money and probably feel pretty good about yourself at the end, too.
In Summary
If you’re thinking about appliance insurance, consider the likelihood of a failure and the cost to do the repair. If it seems more difficult or costly to get it fixed yourself, consider the warranty. Otherwise, you may want to save your money for something else instead, even if that means saving for eventual repairs.
(Disclaimer: This article and apps mentioned are for informational and educational purposes only. The advice given isn’t a guarantee for specific money earnings or savings. You are responsible for your own actions.)