Is The Extended Warranty Worth It?

You ever go to check out your shopping cart with an online order and get a pop-up asking if you want to buy the extended warranty?

“On this $20 item?? Nah, I think I’ll be alright…” – Savvy Solo

“I might need to protect this investment of $20…” – Scarcity Mindset

The number of times I have been offered an extended warranty on small ticket items in the past few years is astounding. Have you ever dealt with a warranty company of any kind before? They aren’t fun to deal with. There’s almost no chance I would go through the hassle of the warranty process just to replace something worth less than $100, it’s just not worth the time and frustration. That’s if I even remember that I had bought the warranty to begin with.

Fair enough, but what about the bigger ticket items?

Let’s explore some areas where extended warranties are the most popular and see if they make sense.

Let’s take a look at this fancy 77″ smart TV by LG. It’s offering a $249.99 “3-Year Additional Protection” plan:

Looks like it offers some type of surge protector plan, which is hilarious. Surge protectors cost $5 – $10 if you don’t already have one. So, let’s discuss the “repair/replace promise.” According to smarttvclub.com, there could be several issues to repair with a newer smart TV. Most of these include: connection issues, display/sound issues, or potentially power issues. Any of these basic problems would be noticeable immediately after purchase and thus would be covered by the manufacturer warranty that automatically comes with.

What about problems that occur down the road? Occasionally these TVs might run into memory limitations, or experience display/sound issues after the manufacturer’s warranty runs out. Without accusing any particular brand of foul play 👀, often times the TV just needs a hard factory reset which is a simple enough task for the average person. Sometimes it might be as extreme as replacing a TV bulb, which in all honesty is easy enough and costs $10-$50 depending on the type of TV.

In over your head on fixing the problem? Homeguide.com reports that the average cost of hiring a technician to fix your TV is $225. The more expensive fixes involve water damage or glass damage, which wouldn’t be covered by this extended warranty anyway. This would mean that you would need to hire technicians on TWO separate occasions in this 3-year span to fix your TV for the warranty to actually be to your benefit. Chances of this happening are minimal, and if they do, reach out to the manufacturer and see if they can assist before you take matters to social media 🤪.

How about computers? I found this little “offer” on the HP website:

According to Homeguide.com, the average computer repair cost is $65. So, for this to make sense, your computer would have to be serviced FOUR times in THREE years! Again, if that actually were to happen, most of the time a decent manufacturer will be able to assist if addressed properly. This one is actually offering accidental damage protection as well. I’ve personally never had a computer screen break on me, but it looks like that may cost around $150. Can you go 3 years without breaking your laptop screen twice? I sure hope so!

Let’s say we are looking to purchase this GE bottom freezer fridge. This bad boy is currently on sale for $1,498.97; and the website directed me to a local retailer P.C. Richard & Son.

Homeguide.com reports that the average cost of repairing a refrigerator is $300, with the compressor being the major swing on this average (roughly $700 – $1,250). So initially this looks like a pretty sweet deal! That is until you dig into some of the details. The manufacturer’s warranty by GE covers 5 years from the date of purchase, which is included at no extra charge:

The warranty that P.C. Richard & Son is offering also begins at the date of purchase. So, what are you really buying? The opportunity to call P.C. Richards with a problem instead of GE I guess. Not to mention, the average life of a refrigerator is over 10 years, so chances that you’ll utilize even the free warranty is very minimal. If you decide to buy that 8-year plan it would only make sense if the compressor goes out once, or you have a different type of service needed TWICE in the window of 5-8 years after purchase. I’m not sure about you, but I’m going to risk it.

What about washer and dryer? Let’s hop on over to Whirlpool and check this out. Here’s what we are looking at for a matching washer/dryer:

Keep in mind that you would have to purchase a separate warranty for both the washer and the dryer. Homeguide.com is showing an average of $200 for washing machine repair, and an average of $200 for dryer repair. These warranties begin after the manufacturer warranty ends, so it might make sense initially. The problem with this to me is that the issue must occur in the window of the warranty period. The manufacturer’s warranty looks to be 5 years. What are the chances this thing conks out at year 6 but before year 7? Next to none?

Also, my personal history with washers and dryers is that the fixes are all relatively simple to do yourself. The parts cost a few bucks, all you usually need is some basic tools and a YouTube video. In the case that it’s out of warranty, and no recalls are on the unit (this is absolutely worth checking), save a few bucks all around and give it a shot to fix it yourself. Worst case scenario is you’ll have to buy a new unit, which you were about to do anyway 🤪.

This one tends to get a little dicey. Of course, each make of vehicle is going to offer their own manufacturer’s warranty that comes with the purchase of the vehicle. This is worth keeping in mind when looking at the different brands. The real question here is whether or not to go after the extended warranty. A lot of times, these can be clear as mud.

Now typically these extended warranties are negotiated with the dealership, so exact costs of them are not displayed on any websites. Forbes actually did a comprehensive piece that outlines these extended warranties with one of my favorite brands Honda:

Let’s say we are looking at a Honda Civic and considering the 5 years / 120k miles protection plan. This extended warranty covers just about anything engine related, including a small level of rental car reimbursement if needed. It doesn’t cover anything cosmetic, or any damage inflicted due to negligence of standard maintenance (oil changes, fluid levels, wheel alignment, etc.).

The big expense that might hit is transmission failure. The average cost for a Honda Civic might cost up to $5k in parts and labor alone 😬. Another issue that might pop up is the radiator. That can range anywhere from $765 – $1800 on parts and labor depending on the issue 😶. In either of these cases, getting that extended warranty is worth it.

How is Honda offering such a warranty for so cheap? Well, JD Power currently rates the Honda Civic at 82/100 on quality & reliability and also rates it as the #2 “Best Compact Car of 2025.” Essentially, the warranty is priced so low because nobody is actually using it. Honda and Toyota are both known for long lasting reliable vehicles, along with more affordable parts to fix issues, so the manufacturer is still winning despite the lower price.

All of that being said, if purchasing an extended warranty on your vehicle is going to give you peace of mind, and help you sleep better at night, then do it. You’ll want to make sure that the warranty itself is indeed from the manufacturer. If the dealership you are working with doesn’t explicitly say “manufacturer’s warranty” then they are trying to sucker you into a 3rd party warranty, which brings us to our next topic.

I’m not going to call any particular companies out, but you have probably seen these advertised all over the place. The most popular being Home Warranty or Car Warranty outfits, but there are warranty companies out there that will cover jewelry, furniture, collectibles, or really anything you can think of! The truth is these are almost never worth the cost.

According to Warranty Week, the average payback for purchasing a warranty is 1.5%! This means that, on average, if you spend $10 on a warranty you can generally expect to get 15 cents of value from it. 😬 It should come as no surprise that these companies are out to make a profit, and they aren’t going to succeed in doing so by making your life easy.

Story Time with Uncle Bill

I once purchased a vehicle from a used car dealership. No, this wasn’t one of those shady “buy here, pay here” type of places. It’s a nationally known used car dealership that at the time (back in 2016) had won awards of all kinds for their customer service and affordability. They offered an in-house warranty that would cover just about anything bumper to bumper on the vehicle; the warranty would cover any work that needed to be done (either at this dealership or any manufacturer’s dealership), and a rental car for the time it took to get repairs done. I gladly took it without digging too far into the details, or (I’m ashamed to say) without looking at the cost of it.

Almost immediately after purchase the heat in the vehicle stopped working. No problem, it’s covered by the warranty, right? Well, this dealership couldn’t see my car for the next two weeks, and no manufacturers dealership could look at it for at least a month. Since the rental car part of the warranty could only last one week, I ended up driving a car without heat in the winter for two weeks. It was frustrating, but technically when they actually were able to service the vehicle, I did get a rental car for that week, and they fixed the problem at no cost to me. Fair enough.

Years later, I’m living in a new land without one of these dealerships within 100 miles of where I live. Unfortunately, the radiator completely went out on me. No problem, its covered by the warranty, right? I bring it to the nearest manufacturer’s dealerships and luckily, they can take a look at it the next business day. After some back and forth with the warranty company, I got the rental car for a week. A few days later I get a call from the dealership that the warranty company is shorting them the real cost of the radiator. I call up the warranty company and they claimed the dealership was over charging on the parts and labor for service provided. The back-and-forth phone calls I made between the dealership and warranty company was a nightmare for days. Eventually I got frustrated enough and folded. I ended up paying $200 out of my own pocket to get my car back. This is exactly what the warranty company, and the dealership, wanted.

Story Time #2 with Uncle Bill

Many moons ago I worked for a place that sold many things, including water heaters. One day a contractor I didn’t recognize was asking about an order through a home warranty company about a water heater for a specific address. I searched the system and found the order, but it was on a hard shipping hold. We needed to get payment from the home warranty company before shipping it out. Naturally I called this company to get payment/authorization to ship the order and they were unwilling to do so “at this time.”

Every day, for two weeks, this contractor would check with me to see where this order was at; and every day, for two weeks, I couldn’t get authorization from the company to ship out that dang water heater. Eventually the homeowner was calling me directly freaking out that they hadn’t had hot water in their house for almost a month! Unfortunately, they would need to take it up with the warranty company, there was nothing I could do.

Now, I don’t know exactly what the holdup was for the warranty company to ship out this water heater, but this house went without hot water for weeks before it even reached my attention! I’d be willing to bet, this was just another case of a warranty company giving their customer the ol’ rigamarole to see if they would crack and buy the thing on their own.

In the vast majority of cases, purchasing an extended warranty is never worth it. Instead of paying some company to have your best interest at heart (they won’t), why not build that security blanket to warranty these things yourself?

This is why I stress the Savvy Solo to build up that car fund within the bucket savings account. You can use this car fund on your next vehicle, but also on repairs on your current vehicle along the way. If repairs on said vehicle exceed what you have saved in this fund, you can utilize the emergency fund for now and work to rebuild it moving forward.

If your current savings isn’t currently enough to cover the cost of necessary house repairs (i.e. water heater replacement, fridge on the fritz, etc.), don’t freak out! It just means you aren’t done allocating some % of your freedom $ towards savings yet. In times of emergencies, it’s a far better plan to borrow from yourself than a company or bank that’s going to charge you interest.

The only possible exception for extended warranties to make sense (at least to me) is with a newer vehicle purchase. In which case the Savvy Solo really needs to triple check that the warranty they are receiving is directly from the manufacturer. Even then, you should only do it if it makes you sleep better at night. All of these 3rd party warranty companies are out to make a profit based on your frustration, so why bother giving them your business?

Stay classy Solos! ✌️