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