Recently, I was contacted by someone who read one of my old ezines (from 2005) posted on my website. She took the time to write, so I decided to repost my ezine here with her different perspective added below it:
 From September 2005:
Do you want an extended warranty with that?
I had been thinking about getting a laptop (notebook) for nearly 2 years and finally I could justify the purchase. I researched the issue, saw a “good deal,” and checked it out. After sleeping on it for a couple of nights, I was ready to buy.
I chose the accessories carefully: compact mouse, flash drive, and a padded notebook carrier. When the helpful sales associate was inputting my order, I was anticipating his question: “Would you like an extended warranty with that?” I gave him a firm “no.”
I don’t remember the exact figures, but there were at least 3 choices of different years and dollar amount combinations. You’ve been there, and don’t you get the idea that you have to make the decision right there and then?
With car rental companies, I give them an automatic “no” to decline all of the extra insurance they offer even though I’ve been threatened with “you’ll owe us the money, not your insurance company,” and “don’t forget how large your deductible is.” I’m thinking that an extended warranty is a form of insurance anyway, isn’t it?
The last time we bought a TV, we researched the issue like we were buying a car. They are that complicated these days, and there are so many choices. Out of fear we bought the maximum amount of extended warranty. When we had a problem with the TV, what we needed wasn’t covered by the extended warranty, but had to be handled by the manufacturer. It got me wondering what was actually covered by the warranty anyway. But I digress…back to the notebook.
Why did I say “no” to the extended warranty with such confidence? I’m not confident, really; I’m taking a calculated risk that makes financial sense and here’s why:
1. Extended warranties are how retailers make their money.
2. I have a manufacturer’s warranty for 1 year.
3. This is a spare computer so I don’t need the loaner that retailer is offering (and charging me for).
4. I wasn’t comfortable that the retailer, rather than the manufacturer, was going to do the repairs. If they could do it, couldn’t anyone?
Now let’s do some math. What do we think that the chances are that I will need to have this notebook professionally repaired (out of house) in the next 3 years (my estimation of its useful life)? Being conservative, let’s say 20%. And let’s say that the repair will cost $250 (25% of the cost of the notebook).
With a 20% chance of a $250 repair, the amount that I should be willing to pay for insurance (a.k.a. extended warranty) is $50 (.20 x $250 = $50). The retailer was going to charge about $185 for a 3 year warranty. I wasn’t willing to pay that much.
I figure that I’ve saved myself a lot of headaches, too, by not having to battle with the warranty company when whatever is wrong with my notebook is not covered for some reason. I’m on my own, and I know it. Maybe I’ll regret it for one product or another, but over time, I will save money.
And knowing that there isn’t an extended warranty with this notebook, I’m taking VERY GOOD care of my notebook.
 Comment from Lynn G. May 2007:
I was reading your Ezines and had to comment on this article, as I normally don’t comment on other people’s thoughts.  On computers, I think an extended warranty is worth the cost.  I have had a number of laptops that I had an extended warranty where the motherboard went before the 3 years were up.  Due to the costs of motherboards being more than the computer itself, the computer was replaced. Under the majority of extended warranties the computer will be replaced before repairing it.  I have found this most beneficial because if you get the computer replaced you end up getting the most up to date computer with ALL the up to date programs, plus all the new bells and whistles.  The only advice is whenever taking in for repair, ALWAYS backup your files and in particular the PST (Outlook) or email data.  The best I have found out there for an extended warranty is with Best Buy.  This is JMHO.
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