Extended Warranties: Are They Worth It?
If you will be purchasing a new vehicle, expensive appliance or electronics equipment this year, chances are the sales person will suggest that you buy an extended warranty to protect your new purchase.
After all, that purchase may be quite expensive and you could keep it for a long time. Since most product warranties only cover an item for a limited time, buy purchasing an extended warranty you may protect your property for years to come. At least, that is the suggestion you may hear from the sales person. But is purchasing an extended warranty really a good idea?
As with many decisions in life, whether or not to purchase an extended warranty boils down to a cost/benefit analysis. Is the cost worth it? If you intend to keep that new purchase for a long time, it just may be worth a substantial additional payment to have the peace of mind that comes with long-term protection. On the other hand, you may be throwing your money away. The problem is that we almost never actually know what we are buying with an extended warranty until it is too late. That is why we urge you to be very careful and informed before purchasing one. Here is a true horror story that happened to a client of our Daytona Beach attorneys recently.
Our friend purchased a used car from a reputable local dealership. As the car was used, she only received a very limited warranty from the seller to cover any problems that might arise during a short period of time. In the mail she received an unsolicited offer for an extended warranty that would cover the engine, transmission and most of the important parts of the vehicle if they failed. Because the vehicle was used and cost a lot of money, she decided to buy the extended warranty at the cost of $150 per month for one year. In all, she paid $1,800 for that extended warranty.
After purchasing the extended warranty, she received a booklet in the mail that explained what it covered, how to present a claim for reimbursement and what to do if there was a dispute over the warranty. Unfortunately the booklet was not provided to our friend before she paid for it. To make matters worse, like nearly all of us, she didn’t read the booklet when she received it because there were no problems at that time.
A year later, the starter when out on her car. She paid a lot of money to have it replaced and submitted a claim for reimbursement to the extended warranty folks. Even though the starter was listed as a covered part under the extended warranty, one of the interior parts of the starter was not and her claim was denied.
Several months later, another engine part failed and had to be replaced. Again she made a claim to be reimbursed for the hundreds of dollars it cost to repair the engine. As before, the part was listed as covered under the extended warranty. This time, the warranty folks didn’t even respond to three certified letters mailed to them. What to do?
Unfortunately, like most of us, it was only then that she read the warranty information to learn what her rights were. The little booklet our friend previously received was now opened. There she learned that although she had a right to bring a claim against the extended warranty folks, it had to be brought in Las Vegas, Nev., which would add an expensive trip to her costs. Sadly this was only one of the hurdles placed in the way of her actually pursuing a claim. In simple terms, she had been taken.
Over the years, we have all bought extended warranties. Occasionally they were a good decision, other times, not so much. Ultimately the purchase of an extended warranty is a gamble that many not pay off and is rarely worth the cost. If you are considering an extended warranty, here are some tips to think about.
- Ask to read the extended warranty before you buy it. Read the language carefully and see for yourself if it is a good investment. If the seller can’t provide you with a copy of the warranty itself, you probably don’t want it.
- Pay attention to how specific the language is in the warranty. Be extremely careful if the warranty appears to cover only individual pieces or parts of an engine, appliance or electrical component rather than the entire item. The more specific the language is, the less likely it is that you will ever receive compensation.
- Carefully read what you must do if there is a dispute with the warranty folks. Where, when and how will such a claim have to be made? In case of a dispute, how hard will it be for you to seek justice?
- Don’t be in a hurry. Don’t make a snap decision to purchase the warranty along with the item itself. Extended warranties can often be bought within a short time after the main purchase. Better to read the warranty and think about it before making that purchase.
- Can I get out of the extended warranty and if so what will it cost.
Purchasing an extended warranty is a personal decision. Only you can decide whether it is the right thing to do. Read carefully, think clearly and be safe.
If you have problems with an extended warranty, or other legal matters, the Daytona Beach attorneys of Seitz & Tresher can consult with you about your rights.
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