Before we get started, note that there are currently three main kinds of extended warranties:
- The "Classic" Extended Warranty
These lengthen whatever the manufacturer offers. For example, the credit cards that double warranty coverage.
The key thing to remember here is that the extended coverage is often only as good as the original coverage.
- Service Plans
That just rolls of the tounge dosen't it? "Service Plan". Sounds pretty friendly right?
Well, in my experience, service plans really are far better than standard warranties, but you should never buy one without careful consideration.
- Product Replacement Plans
A new player, these are typically only 1 or 2 year plans and reflect the results of years of corporate study into product repairs.
The idea is that certain lower cost items (such as telephones, portable CD players, and such are far more expensive to repair than replace. Therefore, a replacement plan will do just that: replace it.
This is great in that you get the replacement right away rather than having to wait for it to be serviced, but harder to use because of their short duration
Stores will call them different things in order to get away from the negative connotations that are associated with Extended Warranties. However, despite the name, they have the following characteristics in common:
- They cost you money
- They make providers a lot of money