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Posted by Aaron J. Bossig on 02/01/07 19:53
Stan Brown <the_stan_brown@fastmail.fm> wrote in
news:MPG.202c0b39e8b4878c98a96d@news.individual.net:
> Thu, 01 Feb 2007 12:15:17 -0600 from Aaron J. Bossig <linkvb06
> @SpammersWillBeExecuted.ptd.net>:
>> I'm sorry, but I just don't understand this logic. Why is an item a
>> bad deal simply because the seller makes money off of it?
>
> If they gain financially, you lose financially. This is basic
> statistics. Sellers establish reserves for how much they expect to
> have to pay off on their extended warranties; those reserves are
> always less and usually much less than the amount taken in. In other
> words, the sellers' own figures show that the warranties aren't worth
> what they cost.
Which is why Rule #2 of Extended Warranties is "Always use them when
you have them." Lots of people buy them and then never cash them in,
which is of course a loss for the customer. And silly. Me, I keep the
paperwork on hand and am ready to call the 1-800 number as soon as
anything happens. As a result, I've never lost money on an extended
warranty.
> Sure, it's worth it to *you* if your appliance dies and you get a new
> one free. But over the long haul, if you buy other extended
> warranties, on average you'll lay out more for the warranties than
> you have to replace the products that actually fail.
Which is why you don't buy them on everything, and I'd never suggest
that you should. You come out ahead when you pick-and-choose.
> Perhaps your confusion is because you're looking at what *might* go
> wrong. But that's only half the picture: you must also consider the
> probability of that scenario. The less likely it is, the less
> valuable the warranty, which is really just a form of insurance.
Exactly. There are products which tend to have a high failure
rate, and for which repairs do tend to be very expensive. To
*not* buy an extended warranty on them is just being careless. Such
products are in the minority of purchases, but it's something the
customer should consider before making their decision. The OP, for
example, is considering buying a portable DVD player, and wants
to know how he/she can protect their purchase. Now, I personally
wouldn't buy an extended warranty on that item, but the OP is asking
exactly the right question: "What is the best (and cheapest) way I
can assure myself I won't be stuck with a dead unit?"
--
Aaron J. Bossig
http://www.GodsLabRat.com
http://www.dvdverdict.com
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