ESP'S (Extended Service Plans)

Why should I or shouldn't I buy an extended warranty when I purchase my appliances?  Why should I buy a warranty on a new machine that I do not expect to need service?  If this product is so good why do I need to buy a warranty for it? These questions have pondered the public for about 20 years now.  The real issue here is what value does an extended warranty have.

When one purchases a calculator for $10.00 and a one year warranty costs $5.00, how cost effective is the warranty?  The real value comes in when the product replacement is high.  For instance,  if one buys a refrigerator for $8000.00 and a 5 year extended warranty costs $299.00 that is only 1/25 of the cost of the appliance.  A small price to pay if service or replacement is needed.  One must assume that the more expensive a product is to buy the more expensive to repair also.  An extended service policy is akin to an insurance policy.  One buys it and hopes never to use it.  It is no great secret that extended warranties are moneymakers for most business who sell them.  One half of the profits earned by Circuit City in 1998 were from extended warranty sales.  Unfortunately, Circuit went out of business (Wards did the same when it went under) leaving many people with invalid warranties.  The State of California (BEAR) is supposed to regulate the warranty industry but does a very poor job of doing it.  Here are a few tips to help you decide weather it is worthwhile to purchase a warranty.

Cost to repair or replace unit versus cost of warranty.  

What is the manufacturers warranty and will this warranty overlap or actually extend.

Who is the servicer, unknown company or large corporation (GE, Whirlpool, Maytag).  Even though the large corporations farm out some of the service they are going to be around for a while, we hope.

Is the product going to get much use?  (Washing machine for a family of 10)

Is labor high where you live?

Can you fix it yourself?

Does the dealer have a good reputation or have they been in business for a while?

At University Electric, we offer a warranty which starts in year 2 and completely covers the appliance for all parts and labor (not cosmetic damages though) for 48 months.  All appliances we sell carry at least a 1-year warranty on parts and labor which with the extended warranty covers the entire unit for 5 years.  If the product carries a warranty which goes beyond the first year then overlap occurs, not extension. We sell Brand Source  warranties for all manufacturers for between $149.00 to $299.00  depending on the cost of the product you buy, package discounts may apply as well..  It is recommended but not insisted upon (like many other stores) that one purchases the warranty for any appliance over $1000.00.  You decide if you need one.  With the amount of business we do here there are many calls I have received over the years from consumers who were offered warranties, thinking they would not need them, and four years later have a problem and wish they purchased one.  If you have 1 service call on your appliance after the initial warranty period (1-year) then you at least broke even.  More than 1 call then you made a good decision.  I believe that the majority of people who purchase these warranties do not use them.  I believe that most people who purchase life insurance don’t use it.  I believe that most people never get the value of what they pay for insurance back, but if you need it, it more than pays for itself.  We try to keep the cost affordable.  Most manufacturers sell their warranties direct.  We sell them for $149.00 and up for 4 extra years and most manufacturers sell the same for $129.00 a year.  If you buy warranties for more than one appliance then the cost is reduced depending on how many are purchased at the same time.  

We let you make the decision.

Here are some common problems which can occur in the first five years with appliances and the approximate cost of part:

Refrigerator:  Fan motors ($50.00), defrost timer ($50.00), water valve for icemaker ($30.00), icemaker (129.00) units that have only one year on the sealed system (Sealed system $500-1000)

Clear ice machines: Everything all the time ($$$$$$$$$)

Washer:  Belt ($25.00), fill valve  ($40.00)

Dryer:  Belt ($25.00)

Gas Range (or cooktop): igniter ($40.00+)

Dishwasher:  fill valve ($45.00)

If it is not listed, it does not have any common problem.