Warranties and Service Contracts

Understand what the warranties and contracts offer when purchasing

By Sharon Johnson

Almost any major appliance you buy today comes with a guarantee, usually in the form of a "standard" Manufacturer Customer Service Terms agreement. Unfortunately, when it comes to this agreement there really is no standard.

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What You Should Know about Standard Warranties

At a minimum, the Manufacturer Customer Service Terms agreement should spell out in detail the item being purchased, the cost of the item, the warranty for that item, and the specifics concerning delivery and responsibility should there be loss or damage in the course of delivery. Pay special attention to the type of warranty being offered. When in doubt, ask.

A one-year warranty is typical, but, depending upon the product and the retailer, the warranty could also be for as little as three months.  Read your warranty with these questions in mind:

  • What is the length of protection?
  • Are both parts and labor covered?
  • Are both parts and labor covered for the same time period? Some warranties are "split," meaning that while parts may be covered for one year, labor may only be covered for three months.
  • What level of "troubleshooting" or customer support is offered during the warranty period?
  • Is the warranty backed by the manufacturer rather than the store? This is important. The "ACME Appliance Shop" may not be in business in six months, whereas GE or Viking will be.

If possible, get an "on-site warranty," which specifies that the retailer will send a repairperson to your home to fix the unit. A "carry-in warranty" requires you to bring the appliance to the dealer for repair. This can be difficult if not impossible for large appliances.

Dramatic Contemporary Kitchen
Victoria Shaw

What You Should Know about Extended Warranties

Whether you call it an extended warranty, a customer service plan, or an extended service plan, it all amounts to essentially the same thing: insurance. Like the standard warranty included in the price of your appliance, an extended warranty covers the repair of a product for a specific time period. Here's the big difference: an extended warranty is a separate, additional purchase, the cost of which varies depending on the length of the contract and the amount and type of coverage provided.

You'll have to make your own decision as to whether or not the peace of mind that can come with purchasing an extended warranty represents good value. While one out of five consumers shell out, on average, $146 for an extended warranty, Consumer Reports and other industry experts generally advise against it.

If the price of the extended warranty is 20 percent or more of the purchase price, walk away. You'll likely be paying more for the warranty than you would for the repair. Instead, invest in quality brands known to be durable.

Common Restrictions of Extended Warranties

If you still want to purchase an extended warranty, be aware of these common restrictions:

  • Service contracts may have deductible thresholds that must be reached before any payment is made.
  • There may be cancellation fees for ending the contract or transfer fees if you sell the appliance.
  • The contract may cover only certain parts. If the contract does not list something as specifically covered, then assume that it is not.
  • Specific actions you take could unwittingly void the contract.
  • The service contract company may go out of business. The Federal Trade Commission often gets letters from consumers asking what recourse they have for unpaid claims when a company goes out of business. Unfortunately, consumers have little or no recourse.

Consider waiting until your warranty period is about to expire before even thinking about purchasing a service contract. Don't give in to any high-pressure sales tactics you may be subjected to when you purchase the appliance. You have plenty of time.

Some credit card companies now automatically include extended warranty benefits when you use the card to purchase a major appliance.

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