Are Extended Warranties Worth The Money? When you're about to purchase a big-ticket item such as a plasma TV, or even a fragile small item like a PDA, you're usually offered the chance to extend the manufacturer's warranty -- for a fee. But is this insurance really necessary -- or can it pay for itself? Do you have to sign up while you're signing on the dotted line? The Early Show's financial guru, Ray Martin, weighs the pros and cons of extended warranties. A few years ago extended warranties were only offered on costly appliances and big-ticket items. But today, these "protection plans" are offered on just about any appliance or consumer electronics products you can buy.
For years, consumer advocates such as Consumer Reports have cautioned against buying extended warranties. But that advice may be in need of updating. In a recent development, many appliance makers are consolidating the terms of warranty coverage on their products to include one period covering all parts and service. The period is one year -- after that, if a part wears out or breaks, you'll pay. Before this, appliance makers would have warranties with different coverage periods for various parts, ranging from five to 20 years. Now they say a simpler and clearer warranty -one that covers all parts and services for the same one-year period -- will benefit consumers. The reality is that in most cases, manufacturers' warranties for many appliances will be shorter and if you want to extend the warranty coverage for periods longer than a year, you'll have to open your wallet. Shorter and "simpler" warranties for appliance brands such as Whirlpool, Roper, Estate, General Electric, Hotpoint, Maytag, Amana, Frigidaire and many other brands went into effect late last year and earlier this year. Some premium appliance brands still offer warranties that apply for longer than a year. Some consumer electronics makers have also cut their warranties. For example, according to PC World magazine, Dell used to offer a three-year warranty on numerous products -- but has cut warranties on some products to just one year, and just three months on others. Once the manufacturer's warranty runs out, all costs for repairs are borne by the consumer, unless you pay for an extended warranty. Extended Warranties An extended warranty typically covers the costs of repairing or replacing an item during the same period when the manufacturer's warranty runs -- and extends for an additional period of time,