Are computer extended warranties worth it?

Are extended warranties for computers really worth the money?

- Janice

This question is one of the most common that I have fielded over the years that has two potential answers: Yes and No!

Much like any "insurance" policy, you only get value from it if you have to use it, so understanding what the exposure risks are for what you are buying before you make your decision is very helpful.

For instance, most desktop computers (with the exception of the non-standard, all-in-one units or those built by Apple) use common parts that are readily available and very competitively priced from hundreds of sources.

Many of the individual parts in a standard desktop computer can be replaced for less than most desktop computer extended warranties (especially if you are comfortable swapping parts yourself). In most cases, unless you have multiple failures during the warranty period, you may not recoup the cost of the extended warranty.

When it comes to laptop computers, the scenario is quite different. Virtually every laptop made is a proprietary design, so you have only one source for most replacement parts; the original manufacturer.

The laws of supply and demand are in full effect with laptops which causes most replacement parts for a laptop to be higher than most extended warranties (especially when it comes to the screen or motherboard).

There are several different types of warranties that you can buy for a laptop, including some that are called "no fault" which means even if you drop it (which is very common), you are covered. Once again, you must weigh the cost of the coverage with the potential odds that you will need the coverage.

Road warriors and college students that are constantly lugging their portable computers around have a much higher likelihood of experiencing a "kinetic" event that could render the laptop useless, so coverage may make sense.

For those that mainly use their laptop around the house and on the occasional family vacation, your exposure to the additional risks are lessened, therefore it may be a closer call.

The bottom line is to make sure you understand what is covered and what is not. The exclamation of "but I thought my extended warranty covered that" is all too common because the purchaser did not look at the exclusions before making the decision.

In computers especially, the vast majority of service issues have nothing to do with the hardware, which is generally the only thing that is covered by many extended warranties. Common problems like virus and spyware infections, operating system corruption, miscommunication of devices or inability to get something to function the way you expected it to are expressly not covered by the extended warranty.

Understanding that all "insurance" products must make the supplier a profit or they wouldn't do it, you can bet that the "house" has the advantage when it comes to extended warranties (just ask any employee that has ever worked at any of those big box electronics stores).

If you ever get the chance to chat with an individual whose responsibility it is to process extended warranty claims in the computer world, you will likely hear that more claims are denied than approved, mainly because the purchaser of the warranty didn't really understand what they bought.

A final piece of advice: don't take any salesman's word on what is covered and excluded by an extended warranty. Get it in writing and review it in detail before making a decision. Rarely is the person that is selling you the warranty the same person that is responsible for processing it.

The person selling the extended warranty generally gets a commission or has a quota they must meet and knows that by the time you figure out that it wasn't quite what they represented, it is too late for you so "buyer beware"!

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