Are extended warranties worth it?

As I posted earlier, I'm planning on getting a palm soon, probably a Tungsten E. Although I usually decline extended warranties without even thinking twice...I'm thinking twice.

Are they a good idea or no?

Any other "if I knew then" tips?

I agree with Coz. I don't have a consistent approach to warranties. I have puchased many in the past that I don't use but this is my latest way of thinking.

For me it is an intuitive feeling for risk of breakage vs the cost of replacement vs whether I am likely to upgrade the item before the item breaks.

For a low cost item like a VCR at home that is hardly ever moved, or a tv set - no, I would not get one. I recently missed the time limit on getting an extended warranty on a washer and dryer (which I would have done - large cost replacement) but my GTD system wasn't in place and I didn't get around to it. While the risk of these items breaking soon is not high - the expense of replacing them is.

Car - yes, if I am buying a used car where I can still get an extended warranty, I will do so. I did this for $1,000 a couple of years back and not long after the whole transmission needed replacing - so that paid for itself.

For things like electronics. Laptops and pda's - yes I usually do. The one time I did not, the fan went on my laptop after 1 year and 10 days. I could have just taken it back and got a replacement if I had been smart. Twice now I have purchased a desktop computer and a pda as an open box item and with the money I saved I got the extended warranty. In the case of the desk top computer, I had to take it back the next day because the modem did not work. They just took a brand new computer out of the box and gave it to me as a replacement, no questions asked. With another brand new PDA and a laptop, I got the extended warranties but upgraded them without ever having used the warranty. It seems a waste, but remember you are buying peace of mind, not guarantee that you will need it.

For laptops and PDA's where you are carrying them a lot and they are vulnerable to breakage, I would be very tempted to do so. But the more expensive the unit the more valuable it becomes. For the cheapest PDA's it may not be worth it.

Paul

I read in Personal Finance For Dummies that extended warranties are almost never worth it. So I never purchase them as a rule.

That said, I have read about reliability issues with the Tungsten E (and Zire 72) - check out the reviews on Amazon.

If you're not comfortable with the possible reliability issues, do what I did and move to the Pocket PC world - the Dell Axim costs the same as a Zire 72 ($300).

The downside of Pocket PC is that you can't get as much free software as for the Palm. Expect to spend an extra $30 for a replacement for the built in calendar/to-do apps, which are very very basic.

Take the self-insure approach.... Which is this.

Most 'defective' electronics will break within the warranty period and you have recourse. Save the money on the extended warranties for everything; (except home, auto and perhaps life ins) and figure your going to have to repair or replace something sometime so just pool the money saved and bite the bullet when something breaks. Odds are that what breaks would have been:

1. outside the xtended warranty period and no coverage anyway
or
2. the one thing you did not ge the extended coverage for

In many cases what you try to extend only repairs the item; and if its computers or PDA's, they will essentially be obsolete or under-powered in 3+ years so you should have set aside money for a new one anyway. If at that time say in 4 years the item breaks, you can decide if it is worth repairing or replacing.

If you replace it with something new, you've saved hundreds on the extended warranty and have more money towards the new one.

It just makes sense to collectively self-insure what you have the means to. Most people can do this except for the big ones; house, car, life, etc.

And I think someone else mentioned that the xtended warranties make the MOST money for retailers; that should be the clue that they are good for them and overall, not for you!

-T

I would consider buying a warranty for a mission critical device provided it gave me an immediate replacement.

Otherwise, I break out my trusty American Express card which includes a built in warranty protection solution. It double the manufactureres warranty up to 5 years (excluding cars.)

It has never let me down. I simply call them to place a claim or do it via their website. I give them the purchase date info, receipts if needed, and depending on the pheasabillity they either repair or replace the unit.

Most recently I ran over my mp3 player. Instead of fixing it they gave me the $180 to get another one.