Bensman Risk Management, Inc.


Insurable Interests

Bensman Risk Management, Inc.
2333 Waukegan Road Suite 275
Bannockburn, IL 60015
847-572-0800 Phone
847-572-0502 Fax

Insurable Interests may offer general financial, insurance, tax and business ideas. However, due to the ever-changing tax laws as well as the complexity of the financial industry, you should seek professional advice before implementing any of the ideas contained in this newsletter. The Bensman Group, Bensman Associates Ltd., Bensman Risk Management, Inc. or Schemata, L.L.C. assumes no liability whatsoever in connection with the use of this newsletter.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS). Kestra IS and Kestra AS are not affiliated with The Bensman Group, Bensman Associates Ltd., Bensman Risk Management, Inc. or Schemata, L.L.C.

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Insurable Interests

Vol. 6, Issue 2October 2010

FINANCIAL INTERESTS

Do Extended Warranties Make Sense?

You looked at all the models of TVs or refrigerators or computers, and you made your choice. But as you are checking out at the appliance and electronics store, you discover there is one decision left: Should you purchase an extended warranty?

You can buy an extended warranty on virtually anything, from a DVD player to a big-screen TV. But is it worth the cost?

Some experts, like ConsumerReports.org, advise against buying most extended warranties, claiming that the benefit rarely outweighs the cost. Most items don’t break during the term of the extended warranty, according to ConsumerReports.org, and even when they break, the cost of the repair is unlikely to be greater than the cost of the warranty.

But even ConsumerReports.org finds exceptions to its extended-warranty ban. And other experts suggest consumers should look at several issues.

First, determine how long the manufacturer’s warranty is, and what it covers. Some manufacturers are changing their warranties to cover items for less time or to provide less complete coverage, dropping things like phone tech support. Find out the exact terms of the warranty you get for free from the manufacturer.

Then, compare that with what the extended warranty covers. For example, do you have to bring the item back to the store, or will they come to your home to fix it? If the item cannot be fixed, how is the replacement determined? Does the extended warranty cover additional expenses, such as spoiled food if your refrigerator breaks down? Does it cover accidental damage, or only mechanical breakdown? What about replacement of bulbs, batteries, etc? Does it cover maintenance, such as cleaning your new digital camera? When does the coverage start?

Determine whether you have extended warranty coverage automatically through some other source. For example, some credit cards offer an extended warranty for items you buy using the card.

Finally, weigh the cost of the warranty compared with the cost of the item. Some items are so inexpensive that paying for an extended warranty makes little sense -- if the item breaks, you can just buy a new one. This is especially true of many electronics, which tend to come down in price over time. For example, if you buy a moderately priced DVD player today and it breaks in two years, it probably will cost you considerably less to buy a similar DVD player.

You may not have to make the decision on the spot. Many extended warranties can be purchased up until the end of the manufacturer’s warranty. Delaying your decision allows you to take a closer look at both the manufacturer’s warranty and the extended warranty. Also, if the extended warranty begins when you buy it, buying later means it will run out later.

In the end, though, an extended warranty is at least partly about peace of mind. Many people buy an extended warranty when they make a major purchase as a way of protecting the value of that purchase. It is impossible to put a price on peace of mind, of course. Just make sure you know what you are buying, so your peace of mind won’t be shattered if you end up having to make a claim.

This article was created by Osmosis Digital Marketing for use with permission by The Bensman Group.

Photo courtesy of iStockphoto.com

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