In writing about the purchasing of a new Sharp Aquos HDTV, I forgot to mention the extended warranty. I tried to use circuit City’s extended warranty as a bargaining chip to see if the salesman could lower the price. That didn’t work, so I left the store without the plan. For $190, if the television stops functioning properly in the first three years of ownership, Circuit City will send someone to attempt repairs. If the television cannot be repaired, Circuit City will replace it. I know that Circuit City makes tons of money on extended warranties like these, but it may just be worth it for a device in which the technology is still so new, and replacement costs would be prohibitive. $63 a year is not bad for this kind of insurance.
The friend who was helping me transport and set up the equipment says he usually will buy extended warranties on expensive electronics, even though it bothers him that they are cash cows for the company. When a piece of equipment stops functioning 18 months after the purchase — past the limit of the manufacturer’s warranty — it can be frustrating. Is peace of mind on a $1,300 piece of equipment worth $63 a year?
For comparison, a phone from Verizon Wireless that costs $100 can be insured with replacement protection from that company for $72 a year (and you’ll still have a $50 deductible). I think it’s clear which one is a better deal.
I still have several days to think it over. What would you do?