In her recent column, Everyday Cheapskate Mary Hunt begins by taking a swipe at extended warranties: “While I cannot say that every extended warranty would be a rip off, that’s the way I want you to start thinking of them.” But she concludes her piece by noting that, “On a personal note, there are only two products for which I have and will continue to buy the extended warranty: Apple products … and treadmills.” Confusing? Well not really.
Ultimately, Ms. Hunt gives her readers this bit advice: “You should create your own, well-thought-out very short list of items for which an extended warranty may be a wise decision.” Other than the “very short” part, her counsel is pretty sound.
More importantly, what at first seems to be an attack on extended warranties or service contracts ends up being a plug for them. We’ve seen this before.
Back in February, Consumer Reports, a frequent critic of service contracts, did its part to encourage readers to buy them. And earlier this month, an ASU marketing professor lamented that “it is unclear what benefits [a service contract] could possibly provide to consumers,” but then observed that recent research shows that risk-adverse consumers derive high value from them.
Recent surveys confirm growing consumer appreciation of the value service contracts deliver in terms of risk management and peace of mind and show that their sales increasing.
So like Ms. Hunt says, you probably don’t want to buy a $5 extended warranty on a $9 toy shaving kit, but with many other purchases you may want to give serious thought to purchasing one. Like, say if you decide to buy a used luxury SUV?