Should I Buy An Extended Warranty?

Thread purpose: To discuss the value and your experiences with extended warranties. Let’s see if we can all have a civil discussion.

I’ll start with this article.

6 Reasons Why You Should Never Purchase an Extended Warranty

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Do you sell extended warranties Nathan?

Please try to stay on topic.

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Interesting to say the least.

I purchased an extended warranty for a 42 inch Sony TV and a little over a year after I bought it died. Repair was done in my home no charge so that was worth it.

I also bought a warranty on a used truck and over the life of the warranty I must of had 5000.00 in repairs and each time I only paid 150.00 deductible.

I never buy extended warranties on appliances, computers or tools, just not worth the hassle.

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Warranties are forms of insurance. The purpose of insurance is to spread risk over many policy holders. The system works for risk you can’t afford to take, such as the risk of your home burning to the ground.

All insurance costs you more in premium than the cost to the insurance company to cover your risk. Otherwise, the insurance company couldn’t make any money. So insurance is always a bad deal statistically in that the benefit times the odds of you needing it is worth less than the premium you paid for it.

Therefore, if you can assume the risk yourself, do it and self insure. Not purchasing a warranty on a printer is a form of self insurance you should take because the cost of the printer times the odds of it dying within the coverage period is a dollar figure that is less than the cost of the warranty.

If you can’t assume the risk yourself, purchase the insurance. Major medical insurance and fire insurance are types of insurance that are not worth the premium mathematically, but make sense anyway from a risk management perspective.

Something in between a printer and your home is where the tough decision has to be made. For example, I never purchase collision insurance on any vehicle I own. Over the years, I’ve probably saved enough in premium to pay for 5 or 6 totaled or stolen vehicles. Now eventually I’m probably going to smash up a vehicle or have it stolen. I’ll wish I had insurance on that day, but I won’t want it as much as the premiums I’ve banked over the years.

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Agreeing to a high deductible is a form of self insurance, while still managing the risk of a high dollar catastrophe.

The insurance industry has more data than you, so when they charge you $1,000 premium to take on your risk for something, you can be pretty sure their cost of taking on your risk is less than $500. In other words, you’re only getting $500 of value. So why argue with their actuaries?

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The exception would be if you know something your insurance agent doesn’t.

For example, if you know you drive a lot of miles each year and you know you drive like a maniac, you know your risk is greater. Buying insurance passes your high risk on to your insurance agent’s other clients. So buy it. Conversely, if you know your risk is abnormally low, don’t buy it. For example, I own heavy equipment and I don’t insure any of it for theft because it is all up in the Rocky Mountains where a thief would find difficulty in making a fast escape with any of it. Since I know my risk is far less than the average heavy equipment owner, I know the premium is more valuable to me than the coverage. So I don’t buy it.

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I don’t think there is anything wrong with talking to yourself. Is there Nick? Nope, I see nothing wrong with it Nick. :wink:

I just purchased at new 60" plasma 3D TV for my wife’s birthday. I paid for the extended warranty.

I also purchased a new laser printer. I did not pay for the extended warranty.

What a great hubby you are, Troy. I purchased a 52" plasma and a living room suite for my wife at Christmas.

Man, she was P ISSED when RTO showed up last week to take them back!! :|.)

Thread purpose: To discuss the value and your experiences with extended warranties.

Let’s see if we can all have a civil discussion.

How are we doing?

I purchased a warranty when I got my I-pad mini that covers water damage ,cracked screen etc,etc, as I know the chances of something like this happening during an inspection do exist. Well worth the 30 bucks IMO however I usually don’t purchase them for any other electronics though.