Your Home's Guardian

Extended Warranties

2YearSymbolIs the Product Likely to Need Repairs?

You may not benefit from a warranty contract if the product isn’t likely to need repairs or if the potential cost of repairs is low. Check websites that offer information about products that are most likely to need expensive — or extensive — repairs.

When you’re shopping, compare specific manufacturers and products. If you buy a reliable product from a company with a good reputation, a warranty contract might not be necessary.

Does the Warranty Contract Really Provide Extra Coverage?

Before considering a warranty contract, make sure you know what your warranty coverage is. Compare the warranty coverage and the service agreement to see if there’s any benefit to additional coverage.

Read the costs and terms of the warranty contract. If you’re shopping online, look for a hyperlink to the terms, and save a copy so you can refer to them later.

Depending on the terms, a warranty contract could last less than a year or more than five. Accidental damage may not be covered. And there may be clauses that allow the company to deny coverage if, for example, you don’t follow their instructions for routine maintenance.

A warranty contract might cover specific parts of the product or specific repairs. If the terms don’t list a part or a function as specifically covered, assume that it’s not.

Keep in mind that you may have other expenses, like a deductible or a fee each time the item is serviced. You may be required to mail the product to a repair center — so consider shipping costs. Some warranty contracts set reimbursement amounts. For example, auto service contracts may not completely cover towing or rental car expenses. In addition, you may have to pay a transfer fee if you sell the product.

How Are Claims Handled?

Find out if the retailer or someone else takes care of the repairs. What’s the process for a claim? For example, would you return the item to the store where you bought it?

If a local retailer or dealer offers the warranty contract, you may be able to get local service only. Consider the possibility that problems may develop while you are traveling or after you move away.

Who Is Responsible for the Contract?

The FTC often gets letters from consumers who ask what they can do if they have a warranty contract with a company that goes out of business and cannot repay claims. Unfortunately, there is little you can do if that happens. Before you sign a contract, think about the company’s financial situation and consider whether the business is reputable:

Look for an address and a phone number for questions or problems.
Do an online search with the name of the company and words like “review” or “complaint” to see if there are negative reviews of the company.
Call your state consumer protection office and ask if they have any complaints against the company.

Is There a Better Option?

Some consumer advocates suggest that people are better off skipping extended warranties. If you need repairs, you’ll find the Home Protection Bureau has no contracts. Our agreement is to provide you with a low cost service for only the repairs needed, with No limitations or exclusions.

A Warning About “Cold Calls”

Many extended warranties are offered at the point of sale, but sometimes marketers call or send mail long after you’ve made a purchase. More than likely, these pitches are from unrelated businesses. If you respond to them, you’re likely to hear high-pressure sales tactics, as well as demands for personal financial information and a down payment, before you get any details about the service contract. And if you buy a service contract from a telemarketer, you may find that the company behind it won’t be in business long enough to fulfill its commitments.