Purchase Protection Plans: Scam or Savior?

People were talking about dying Video Cards in another thread and Denice mentioned having bought the protection plan from compusa on her board.

Who else does this? So far I’ve never done this because it just doesn’t seem worth the extra money, but Denice obviously saved a bundle because of this…

Any thoughts?

Scam, of course, for anything that already has a warranty. Why do you think they hard sell them?

Everything I’ve read says their a scam. However, I’ve had a lot of luck with them for portable items that take a beating. I had a laptop that I had an extended warranty on where the store replaced the motherboard and regularly replaced the “feet” (which swung down changing the angle of the laptop) because they kept snapping off. I also had a portable CD player which was replaced twice no questions asked.

I generally say no warranty, unless I’m sure I’m going to be moving the item I’m purchasing around a lot. If I’m planning to take the item purchased and toss it in my backpack and drag it all over the place then I sometimes say yes. However, as I said, everything I’ve read in Newspapers and Magazines basically says they’re a scam.

Scam whether it has a warranty or not. Same deal for buying insurance on a rental car from the rental company. They charge rates way, way over what it would normally cost you to insure the item. My understanding is that it’s a big profit-maker for those companies.

The only things I’ve ever taken out extended warranty on are Sony items.

The 60-day PS2 warranty was just too much of a signal to pass up. I exchanged mine twice, and got a working one the third time around.

If the product is broken when you buy it, then any reputable dealer will exchange it anyway. They can’t charge you for broken items. Now warranties are different. Then it depends on the item and how much they are charging for the warranty.

You can also purchase protection from credit card companies, but that’s a scam because VISA, Discover, etc. protect people from fraud and buying damaged goods anyway. It might be more of a hassle if you don’t have the protection, but at least you aren’t gambling with your money.

I thought it was pretty funny when I bought an mp3 player from Circuit City and they offered some kind of protection for three years. Total price was only $20 less than the player I purchased. They try to make too much off the extended warrenty is the problem. I can’t imagine that many people taking advantage of the warrenty, I can’t even remember after a few months what I’ve bought a warrenty on. Give me a three year warrenty on a t.v for $15 and I’d probably go for it.


I am authorized to sell you some post protection insurance on the next thread you start. It’s pretty reasonably priced and is definitely not a scam.

Remember: if you’ve got post protection insurance, you can post with confidence!

I hope I have not offended anyone and that no one thinks I am being too mercenary here… If you do, however, guess what? I don’t care! I’ve got my own post protection policy! :)

Only a 60 day warranty? Good lord, bad Sony.

My posts come with a lifetime warranty.

But I’ll only replace it with the identical post.

Scam. If your card has a physical defect, you can always RMA it. I had a Best Buy drone try to sell me purchase protection on a mouse once. An optical mouse. You know, the kind with no moving parts. I declined.

I took advantage of Best Buy’s auxiliary warranty plan on my original PS2, and it turned out to be a boon of an investment. It was one of those first batches with the shoddy disc spool, and it died like two months before the plan expired. However, by that time, the PS2 price had dropped and I came away with an extra hundred clams.

I had someone at BestBuy try to sell me a protection plan on a mouse. I think I laughed out loud at him. We did get the protection plan when we bought our DVD player (back when Divx was still competing) - just because the technology hadn’t been out long - and we used it once - when the warranty would have expired. (of course by that time DVD player prices were down anyway…)

From the letters I’ve gotten re: Sony’s repairs, the extended warranty may be good thing if the store will let you swap it and your alternative is to send it back to Sony for repair.

For me, it depends on the item and how much the warranty costs vs. the cost of a typical repair. On a stereo, for instance, I wouldn’t get one on the receiver (almost no moving parts), but I might consider it on a CD or DVD player. I did get one on my Sony WEGA, due to the short labor warranty and the cost of the item (and the reasonable price of the warranty). Of course, buying the warranty meant my first three years were trouble-free. :)

If a product is under $150 or so, I’d definitely not bother with an extended warranty. Dead electronics = “ooh, I can upgrade!”

For stuff like video cards, chances are that failure is going to occur (1) when the product is still fairly new and under warranty, or (2) when it has a couple of years of heating/cooling behind it and you’d be happy for an excuse to upgrade anyway. (Or you can buy an identical used card for $30 on eBay…)

In fact, that’s probably not a bad rule of thumb on the extended warranty – how much is the extended warranty vs. what the product will sell for on eBay in two years? If the warranty is more than 1/4 of the cost of an eBay replacment, play the odds and skip it.

Say somebody buys a refrigerator, dishwasher, TV set, DVD player, speaker system, MP3 player, and video card from Circuit City or Best Buy over the course of a couple of years, and buys warranties for everything. Chances are, for the cost of the warranties, you could replace any of the items with a new item for the same amount of money. And if nothing dies, you have enough extra cash to buy a new toy. What are the odds of more than one of the items going belly up?

Also, when my Sony 5-disc DVD player fritzed out about a year ago, the repair was $60 – less than the warranty would have cost.

The one place I’ve seen these pay off is when you can get credit towards a new item instead of an exact replacement. Sony only manufactures Clie handhelds for about 6 months before coming out with new models – I’ve had readers report replacing dead Clies at Best Buy with dramatically better models at no cost. (Well, other than the warranty cost.) Same thing with cell phones.

I was pretty stinkin’ glad I paid $20 for a two-year plan on that AIW 9700 Pro that I paid $400 for back in January, I’ll tell you that! The Ops Manager actually offered me a swap for a PNY nVidia FX 5900 (I would have only had to pay the difference in cost between the cards) but I did get another 9700 Pro because I really like its multimedia capabilities.

A lot of times a mfr. doesn’t cover accidental damage (like the time my husband dove into a pool with his $499. PDA cell phone still in his back pocket) where CompUSA’s replacement plans do. I also have a friend who bought a PSX with a two-year replacement plan from EB, and one of her five children accidentally yanked the controller too hard and the whole PSX went crashing onto the floor from the top of the TV, where it promptly decided to die. She just brought it back to EB and immediately got a new one.

A lot of people also don’t realize that many mfrs. make you pay shipping one way even if an item is defective, and they send you back a refurbed unit and not a new one. This goes for cell phones, monitors, and even computer parts. Store replacement plans (at least the ones I’ve bought) give a new item in exchange for the returned one and it’s been done for me right away, instead of waiting a week or longer without the item in question.

It’s a gamble on both sides, really, but I usually get the plans on computer parts because they’re so fragile, and also on any hand-held devices (like digital cameras, mp3 player and of course cell phones, ahem).

That Best Buy books obscene profits on the warranty plans tells me it can’t be that great of a deal for customers.

The difference between insurance you buy from the place of purchase vs insurance you buy from an insurance company is that the insurance companies compete with each other for low rates.

Best Buy doesn’t have to compete with anybody else because nobody else will sell you insurance on something you bought at Best Buy.

The market rate for an insurance policy on something like a video card or DVD player would probably be a lot less than what you pay at Best Buy or CompUSA, except for the fact that there is no market.

So you’re right, it’s almost never a good deal for the customers, except in the rare case that something bad happens, in which case you may save yourself a few bills.

True as far as it goes, but what’s important is the overall cost/benefit. These insurance things work like a Vegas casino: everyone remembers when they (or a friend, or friend of a friend) scored a replacement on a $500 PDA, but forgets / doesn’t realize how much they’ve paid into warranty programs overall. Chances are, it’s more than $500. While I’m sure a few people make more than they pay in–just like in Vegas–I’m certain that overall most people lose a lot of money.

When I worked for Incredible Universe, a now defunct big box electronics place, most of whose stores have been turned into Frys, the manager said one thing that I still remember.

“Sell more protection plans – they’re pure profit for us.”

Since they’re pure profit for the stores, I’m going to assume that they’re not exactly there for the benefit of the consumer. It could be just that the actual use rate of these plans is so low that it ends up being pure profit, but most of the time I’m quite content with the manufacturer’s warranty.

Besides, am I supposed to keep paperwork for like 3 years? Yeah right.

Yes it is because many of the items simply won’t fail during the warranty or extended warranty period. And depending on the cost of the protection plan, it makes it really poor.

I bought a Sony Discman CD/MP3 player. The cost of the protection plan was going to be about a third of what I was paying, to get an additional two years.

Me: So why should I?
Sales: It’s two more years of protection
Me: What does it cover?
Sales: Everything!
Me: So if the case crack becuase I drop it, you’ll replace it?
Sales: Of course!
Me: Let me see the contract.
Sales: Ummm… I don’t have one handy right now…

I manage to eventually weasel some truth out of him and accidental damage was not covered as it was really en extended warranty and not a protection plan. The terms of the warranty were the same as Sony’s but extended for two years. The lying bastage!