A few months ago, we moved to The Valley and found out we needed to buy a refrigerator. We were busy moving and working for a week before we finally got a fridge.–yes that was an expensive week of eating out!
We paid cash of course $585.08. It would have been cheaper, but I opted to spring an extra $85 for the automatic ice maker. We got a good deal, free delivery, and they installed the water line to boot.
Now several months have gone by and we get a packet of information from G.E. trying to get us buy an extended warranty.
Extended Service Plans: Why? Is My New Fridge Junk?
So I begin thinking “Wait, what have we done? Is my fridge a piece of junk?” I have a twinge of fear, before my brain takes over.
“No stupid, you bought a top quality refrigerator that should last 15 years.”- my brain said to my fear. “Your manufacturer’s warranty is still good for another 7 months.”
My fear now gone– my brain starts to become angry when it sees the *terrible (insert word of choice) product they are selling.
Extended Warranty Plans: Great Marketing
Here are a few lines from the pamphlet they sent. Great marketing if you can’t do math or believe your fear.
- “Spend time with a friend. Not a repairman.”—catchy eh?
- “You have the right to expect the very best performance from your appliance and home electronics…but life isn’t perfect.”–do you sometimes sell lemons?
- “No hidden costs. No deductibles, No stress. Peace of mind protection!”—sounds good right?
Extended Warranty: Breaking Down the Numbers
Here is what the numbers look like. They offer a one year plan (20% discount already included–how nice of them) for $54.36, a two year plan for $97.85, and a three year plan for 146.77.
If you remember I bought our G.E. refrigerator for $585.08. A three year plan would be 25% of the original cost we paid for the fridge.
Extended Warranty: Is it Worth the Cost?
Is an extended warranty worth it? No way! In 4 years (you have to add the manufacturers warranty) I shouldn’t have my fridge break…If there was a good chance of it breaking, Assurant Solutions would be loosing money on every repair job. Trust me, they are really good at math and know they’ll make money insuring quality products.
Paying 25% of the cost of my fridge in the first 4 years is ridiculous. If something were to happen in the first 4 years, I have an emergency fund. We got a great deal on my fridge anyway and we could easily just buy a new one if the compressor went out–a $500 cost according to their website.
Final thoughts on the offer of extended service plans:
- They are banking on the fact that I don’t have an emergency fund to cover such expenses.
- They are also playing on my fear that my fridge will break soon. (most products break during their first year and near the later years of their life)
- If you read the fine print, the extended warranty doesn’t cover all parts that break.
- My homeowners insurance covers my fridge in case of flood, fire, lightening strike, or other acts of God.
- The company makes a ton of profits from extended warranties and extended service plans, thus a high motivation to sell.
More Articles on Extended Warranties
Never Buy Extended Warranties – Dave Ramsey
Extended Warranties: A High Priced Gamble – Consumer Reports
What are your thoughts about extended warranties? Have they paid off if you’ve bought them?
Photo Credit SnaPsi Сталкер (Creative Commons)