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It’s a feeling many consumer electronics users have experienced: the drawn out “oh no” moment where our prized smartphone falls out of our hand and plunges to the ground below. For users of iPhones or similarly fragile devices, just one drop can mean a shattered screen and an inoperable device. Sellers of smartphones, TVs, appliances, and other big ticket items will remind you of moments like these and likely offer you a replacement plan or an extended warranty. I’m going to try and break down what each is, when it makes sense to get one, and when it makes more sense to pass.

3Year_WarrantyReplacement plans and extended warranties are often used interchangeably, yet plan by plan they can offer greatly different levels of protection. They tend to fall into two categories: a plan that simply extends the original warranty term of the item, or a plan that covers the device in the event that it is accidentally broken. They are offered by many retailers such as BestBuy, Target, and Walmart, and are also offered by 3rd party protection/warranty companies. These plans can be either a lifesaver, or a money waster.  

Two major questions will drive your decision making process: does it make sense to purchase a plan for this product? And does the plan I have selected provide good value? A smart consumer should assess the following about their purchase before thinking about purchasing one of these plans:

  • How often is this item defective?
  • How prone to accidental breakage is the item?
  • How has my experience with similar products been in the past?
  • What level of protection does the included warranty provide?
  • How much did the product cost?
  • How much does the plan cost?
  • Is there a deductible?

The answers to these questions will help consumers decide if such plans are a valuable purchase. For an expensive item such as an appliance that is unlikely to get accidentally damaged (it’s harder to drop and break a dishwasher than a smartphone) a plan covering accidental damage may not make sense—however an extended warranty that protects against defects for another couple of years may be worthwhile. Goods such as smartphones are getting more and more reliable, yet are highly susceptible to accidental damage, so a replacement plan covering accidental damage may be a better option. Consumers considering these plans should think about their track record with similar devices in the past and consider if it will likely end up broken.

Once the necessity of a plan has been evaluated, consumers should consider the cost and weigh it against the odds they will need to utilize the plan. If your smartphone can be replaced for $300, the replacement plan for 1 year costs $100, and you know you will be careful with your phone, you may want to pass. However, even careful consumers may purchase a plan if it only costs $25. Consumers should also keep in mind that such plans may be purchased from 3rd party sellers, and in some cases these may provide better value than the plan offered by the direct seller.

One thing is certain. At some point during your transaction, you will be notified if such a replacement plan or warranty extension is available, and you will be told unquestionably that it is a good idea to get one. In some cases it will be, in some they will be a waste of money. Think about this advice, arm yourself with information, and make an educated choice.

 

This post is part of our “Shopping 101” series, bringing you timely information as you shop this holiday season.  For more information on your shopping rights, click here.

Ian Mabie is a student at Northeastern University and is the communications co-op at the Office of Consumer Affairs.

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Jayda Leder-Luis is the Communications Coordinator at the Office of Consumer Affairs & Business Regulation.

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