Are Extended Appliance Warranties Worth It?

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Vault’s Viewpoint on Extended Appliance Warranties

• An extended appliance warranty covers a single appliance and must be purchased while the original warranty is still valid.
• A home warranty covers multiple appliances in your home and can be purchased at any time.
• An extended appliance warranty is not generally worth the cost, but a home warranty could be a worthwhile investment.

Extended Appliance Warranty Pros and Cons

Pros

• Peace of mind
• Repair costs are presented upfront 
• Experienced technicians
• Can be extended

Cons

• Typically expensive
• Covers a single appliance
• Terms and conditions apply
• Coverage may go unused

What Is an Extended Appliance Warranty?

An extended appliance warranty is a type of optional extra coverage that you can purchase to cover a specific appliance past the original warranty’s expiration. When repairs are needed, you can access professional technicians who can diagnose and repair the problem. Should your appliance require replacement, your extended appliance warranty may cover the replacement cost as long as it meets the terms of the warranty. 

The length of your extended appliance warranty can vary, though most last several years before they expire. You may be able to extend your warranty even longer if necessary. 

What Does an Extended Appliance Warranty Cover?

Most extended appliance warranties cover the mechanical parts of a covered appliance, but cosmetic damage—like dents, scratches or lost knobs—may not be covered. Some appliances may also break sooner than others. For example, 34% of refrigerators generally require repairs within the first five years, according to Consumer Reports. 

Here’s a breakdown of some popular appliances and how long they are typically covered by extended appliance warranties. 

Average Extended Appliance Warranty Coverage Window

Not everything that could go wrong is covered under an extended appliance warranty. There are some cases when an extended appliance warranty may not apply. These cases often include:

• Accidental damage
• Improper maintenance 
• Modified appliances
• Cosmetic damage

Extended appliance warranties can vary, so be sure to read the terms carefully so you understand what is covered and what is not. 

How Much Does an Extended Appliance Warranty Cost?

The cost of an extended appliance warranty varies based on factors like the manufacturer and model of the appliance, the warranty provider and the length of the warranty. However, most extended appliance warranties cost between $20 and $500 each year. They are typically sold by a retailer, manufacturer or third-party company. 

Is an Extended Appliance Warranty Worth It?

Extended appliance warranties have become a $40 billion business, but researchers at Stanford University found that customers can overpay for them because they misjudge an appliance’s likelihood of breaking. 

In most cases, an extended appliance warranty is not worth it. The cost of coverage often exceeds the cost of repairs. Or worse, coverage ends up going unused. 

What Products Don’t Need an Extended Warranty?

For some types of appliances, extended warranties rarely make sense. Here are some products that don’t often need an extended warranty. 

• Electric oven: An electric oven is generally cheaper than a gas oven, making for more affordable repairs that may not constitute the extra expense of additional coverage.
• HVAC systems: These tend to have a longer appliance warranty, lasting five to ten years, so an extended appliance warranty may not be necessary. 
• Small appliances: Less expensive items like microwaves and coffee makers are cheap enough that it is often more cost-effective to replace them than pay to cover with an extended warranty.
• Televisions: When it comes to TVs, accidental damage is the most common problem, but this is not covered by the average extended appliance warranty. 
• Washers/Dryers: Washers and dryers are some of the few appliances that rarely need repair, making an extended warranty not worth the money for many. 

In these cases, a home warranty could be a better solution.

Should I Buy a Home Warranty Instead of an Extended Appliance Warranty?

A home warranty is another option for appliance coverage. While an extended appliance warranty only applies to a single appliance, a home warranty covers multiple appliances in a single policy. Extended appliance warranties often come from the manufacturer, an appliance retailer or another third-party provider. Home warranties are purchased from a home warranty company. A home warranty can be purchased at any time, but extended appliance warranties must be purchased before the original manufacturer’s warranty expires.

A home warranty may be more expensive than an extended appliance warranty because of the extra coverage, with policies ranging from $300 to $600 per year, depending on the type and number of appliances covered. However, with a home warranty, policy management is greatly simplified because multiple appliances in your home are all covered under one policy. For many homeowners, a home warranty means greater peace of mind because they know their homes’ key appliances are covered in case they break or stop working. 

Before you buy an extended appliance warranty or a home warranty, consider the appliances in your home, paying attention to their current age, condition and original warranty life, to determine if you need additional coverage for one or multiple appliances. 

Best Home Warranties for Appliances

There are many choices for home warranties, but these are our favorites. 

• 2-10 Home Buyers Warranty
• AFC Home Warranty
• American Home Shield
• American Residential Warranty (ARW)
• Choice Home Warranty
• Cinch Home Services
• Elite Home Warranty
• First American Home Warranty
• Liberty Home Guard
• Select Home Warranty
• The Home Service Club

Tips for Deciding Whether You Need an Extended Appliance Warranty

When determining whether you need an extended appliance warranty, there is much to consider. Here are a few key factors to take into account as you make your decision.

• Refer to your original warranty. Review your original manufacturer’s warranty to determine how much time is left. If you still have a significant amount of time left on your original warranty, extended coverage is likely not necessary. 
• Review the extended appliance warranty. If you need coverage for a specific appliance, carefully review the terms of your new extended warranty, including what it covers as well as the repair vs. replacement policy. You may be required to maintain the appliance in such a way that protects the appliance and helps to prevent future issues. 
• Check your credit card benefits. Sometimes, credit card providers will extend the original warranty if you bought the appliance with their credit card. You could receive coverage for up to one year or more.
• Understand the service limitations. You may be required to use a specific service provider for repairs. Consider where these providers are located so you can be sure that there is a location convenient to you. 
• Price out repairs. An extended appliance warranty could end up costing you more in policy coverage than the actual repair would cost if you handled it yourself. This is especially true if your warranty requires a deductible before coverage kicks in.