When it comes to expensive purchases, we all want peace of mind. But are extended warranties really worth it? To answer this question, we need to understand what a warranty is. A warranty is a company's promise that, if the product you bought from them breaks, it will be repaired or replaced for free. Nowadays, many items come with warranties that last anywhere from 60 days to a lifetime.
When you buy certain items, you're often asked to shell out even more cash on an extended warranty. Retailers know that you're more likely to spend money to protect your expensive purchases. Especially mobile phones are one of the most common items for which people buy extended warranties without even thinking about it. However, many extended mobile phone warranties only cover defective parts and don't help if the phone is lost, stolen, or damaged.
There are also different versions of phone insurance, such as “device protection plans” or “service plans”, but these charge you an additional fee per month and you usually have to cover an expensive deductible before your phone or tablet can be repaired or replaced. At that cost, you could also save money and buy a new device yourself. Just because you can get an extended warranty on most things doesn't mean you should. We've already told you about some of the problems with certain types of extended warranties, but here are a few more reasons why they just aren't worth paying for: they can be expensive; they don't always cover what you think they do; and they don't always save you money in the long run.
If you want to be better with your money and create that emergency fund, it all starts with a good budget. When you make a plan for the month, you're less likely to spend your hard-earned money on things you don't need (like extended warranties) and more likely to save money for things you do need (like repairs). When it comes to HVAC systems, most come with a 5-year warranty but newer systems are designed to last 10 to 15 years. This is why an additional extended warranty may be a good idea.
However, some experts say that some extended HVAC warranties may not be worth it because the original manufacturer's warranty usually offers excellent parts coverage and any labor costs are likely to be lower than the cost of the extended warranty. Consumer advocates often warn homeowners not to buy extended warranties for most products. For the additional warranty to be worth it, your air conditioner would have to break at a specific time after the manufacturer's warranty has expired, but before the extended warranty runs out. An extended “plus” package could cover up to 10 or 15 years of parts and labor, covering most of a system's expected lifespan.
Some vendors of heating, ventilation, and air conditioning systems promote extended warranties because they are very profitable for the company that sells them. But even if the manufacturer's warranty is expired, it's always worth calling to see if they're still covering repairs or replacing the item. A home warranty covers repairs to things in your house, such as electrical systems, plumbing, major appliances, and HVAC units. The different types of extended HVAC warranties generally include a number of years of coverage for the replacement of parts and a number of years of labor costs.
The other cost-effective strategy is to have your furnace checked regularly by an HVAC professional.
