Consumer Hub: Buy Smart

Be Careful When Buying Service Contracts and Extended Warranties

Service contracts or “extended warranties” can add hundreds to your purchase price and are rarely worth the cost. Some duplicate warranty coverage you get automatically from a manufacturer or dealer. Ask these questions before you agree to one of these contracts:

  • Does the dealer, the manufacturer, or an independent company back the service contract?

  • How are claims handled? Who will do the work, and where it will be done?

  • What happens to your coverage if the dealer or administrator goes out of business?

  • Do you need prior authorization for repair work?

  • Are there any situations when coverage can be denied? You may not have protection from common wear and tear, or if you fail to follow recommendations for routine maintenance.

     

Source: 2011 Consumer Action Handbook, GSA Federal Citizens Information Center