Posted by Stan Brown on 02/01/07 19:36

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.

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.

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.

--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com/
DVD FAQ: http://dvddemystified.com/dvdfaq.html
other FAQs: http://oakroadsystems.com/genl/faqget.htm

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