There are many factors to take into consideration when considering an extended warranty.  How likely is it that the appliance will become obsolete during the extended period, making repair or replacement not feasible?  What is the average cost of a repair and how does it stack up against a repair bill? How likely is the product to break during the extended service time?  Consumer Reports data shows that most defects actually show up the first year during the standard warranty period.  In reality, only those products that are expensive to repair or replace should have extended plans, and those plans should not cost more than ten percent of the price of the product.


Who hasn’t had to make that decision on whether to add an extended warranty to the pricey appliance or home electronics they just purchased?  Adding another $100 or more to your purchase can quickly kill the satisfaction of getting a “good deal.”   Are these add-ons a true benefit? Or are you just padding the pockets of retailers who reap as much as 50% profit for extended service plans that are never used by consumers.


On a grander scale, a home warranty is a one-stop service plan that covers the repair or replacement of all your home’s appliances.  One call to a service center and a technician is dispatched to repair your appliance.  In addition to typical appliances such as a refrigerator, a home warranty covers air conditioning and heating systems. The roughly $500 home warranty also requires a homeowner to pay an annual fee and likely a service call each time a technician is called.  These subcontractors pay for these leads so they may try to upsell other services as well.  


Home warranties have become incentives home sellers use to close a deal.  They are a great benefit to homebuyers provided the buyer is not planning to change the appliance.  While manufacturers should stand behind their products, if a buyer plans to keep their appliances for many years, a home warranty is likely the best way to go.

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