Appliance extended warranties: are they worth it?

Almost every appliance purchase now comes with an offer of an extended warranty or protection plan. Sometimes it is worth it; often it is not. Here is how to decide.

Warranty or service contract?

A manufacturer’s warranty comes with the appliance and is included in the price. What retailers sell at checkout is usually a service contract — a separate product, often run by a third-party company, that covers repairs for a set period. The U.S. Federal Trade Commission points out that a service contract is only as good as the company behind it, and that it is not the only way to plan for future repairs.

Questions to ask before buying

• When does coverage start? Many plans overlap the manufacturer’s warranty for the first year, so you pay for coverage you already have.
• Who carries out repairs, and how quickly? Is there a limit on the number of claims or the total amount paid?
• Are parts, labor and travel all included? Are there deductibles?
• What is excluded? Cosmetic damage, accidental damage, “improper use” and maintenance items are common exclusions.
• Will the plan replace the appliance if it cannot be repaired, and at what value?
• Can it be cancelled or transferred if you move?

When a plan can make sense

• Complex, expensive appliances with many electronics, such as smart French-door refrigerators or high-end ranges, where a single board or sealed-system repair can cost a large share of the purchase price.
• Households that cannot absorb an unexpected repair bill.
• When the plan is reasonably priced and includes in-home service with a good reputation.

When it usually does not

• Simple, inexpensive appliances whose common repairs are low-cost.
• When the plan price is a large fraction of a likely repair.
• When the manufacturer already offers long coverage on the parts most likely to fail.

The self-insure alternative

Instead of buying a plan, set aside the amount you would have spent and keep it for repairs. Combine that with good maintenance — cleaning filters, coils and vents — and you will often come out ahead.

Watch out for warranty scams

Unsolicited calls, letters and emails warning that your “warranty is expiring” are a common scam. Repair scams work in a similar way, with unrealistically low quotes followed by inflated bills. This guide on how to avoid appliance repair scams explains the warning signs. For more buying advice, see our guide to reliable appliance brands.