Question

With almost every major item we purchase (especially electronics!) we have the opportunity to purchase an extended warranty that will cover the item 2-3 years beyond its extended warranty. If the item breaks during this time, it is either replaced or repaired, or you are reimbursed for the item.

These warranties normally cost between 10-20% of the purchase price for the product, depending on the item. Do you think it's worth purchasing extended warranties on all household products? Or do you think that we should only protect certain kinds of items? Use statistics to justify your answer.

Answer 1

[AI-generated answer — Bot GPT 3.5]

There is no one-size-fits-all answer to whether purchasing extended warranties on household products is worth it, as it ultimately depends on the individual's preferences and risk tolerance. However, looking at some statistics can help provide some guidance.

According to a study by Consumer Reports, extended warranties are generally not worth the cost for most electronics and appliances. The study found that products are typically reliable and do not break down within the extended warranty period. For example, Consumer Reports found that only 15% of buyers of laptops and 11% of buyers of ranges and refrigerators had to use their extended warranties.

Additionally, a survey by the National Association of Insurance Commissioners found that only 12% of consumers filed a claim on their extended warranty, and only half of those claims were paid out. This suggests that extended warranties are often not utilized or do not provide the expected value.

On the other hand, some items may be worth protecting with an extended warranty. For example, items with a high risk of breaking down or high repair costs, such as smartphones or high-end appliances, may benefit from an extended warranty. It's also worth considering the cost of the product and the cost of repairs or replacements outside of the warranty period when deciding whether to purchase an extended warranty.

In conclusion, while extended warranties can provide peace of mind and protection for certain items, they may not be worth the cost for most household products. It's important to carefully consider the risks and costs before deciding whether to purchase an extended warranty.