Of­ten, ex­tended war­ranty won’t ex­tend your sat­is­fac­tion

The Washington Post Sunday - - BUSINESS - BY PAT MERTZ ESS­WEIN — Kiplinger’s Per­sonal Fi­nance

Be­fore you sign up for ex­tended war­ranty cov­er­age, make sure you’re get­ting the pro­tec­tion you pay for.

Re­tail­ers love these con­tracts. In fact, re­tail­ers might reap more profit from ex­tended war­ranties on ap­pli­ances and ma­jor elec­tron­ics than they do on the prod­ucts them­selves (that’s why sales­peo­ple are coached to urge you to buy the ex­tra cov­er­age). Typ­i­cally, you’ll pay 10 to 20 per­cent more for an item to ex­tend a one-year man­u­fac­turer’s war­ranty through the fifth year of own­er­ship, ac­cord­ing to the Ser­vice Con­tract In­dus­try Coun­cil. Most re­tail­ers hand off the con­tract to a third-party ad­min­is­tra­tor in ex­change for up to half of what you paid.

Odds are youwon’t need it. Celia Ku­per­szmid Lehrman of Con­sumer Re­ports says that most ma­jor ap­pli­ances do not break down within the ex­tend­ed­war­ranty pe­riod (among the ex­cep­tions are re­frig­er­a­tors with ice­mak­ers, elec­tric wall ovens and dish­wash­ers). When they do, she adds, the cost of re­pair roughly equals the cost of the ex­tended war­ranty.

You might al­ready be cov­ered. Amer­i­can Ex­press cards ex­tend the length of the man­u­fac­turer’s war­ranty by up to one year, and Visa Sig­na­ture and mostMasterCard credit cards will dou­ble it. Costco ex­tends man­u­fac­tur­ers’ war­ranties on TVs, pro­jec­tors and com­put­ers to two years from the date of pur­chase. Plus, the man­u­fac­turer may pro­vide a free or dis­counted fix for a de­fect that doesn’t reach the level of a prod­uct re­call.

Ser­vice? What ser­vice? Ti­moth­yMeenan, ex­ec­u­tive di­rec­tor of the SCIC, says that with an ex­tended war­ranty, you step to the front of the line. But Steve Sheinkopf of Yale Ap­pli­ance and Light­ing in Bos­ton says he sells and ser­vices his own ex­tended war­ranties be­cause most third-party ad­min­is­tra­tors do not re­spond quickly to cus­tomer com­plaints. Wil­liam Purdy, a fac­tory-au­tho­rized ap­pli­ance re­pair­man in Tel­luride, Colo., says he’s found that ad­min­is­tra­tors pay low and slow and de­mand bur­den­some pa­per­work.

It’s easy to check the provider’s track record. If you’re con­sid­er­ing an ex­tended war­ranty, ask up­front who will pro­vide ser­vice. Vet the provider on­line, us­ing a source such as Angie’s List. Read the con­tract and look for de­ductibles, lim­its to the num­ber of cov­ered ser­vice calls, ex­clu­sions to cov­er­age and trig­gers for can­cel­la­tion. (If the ap­pli­ance can’t be fixed af­ter a rea­son­able num­ber of at­tempts, will it be re­placed?) Then check the ad­min­is­tra­tor’s record with your state in­surance depart­ment and the Bet­ter Busi­ness Bureau. For in­stance, As­sur­ant, which ad­min­is­ters ex­tended war­ranties for such man­u­fac­tur­ers as Whirlpool and KitchenAid, gets an A, the top rat­ing. War­ran­tech, which sells the Re­pairMaster war­ranty through re­tail ap­pli­ance deal­ers and on­line dealer AJMadi­son, gets an F, largely be­cause of lengthy de­lays in pro­vid­ing ser­vice.

You can can­cel. If you bought an ex­tended war­ranty, most states man­date a 30-day “free look” pe­riod (some con­tracts pro­vide up to 90 days) dur­ing which you can can­cel and re­ceive a full re­fund. (To learn more, con­tact your state’s con­sumer pro­tec­tion depart­ment.) You may still can­cel af­ter that, but you’ll re­ceive a pro­rated re­fund, and the ad­min­is­tra­tor might charge you a fee.

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