A Warranty Is Not Insurance

They seem to be very similar, both pay for broken things. What a warranty does is to protect the customer from a MANUFACTURER defect. We have customers who don’t either understand this concept or just hope that it will get fixed for free. When you lose control of that WII and launch it through your new plasma television, Warranty will not fix it.  It wasn’t designed to withstand the impact of the WII.  That is the key! “Wasn’t designed for this”.  The same is true for big screen crt televisions that are on the shopping channel all day with the price in a static location on the screen. The manufactures said that these tv’s were not designed for this kind of use, and warranty will promptly decline any claim made on a set that has phosphor burns. A warranty is a liability for a manufacturer, not a profit center. 

                So then the question is why do manufacturers offer a warranty?  Besides any lemon law that may exist in your state, Manufacturers don’t have any obligation to provide a warranty.  The reason should be simple, to make us believe that the product is built soundly.  It gives us the feeling of security. The warranty will promote the sale. There are many cases where a large department store will buy products from a manufacturer without a warranty to get the product cheaper.  Then offer an exchange only warranty from within the store. The store will bear the Burdon of the warranty. I think the main point here is when you intend to purchase that new gadget and while the salesman is telling you all about its features, have him also explain the features of the warranty.   That way you will know what will happen and you don’t have to guess.

                Extended warranties are not created equal.  If you are going to make that $3000.00 investment I recommend an extended warranty.  But know how it works. Extended warranties make US think that it is more like insurance – again it is not!  Make sure you know how your extend warranty functions. From now on in this article I am going to make assumptions about extended warranties based on my experience. But the warranty you have may be different.  If you purchase that 5 year extended warranty you are really getting a warranty after the manufacturer’s warranty runs out. So if you get a 2 year manufacturer warranty, that 5 year extended warranty is really 3 years of effectiveness.  Also be aware of the limit! The contract you sign may only pay up to the cost of the tv. Meaning that if the tv goes’ in for repair multiple times, each time it crosses the tech's bench goes agenst the total amount of the contract.  If you get a real lemon of a television, it is possible that the warranty will run out before the 5 years is up. You can be left out in the cold. The warranty company will do what they call a “buy out”, giving you what is left on the warranty. If you purchased a TV for $2000.00, and used up $1400.00 of your warranty, and the set comes back in to be repaired, they may cut you a check for $600.00, and get out of the warranty contract.  Nobody really talks about this, but, I am here to tell you it does happen.

                Well after all of that bad stuff, I want to tell you that if you get a good extended warranty company, even with all of the limits and possible pit falls. It is still a good investment on that expensive piece of equipment.   They are usually pretty fair about the repair, and will usually pay for the repair without complaint. Again, I want to say that this is our typical experience with warranty companies.  Please post your warranty stories below, it should be interesting.



Having worked for an authorized service center for a number of manufacturers, I can say that the initial statements are true.  Many customers feel that ANY failure is covered.  For example, I had a customer show up with a portable CD player.  The cover was detached.  In other words, the cover was opened well beyond its limit.  Needless to say the cover needed to be replaced.  Also, not covered under warantee as it was not a defect, but customer damage.  The customer almost jumped the counter at me when told of this.  As it turns out, there were other problems with the unit that caused the user to try to get better access.  The initial problem WAS covered.  Oh well...

Another point is what the warantee actually covers.  More and more these days, the warantee covers parts for 1 year or more and labor for 90 days.  Labor charges can easily exceed a reasonable repair/replace price point.  Be careful about this too.  As an example, I received a small cd/receiver/tape compact unit for repair.  In this case, the CD failed.  The actual problem was with an IC on the CD board that had failed.  This was clearly a manufacturing problem.  The customer did not get it fixed because the labor charge for this location was a minimum of $60.  The cost of the unit everyday...  $49.

I could go on with more examples, but you get the point.



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