I used to be a customer service manager at a couple Circuit City stores between 1992 and 1997. Customer service managers managed the repair/return department specifically. Basically I saw every item that came through be it for repairs or retrns/exchanges. I also has the daily pleasure of arguing with people about what the warranties do and do not cover – in short I know how these plans are valuable (or were as of 1997) and which ones aren’t worth the money.
Back in the day it was worth it to buy the ESP (extended service plan) for computers especially, because if the computer was over 12 months old there was a very small chance we woudl bother repairing it, since parts were typically not availible after that point. In these situations customers would bring in a busted 486dx they bought in 1994 for $2500 and get a store credit for that amount to apply to any new purchase, which typically ended up being a machine many times better than the old one.
The kicker was that abck then the warranties were not priced any different than the ESP’s sold for everything else in the store, this ended up costing them tons of amoney in the long run because CC always sold computer at 1-5% negative margin, because they made money on accesories. So any money spent either repairing or replacing was compltely lost since there was no profit to be made in the first place.
Aside from computers always being the number one thing you’d want to buy an ESP for there was one other category of items worth insuring: Anything with moving parts. It doesn’t matter if it was a cd player, a VCR, a cam-corder, a Laser Disc player, a washing machine, or a car radio with a tape deck. If it had moving parts we were much, much more likely to see these items return for repairs/exchanges.
Sure we had stuff like defective tv’s and telephones come back, but typically it was because buttons weren’t working, not because the unit just stopped working.
As a consumer I buy extended warranties on most items with moving parts, to this day, but I ignore them on stuff that doesn’t – and I make it a point to NEVER buy them on CRAP like CD-scratch warranties (give me a fucking break).
In the end it’s really important to consider what you are buying the warranty for: How it is used, how often it is expected to be used, and how much the warranty cost compared to the replacement cost of the item itself (or how soon such an item will be more or less obsolete – or when you will plan on replacing it anyway).
As for my opinion on Car warranties, it depends on the warranty and the dealer and the car itself. 90% of the extra warranties are crap for used vehicles, and the ones that aren’t can cost half as much as the car… You really have to be on your toes with these, because they generally are huge expensive scams.