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Everything Must Go’ – includes warranties? Losing a favorite place to buy a book, procure the latest electronic gadget or update the home can send passionate shoppers into an emotional spiral much like the stages of grief.

Denial sets in first. “They can’t go out of business; they are always so helpful and sell only the best products.”

Soon after comes the inevitable anger stage. “Great, they went out of business. Now my extended service plan (ESP)* won’t be any good. How could they do this to me?”

*NOTE: While many store associates and consumers consider the purchase to be an extended warranty, this is often not the case. Many extended plans are not truly adding on to the original manufacturer’s warranty, but rather, extend the post-warranty service options and are therefore more appropriately referred to as an extended service plan, or ESP.

Retailer bankruptcies have been an unfortunate reality over the past three years with almost 70 major brands permanently closing their doors since 2009. While many analysts believe that the worst is now over, many consumers are still left wondering what will happen to their ESPs. The truth is there are a number of ways it can go.

In a worst case scenario, extended service contracts are voided when the company files for bankruptcy. This is often the case if the retailer underwrites its own ESPs. On a positive note, manufacturers’ warranties are in no way affected when a retailer closes. So, some repairs and replacements might still be covered.

In a better scenario, the retailer outsourced its warranty underwriting to a reputable third-party.

“The end of a retailer doesn’t necessarily mean the end of the extended service plan,” said Sean Stapleton, CEO of Warrantech. “Responsible companies have safeguards in place, such as third-party contract underwriters, that protect their customers, even after bankruptcy.”

So, the first step is to read the service contract papers if a store closes. Chances are that the ESP isn’t actually owned by the retailer, so there’s no reason to panic. But, rather than waiting until the unthinkable happens, Stapleton advises to read the service contract before it’s purchased to avoid potential problems down the road.


“Check the fine print for a third-party provider and consider the reputation of the company,” Stapleton said. “Look for an address to write to or a phone number you can call if there are issues.”

Consumers are spending more on electronics and other big-ticket items than ever before, so ESPs are becoming increasingly important – as long as they will be there when they are needed. On its consumer protection website, the Federal Trade Commission urges shoppers to read warranty and ESP paperwork and look for answers to the following questions:

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How long does the warranty and ESP last?

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Who do I contact to get warranty and ESP service?

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What will the company do if the product fails?

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What parts and repair problems are covered?

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Are there any conditions or limitations on the warranty or ESP?

By asking these questions upfront and ensuring that their ESPs are backed by a reputable third party, shoppers can gain peace of mind that their purchases will be covered – even if a favorite retailer permanently closes.

Warrantech administers and markets service contracts and after-market warranties on automobiles, automotive components, recreational vehicles, appliances, consumer electronics, computers and computer peripherals for retailers, distributors and manufacturers. Warrantech ESPs are underwritten by sister company Am Trust Group insurance carriers, rated “A” (Excellent) by A.M. Best Company for their financial strength and stability.


Everything must go’ – includes warranties