Should You Consider an Extended Warranty?

By Jennifer Hunter, Ph.D., University of Kentucky Family Finance Extension Specialist

Extended warranties are available on a multitude of items ranging from DVDs to major household appliances and automobiles. Often it can be difficult during the few seconds you have at the cash register to make an informed decision about purchasing an extended warranty for a product.

An extended warranty is in many ways like insurance; designed to fix or replace your item if it is broken or damaged within a specific timeframe. Insurance is typically purchased to limit your financial risk on large ticket items, like your house or home, in case of an unexpected costly event. The need for insurance, a service-plan, or extended warranty is much less on general household items.

On small items, it is not often cost or time effective to purchase an extended warranty. Extended warranties on DVDs, for example, are typically very inexpensive, so it may be easy to say yes to the extra $2.00 to $3.00 at the cash register. In theory, it sounds great that a DVD will be replaced if it gets scratched or broken. But before saying yes, think about how many DVDs you have actually scratched or broken. Can you hold onto the receipt and other paperwork needed to claim the extended warranty? Would you be willing to go through the process to receive the replacement DVD? After giving these questions a little extra thought, you may realize it would be best to save the extra money.  

What about bigger items? Before heading to the store to purchase a larger household item, do your homework. Start by searching online for consumer reviews about the specific product that you are interested in. Some websites, like, will even provide brand comparisons that often include reliability and repair information.

Salespeople and cashiers often highlight the benefits of having an extended warranty. Stores typically have a large profit margin on the sale of extended warranties, so salespeople are motivated or incentivized to sell extended warranties. However, prior to purchasing an extended warranty for an item, be sure to ask your salesperson:

  • Does the item have a manufacturer’s warranty? 
  • If so, how long does the warranty last and what does it cover?
  • What are the most common repairs for this product? 
  • How much does the average repair bill cost?

The length of the manufacturer warranty may vary from 30 days to three years, depending on the product. The majority of manufacturer warranties will last at least 90 days; this initial time window protects you in case your product has a factory defect. Try not to let the product sit unopened after purchase, open and test the product during the manufacturer warranty period to ensure it is working properly. 

 If you do decide to purchase an extended warranty, here are three quick tips:

  1. Read the fine print. Warranties often have exclusions, meaning they may only repair or replace the product under certain conditions.
  2. Keep the paperwork. Be certain to retain all paperwork associated with the original product purchase as well as the extended warranty.
  3. Do the follow-up, if necessary. Be willing to follow-up on the warranty if the product does break. Know who you need to call and whether you need to use specific service provider. Find out whether the store has an on-site service provider or if you will you need to mail the item. And if you need to ship the item, determine who is responsible for postage. 

 Understanding how the extended warranty process works and knowing exactly what it covers will help you make a more informed decision about whether it is added protection that you truly need. 

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