What is your thoughts on buying an extended warranty on an appliance?
I worked for a company that did work for an Appliance Insurance Company. All of our repairs were on appliances 4 years old or less. A good percentage of my customers complained about having to wait so long before their appliance was fixed. Others complained about their appliance and said that they would never buy another ( GE, lg, etc) again.
I did some research and found a variety of different views on whether or not it was worth buying an extended warranty. Some of what I found I thought was a bit misguided.
In your many years of field experience, what is your opinion on this?
- Guest asked 8 years ago
- last edited 8 years ago
Hello
Appliance service warranties are only benefiting the company that sells them. This is a big business and it is a numbers game for service contract companies. They make big bucks and provide poor service. The average kitchen appliance nationally will break down ever 3.8 years and the average home owners warranty cost is $243.00 annually with a $100.00 / $50.00 per occurrence deductible. That comes out to $1023.40 per repair and the homeowner has to wait 1-3 weeks to get the repair done in most cases. The average appliance company can complete the repair for $196.00 with parts, labor & Tax. Then the customer gets same day or next day service from a reputable company of their choice. All of the warranty company’s including the utilities like the gas & electric company, sub contract appliance repair company’s to to their work. They pay the appliance repair company a fraction of the repair bill and beat them down on prices, so bad the get the bottom of the barrel contractors to do their work. So you can do the math $1023.40 for an average repair to get POOR service, or pay $196.00 for your repair on average and save $827.00 over 3.8 years . Then you can choose the company of your choose that has a good reputation in the industry. We get calls weekly on customers that have had service contracts for years and NEVER used it, then when they called for service they were told it would take 9 days for a no cool refrigerator. So they call us and we get out the same day and the customer gets NO REIMBURSEMENT from the contract company. Only their providers can service the products. We will not become a provider and discount our service rates by 50% or more. They call us every few weeks trying to convince us to become one of their contractors, no thanks. I hope this helps.
- AV Repair Help answered 8 years ago
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Thank you for your answer. I’m trying to follow the math in your example? Two questions. How did you come up with the amount of $1023.40 per repair? Where did you get the average appliance national break down? Your answer really got me thinking. You are absolutely correct when the customer has to wait 1-3 weeks. In my case, it was more like 2-4 weeks. Imagine being w/o a fridge for that amount of time? I got fed up with the irate and uninformed customers, that I quit. How do I convince my customers that it’s just not worth purchasing an extended warranty? With good statistics.
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If you pay $243.00 per year x 3.8 years = $923.40 Then with A $ 100.00 deductible = $1023.40 …. I found the 3.8 years in the USA ( United Services Association ) magazine in the July 2015 addition . Then Marcone magazine had the same article in the 2015 September addition , they did the same research and came up with 3.9 years,. So I went with the lower of the two so it would be on the safe side. If you support and do the work for the service contract sellers , you are only putting yourself out of a job. The more customers they get on contracts, the lower negotiated rates to service companies like us. Their have been some sates that the utility company’s have taken up to 40% of the homeowners on contract, then the appliance service company’s are forced to take a substantial discounted rate or they will have no work. These contract sellers provide horrible service to the homeowner. They do not care because by the time the homeowner needs to use their contract , the contract seller has made $1200.00 to $1500.00 of off that homeowner. When the customer gets upset and calls an independent appliance service company because they cant get a contractor out for 2-3 weeks, they love it and use the money made to scam new customers. That is why we absolutely will not support them.
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