Extended Warranties. Yes or No?

Should you buy an extended warranty on new appliances? The answer depends on the initial price—and your personality.

Sometimes, you need to spend money to save money. But sometimes you don’t. When you’re buying or building your first home, and conscientiously choosing appliances that are environmentally friendly and fit your budget, you may be flummoxed when a salesperson pushes you to add an extended warranty to your bill.

While you may be thrilled with the shiny new stainless-steel refrigerator, range, and dishwasher that you picked, you may feel a bit vulnerable. You’ve shelled out a lot of money for products that may come with only a one-year warranty. Don’t worry, you’re told. If you pay more, you get a bulletproof warranty to cover any unexpected breakdowns.

Before you say yes or no to that warranty, it’s smart to consider the advice from consumer experts like Angi (formerly Angie’s List) and Consumer Reports. But not even those experienced companies can come up with a definitive answer that works for everyone.

“The debate as to whether extended appliance warranties are worth the cost is one where even our Angi pros have some differing opinions,” says Bailey Carson, a home expert with Angi. “While some appliance technicians recommend an extended warranty for your larger, more expensive appliances, others suggest that regular maintenance and upkeep is enough to keep your appliances in top running order.”

Beware of the Scare

Three-fourths of appliance buyers say that a salesperson approached them to try to convince them to buy an extended warranty plan, according to Consumer Reports . While the experts at Consumer Reports say it’s usually best to decline the extended warranty, nearly one-third of consumers buy them, especially if they’re purchasing a major appliance. It’s common to overestimate the likelihood that your appliance will need an expensive repair.

“At the end of the day, use your best judgement and don’t make a decision because of assertive salespeople,” says Carson. “Scare tactics are often used to talk you into an extended warranty, such as mentioning the possibility of the appliance breaking down after one year.”

According to Consumer Reports, it’s uncommon for appliances to break during the first two to three years. However, if you look out to five years, Consumer Reports finds that 40 percent of refrigerators, 30 percent of dishwashers, and 25 percent of ranges will need a repair.

So, once you set your fears aside, how do you make an educated choice on a warranty? 

“When deciding whether to buy an extended warranty, two large factors to consider are the price of the appliance and your willingness to work on its upkeep,” says Carson.

How Much is a Lot?

Are you buying an expensive appliance? Well, pretty much any major household appliance seems pretty expensive, especially if you’re buying a bunch at once. But whether you might want to think about an extended warranty depends a lot on the price tag of that new fridge.

“As a rule of thumb, our Angi pros suggest that for appliances that cost $500 and less, an extended warranty likely isn’t necessary unless normal maintenance is impossible,” says Carson. “For appliances costing $500 to $800, pros are more likely to say it’s worth considering, and for those costing $800 and above, the consensus is that the warranty is worth the added cost.”

Looking at the math, you can buy a Whirlpool dishwasher at Lowes for $749 that comes with a standard one-year warranty that covers parts and labor. For $100, you can extend that warranty for three years for a total of four years of coverage. But just 30 percent of dishwashers need a repair within the first five years after installation. According to HomeAdvisor, the average dishwasher repair costs $230, but some repairs cost just $50 to $100. In other words, you’ll need to calculate your risk to decide whether it makes sense for you to buy that extended warranty. 

How Diligent Are You?

Many appliances last longer if you clean them regularly. For example, you’re supposed to pull your refrigerator away from the wall once or twice a year to vacuum the coils to get rid of dust and debris.  According to the Family Handyman, 70 percent of service calls for a refrigerator can be eliminated by cleaning your coils once or twice a year. You’ll also save $5 to $10 per month on your electric bill if your coils are clean, the site says.

Annually cleaning your dryer vent is not only important to prevent fires, but it will keep your dryer performing more efficiently and extend its lifespan.

 If you think you’ll never do this, an extended warranty may be worth the cost.

What’s Your Anxiety Threshold?

Do you worry about unexpected bills, or tend to budget your household closely? If so, the intangible benefits of extended warranties may be worth the cost. 

If you get anxious about the “what ifs” such as an appliance repair, you’re not alone. The American Psychological Association’s study in 2019 found that feeling stressed about money is one of the most common complaints of Americans, with 60 percent mentioning money as a significant source of stress.

Of course, an extended warranty isn’t the only solution to this stress. A better plan might be to commit to saving up $1,000 for an emergency fund that could cover anything, including fixing your washing machine. A 2020 survey by Bankrate found that only 41 percent of Americans could cover a $1,000 emergency from savings.

Some other factors to consider:

• Is the manufacturer kicking in some coverage? When you first buy an appliance, most manufacturers offer warranties that can last anywhere from three months to one year, says Carson. “After that, the manufacturer claims no responsibility if the unit breaks down, unless the customer purchased an extended warranty,” says Carson.

Some extended warranties begin before the manufacturer’s warranty wears out, so make sure you know when a plan will begin before buying one. You don’t want to pay for double coverage.

“Extended warranties vary in both price and length of contract,” says Carson. “For example, warranties may run for as little as one year or extend up to five or more years, and typically cost less per year if purchased for a longer period of time.”

• Will your extended warranty cost more than a repair? Not all appliance repairs generate a massive bill. Extended warranties cost an average of $126 for large appliances, according to Consumer Reports. But they also estimate that a repair typically costs only about $26 more without a warranty, and you might never need a repair at all.
• Are you buying from a returns-friendly retailer? Some stores won’t let you return anything once it’s out of their warehouse, but others will allow you to return something defective for months or maybe longer after you buy it.
• Will your credit card company help out? If you buy your appliances with a credit card, you may have an automatic extended warranty as a benefit from the credit card company. You can call customer service to find out if your card includes a warranty and how long the coverage lasts.
• Can you benefit from a combined service plan? If you buy multiple appliances from one manufacturer, you may be able to cover them with one plan. For example, Whirlpool offers a multi-product plan that can save money overall compared to buying an extended warranty for each appliance.

Warranty Offer Fine Print

If you do choose to buy an extended warranty, it’s important you understand what you’re getting for your money and that you read the terms and conditions carefully.

“These extended warranties often come with fine-print exceptions that could cause a company to deny a claim, so be thorough when reading through it before signing up,” says Carson.

Some details to check for include whether the warranty covers accidental damage and how the coverage is impacted if you didn’t follow the manufacturer’s maintenance instructions.

While some people automatically say no to every extended warranty, and some people give an automatic thumbs up to that extra service plan, you’re probably better off taking the time to make a decision on a case-by-case basis. Read this couple’s first-person account of dealing with a home warranty plan for more pros and cons.

Major Home Appliance Life Expectancy Chart (Excludes Commercial Appliances)

Not all appliances are created equal. Microwaves especially can be very short-lived. But compact refrigerators may perform even more poorly.

Source:  23rd Annual Portrait of The U.S. Appliance Industry

Publisher’s Note: This content is made possible by our Today’s Home Buyer Campaign Sponsors: Panasonic, Whirlpool, Rockwool, and Lee Industries. These companies take sustainability seriously, in both their products and their operations. Learn more about building and buying homes that are more affordable and less resource-intensive on Today's Home Buyer.