A recent post at WarrantyLife.com argues that an extended warranty’s value comes from the peace of mind it provides.
True, [an extended warranty] is designed to not lose money for the warranty provider, but it is also designed to provide security for the holder of that plan. People buy insurance on their homes, cars, life and other things which secures them against a possible unforeseen large expense. In this regard, warranties should be viewed in a similar light.
According to the post, the four key factors to consider when deciding whether to buy an extended warranty are:
- price point;
- how much of a hassle is involved with having the product repaired;
- type of product involved; and
- who’s standing behind the contract.
WarrantyLife.com explains that: “A properly priced warranty provides cushion for the health of the plan but does not gouge.” On repair convenience, it points out that:
Warranty providers already know who the best repair people are and will take care of the payment so the customer does not have to worry. Servicers are required to meet performance guidelines or risk not getting the business, so you know you’ll get a quality repair.
It identifies products “you can’t live without” – such as cell phones, tablets, and laptops – specialized items, and large products not easily returned for service as prime candidates for extended warranty coverage. But cautions consumers to be sure that the contract is underwritten by a trusted company.
Terry Hawkins, President of the Global Warranty and Service Contract Association, reports that fly-by-night outfits have largely vanished from the service contract industry.
Today, the vast majority of service contract providers are highly reputable companies that respect their customers. While in the past there were some providers that were less than straight forward in their claims handling, today’s providers have the integrity and financial stability to provide true service to their clients.
Hawkins also believes that intense competition in the marketplace continues to increase the value extended warranty products deliver to consumers.
In today’s retail and e-tail market, it is far more competitive and prices have been driven down. This is all about peace of mind and convenience. That is what people are buying.
I agree with WarrantyLife.com and the GWSCA’s Hawkins that when viewed as a form of low-cost high-quality insurance on our necessary or big-ticket items, extended warranties make sense.