Are extended warranties worth it?
I cover regular warranties, returns, product registration, overseas purchases and USA vs. gray market products on my Returns and Warranties page.
I'm an American living in California. I'm writing from personal experience. I'm not a lawyer. If you live elsewhere or aren't an American I can't vouch for what applies in your country or state. Check the specifics yourself if details are important for your particular case.
"Standard Warranty" means the warranty included with any product at no extra charge.
For good cameras this is usually a year. Crappy electronics may only get 90 days and Nikon lenses can get 5 years. There is no legal requirement as far as I know: it's all what competitive market forces create.
Standard warranties usually cover everything except your own stupidity. I address standard warranties on my Returns and Warranties page.
Extended warranties are options sold to expand coverage from the standard warranty.
Extended warranties are called different things by different sellers. Ritz calls it ESP, Apple calls it Apple Care, Mercedes has called it Starmark and Extended Limited Warranty.
Don't get hung up on the name. Do pay careful attention to the fine print of whatever it is that you're buying.
Extended warranties for cameras and lenses usually cover anything that can go wrong, just like the standard original warranty.
Extended warranties for refrigerators and cars usually only cover specific parts. These warranties can become worthless if the list of covered parts isn't broad enough. If a warranty lists "covered items" read it very carefully. For automobiles many warranties only cover "internally lubricated engine parts," which never break unless you run the car without oil, which again isn't covered.
Extended warranties come from three sources: the manufacturer, the dealer, or fourth parties. Most people call fourth party warranties "third party," but if there's you, the manufacturer and the dealer in any transaction, that makes the 3rd party warranty company a 4th party. Don't worry about these numbers.
Sometimes warranties are offered by fifth parties, like your insurance or credit card company. These usually extend the other warranties.
Warranties offered by the manufacturer are the most valuable.
Warranties offered by a dealer or other party may become worthless if the seller goes out of business. They tend to have more fine print to exclude more things from coverage. Ask yourself how long the seller has been around and if you've ever heard of them before.
Most warranties cover things that break due to natural causes. They usually are worded as "defects." Covering defects makes me laugh because I consider things like Nikon's leaving the AUTO ISO feature active in manual exposure mode as a design defect. I doubt they could fix that without a global firmware revision.
The Ritz (Ritz, Wolf, Deans, etc.) chain's extended warranty offers an unusual bonus: it covers abuse! Read it yourself at the store: it even covers your own stupidity. I quote from the warranty I bought: it covers "equipment rendered unusable due to ... wear and tear due to ... abnormal use, including ... abuse, ... shock or trauma, ... exposure to ... water" and "chemicals." That's right: accidentally drop your camera into a lake or a vat of acid, drop it off a building or drag it behind your car, and Ritz will repair or replace it.
I've never seen an extended warranty only cover parts or labor, unlike new warranties. All the extended warranties I've seen cover parts and labor.
Think hard: try to imagine some part of the unit that can break and see if it's on the list of covered items. Every product has many, many more parts than are covered. Warranty providers use lists of covered items to excuse them from having to cover everything.
When Does it Apply?
Most extended warranties only take effect after the manufacturers' warranty expires. Pay careful attention when buying a warranty, since often they refer only to the total period even though the extension for which you're paying is only a small fraction of the total time.
If you buy a "six year" warranty for a Nikon lens, you may really only be paying for a year of additional coverage. Nikon lenses in the USA are covered for five years, free.
On the other hand, my Mercedes warranty was sold as a 36 month extended warranty. It covered 36 months after the 48 month standard warranty expired, so in fact the car with the extended warranty is covered for a total seven years or 84 months.
Ritz' warranty is a little different again. Since Ritz covers your own stupidity, it adds coverage above the standard warranty from the day you get your new camera.
Apple Care gives you free phone support for just about anything, which otherwise goes away after 90 days for non-warranty issues.
Warranty vs. Insurance Policy and Deductibles
A warranty fixes things if they break, for free. That's what you want.
Some things sold as warranties are only insurance policies. If something breaks you have to file a claim and pay a deductible. Deductibles and claims make most of these policies almost worthless, since if something breaks the effort and expense involved may outweigh the value of the repair. I've never bought one of these, so I can't vouch if a repair facility would just fix your camera and handle the paperwork, or if you'd need to pay for the repair, do the paperwork and wait to be reimbursed minus a deductible.
BMW extended car warranties have $50 deductibles for each repair. Mercedes is free with no deductibles.
I've had people try to sell me extended auto warranties that were only insurance policies. The deductibles, exclusions and small list of covered items made them almost worthless.
A small deductible is a big negative to the value of any policy. Consider this when shopping. A deductible applies every time you have to get something fixed.
I've been told all sorts of crazy stories when people try to sell me warranties. Ignore the salesman, unless you already have good experience with them, and read all the fine print before signing. With vehicles most salespeople tell me that they are "bumper to bumper," where in fact they are usually almost worthless since they only cover very specific items.
I've heard that some salespeople lie. Read the entire contract before you sign.
If the seller won't let you read the contract before you buy, or claims it comes in the mail later, pass on it.
Many policies offer you the option of canceling within a few days.
If you're dealing with a legitimate operation and aren't sure about getting it, you might want to get it and think it over while you can still cancel.
Often you have the option to buy a manufacturer's policy as long as the initial warranty is valid. This is the case with Apple Computers.
I didn't bother to buy Apple Care until my laptop's original warranty had almost expired. Apple Care's warranty coverage only takes effect after the first year passes, so no big deal.
Hint: Apple gives you a year warranty free, but free phone support goes away for non-warranty issues after 90 days. Apple Care gives free phone support. If you decide against the policy and have non-warranty issue for which you'd like phone help, buy the extended warranty then and your phone support becomes free, even in the first year.
Who Does the Repairs?
Read your policy carefully. I only let Nikon touch my Nikons. Technology flies so fast that I doubt any other service facility has all the exotic tools and software needed to repair digital cameras as I want them done.
I greatly prefer to have a manufacturer do repairs because I've often noted additional, free, upgrades done to improve issues that have come up elsewhere. Nikon did a secret upgrade of the rewind crank of my F100 to improve reliability when my F100 was in for something else. When I've had cars repaired at dealers I've also gotten free upgrades for unrelated things that were recalled. 3rd parties don't have all this insider information and aren't likely to give you free secret upgrades.
When I worked for a manufacturer, all our gear that came in for service was also always updated to the latest firmware, free. This was on all products, especially those on which upgrades couldn't be done by customers in the field.
How Long Should You Buy?
If you have the option for different periods, buy for as long as you expect to use the product and at least enough to sell it while still covered.
Digital SLRs are obsolete in 2 years. Get a total of 2 or three years of coverage. Beyond that, toss the camera and get a new one.
Lenses last a decade. I'm happy with Nikon's free 5 years.
Is it Transferable?
It's great if you can sell an item and include the warranty with it. Ritz' warranty transfers, and so do many others. This makes it easy and safe for anyone buying or selling a used item, since anything that might be wrong is probably covered. This makes an easier, faster sale for all involved. This alone could make buying an extended warranty worthwhile if you intend to sell the item while the warranty is in force.
It should be transferable for free. Mercedes car warranties transfer for free if you buy from an individual. It may be worthless to pay $50 to transfer a partly-expired camera policy.
A small transfer fee can be a big negative to the value of the policy if you're buying it to lubricate resale.
I have a page on Goodwill Warranties.
It's all calculated on odds. You're gambling that something is going to break, and the seller is gambling that it won't.
The seller knows the repair histories. You don't. The seller has years of return data history, and engineering predictions on future reliability. You don't. The sellers price warranties to ensure that, on average, they make money.
The sellers are eager to sell you an extended warranty because, on average, you'll be paying in more cash today than any benefits you'll get over time.
Most consumer electronics warranties are bad deals. Electronics stores push them hard because they make more money on the warranties than selling the actual products! Consumer electronics rarely break or need servicing. I have the very first portable CD player ever invented, a Sony D-5 bought over 21 years ago. If there was ever a completely new delicate product pressed into difficult outdoor use, this was it. Mine still works great and has never required any cleaning.
Buy a warranty if you expect to be far more likely than others to collect on it. If you expect to be using the product a lot more than normal, consider the extended warranty.
Buy one based on your history. I'm very good with what I own and things rarely break on me. if I was smarter I'd buy fewer warranties. Other people seem to have all the problems. If you're one of them, consider the extended warranties.
Buy a warranty if it makes you feel good. Peace of mind is a perfectly good reason.
Buy a warranty if you like the level of service you get from the manufacturer. I always buy Apple's "Apple Care" policies for my computers because their service and support is excellent. I also use my computers a lot! The fact that I can phone them up and ask them how I do something, even if it's not broken, is very valuable to me.
What Have I not Bought?
I've passed on almost every 3rd party car or electronics warranty. I couldn't see the benefit, since they offered so little in terms of what was covered and for how much little time after the factory warranty expired.
I've never bought one of the Mack Camera warranties because oddly I've never been offered one. I believe they are the biggest supplier of 3rd party camera warranties and I think they have their own huge repair facility. Their name comes up most often when people ask about warranties.
Mack is probably as good as 3rd party warranties get, although I've never read the policy. I would most likely pass if offered simply because I gamble that I wouldn't need it and that I want to send my cameras only to Nikon, not a 3rd party. I'm unsure if Mack sends cameras out to Nikon; they probably do if they have to.
What Have I Bought?
I'll go through the mental calculations that led to each purchase. You'll see each one requires analysis of all the factors explained above.
Nikon: We don't pay for it, but Nikon calls their 5-year coverage for lenses an extended warranty beyond the standard one year. Nikon says you have to register to get the extended warranty, which is free. This 5-year coverage is worth it for me to buy USA instead of gray market, especially with the new complex VR lenses. In the 1980s I bought my manual-focus lenses gray, since the exchange rates made them about half as expensive as USA and manual focus lenses last forever.
Ritz Camera: I bought the Ritz extended warranty for a D70. I bought it because I expected to beat the heck out of my plastic D70, and I did. I made tens of thousands of shots on it. I gambled that I would be far more likely to collect than average. Guess what? Two years passed and I never had a problem. I'm still glad I bought it. I used my D70 daily and liked knowing if dropped it that it wasn't my problem. Ritz won. I looked into their warranty on the D200, but as a pro camera the warranty was far more expensive than the D70's. I gambled that I wouldn't be beating up a D200 more than the typical D200 user.
Apple: I always buy the extended warranties, called "Apple Care." This gives me upgraded support even for the 1st year of regular warranty coverage. Apple's support is excellent. I usually can walk into an Apple Store and whatever I need is fixed or exchanged on the spot. I had the hard drive in my iBook die, and they overnighted and repaired it pronto! Apple supports me the way I expect to be supported. They pick up the phone and fix the problem, period. They are nothing like the awful service my wife gets from Dell. Hint: if you buy a display at the same time as a computer you can have it covered along with that computer at the same price! Apple and I both win: I've had things break and used their services. Since I'm on my computer all day doing photography and this website, downtime from losing just an hour would cost me than the policies do.
Good Guys : I bought an extended warranty on a very expensive CD player I bought as a floor model in 1995. The floor model cost $299, down from an MSRP of $730. The policy only cost an extra $40 for five total years of coverage. The policy was cheaper because it was based on the lower selling price of the floor model. I got the warranty for an expensive item at a deep discount. There was another crucial factor playing my favor: I bought another of the same model from another Good Guys earlier that week. The policy stated I was covered for a Sony CDP-X303ES player. It didn't say how many or define a serial number. I had both my players covered for the price of one policy. This is an odds game, and I figured at $20 each player the odds were in my favor. They were, however of course these two CD players still work remarkably 11 years later. Good Guys still won.
Ford Mustang GT V8 Convertible: In 1986 I bought my only new car ever. Ford offered me a Ford warranty for $1,500 on this $16,000 car. This was back in the day when new cars only had 12 month, 12,000 mile warranties. I got it because it covered a.) most of the car, and b.) it also covered free maintenance for five years, and c.) it also covered wear items, which included the clutch. I bought a hot rod with a standard transmission, and beat the heck out of it doing burnouts, San Fernando Valley stoplight drag racing and screaming through Los Angeles' Santa Monica Mountains' canyons. I fully expected to melt a few clutches, at Ford's expense. We both won: I never had anything wear out or break. Ford knew they had a sturdy, upgraded clutch. I got all my service done at the dealer for free, which would have cost me more than the warranty! One time the service writer quoted a $600 estimate for the service until I pointed out that it was under warranty. I had a grand time driving my own car like a rental. It's a good feeling driving your own high-performance car like you stole it.
Mercedes: I paid to extend my one year of coverage to three when I bought my 1997 SL500 in 2004. Yes, my 1997 car is still under warranty! I bought the added warranty mostly for peace of mind. I don't drive enough to break anything. It's a good warranty and I have had a couple of things replaced, for free. They even offered to replace my entire instrument cluster, for free, just because I noticed the clock runs a few minutes fast a month. Mercedes has very accurate clocks and this isn't within spec. I thanked them, but couldn't bring myself to ask them to go through with it just for a fast clock. This shows us that Mercedes stands behind their cars and warranties. We both win. Nothing has broken to equal the price paid, but the peace of mind and ability to sell either car easily if I wanted to makes it worthwhile. Unlike my Mustang 20 years ago, I'm not trying to break either of these.
Mercedes: I adopted a 2002 Mercedes E430. The original owner paid $2,380 for an extra 36 months of coverage. This extended warranty transfered to me for free. It works! The digital clock started to lose a few segments and look scrambled. The dealer had to change the entire instrument cluster, since the clock wasn't repairable alone. This was a $3,000 job! My cost? ZERO. It was all covered for free under warranty. I WIN!!! YEAH!
Every extended warranty offer has a different set of variables.
You need to consider:
1.) Who's offering it, their reputation and your prior experience with them.
2.) How likely you are to break it versus the average user.
3.) How likely it is to break at all. DVD players are disposable products that don't break, while cars need regular service. Cameras fall in the middle, closer to DVD players, and computers fall closer to cars. Most amateurs won't work cameras hard enough to wear them out, while others destroy any camera they get their hands on. Which one are you?
4.) What's covered, and for how long. This is critical: I pass on almost every 3rd party contract that only covers stated items.
5.) Any deductibles.
7.) Cost. Some policies offered on cheap consumer electronics, like today's CD players, cost almost as much as the product. Pass on these.
8.) Peace of mind. If it feels good, do it. If it doesn't make sense or doesn't feel right, forget about it. Remember every new items comes with some sort of warranty.
Look at all these items and the choice becomes clear. If it's not clear, I opt for no extended warranty.
If you find this as helpful as a book you might have had to buy or a workshop you may have had to take, feel free to help me write more with a donation. Thanks! Ken.