Avoid Home Appliance Warranties

Home appliance warranty companies are out in full force with television and social media ads. They use fear of a large repair bill to get you to buy an insurance policy that will cover these repairs. The bottom line is, it's basically a bad financial decision to buy these programs.

First, for the most part, they do not provide service. They are not even responsible for finding a service technician when you have a problem! They'll reimburse you (if you're lucky) for the repairs you need to make by hiring a provider.

Second, there are a plethora of exceptions from coverage, and almost always have a co-pay or deductible.

Third, if you buy quality appliances and skip the warranty, you will likely save in the long run. The statistically most unreliable appliances are professional gas ranges and refrigerators, so spend a bit more on those. Some companies offer extended warranties when you buy, which are cheaper and often better service than the generic appliance warranty providers (make sure the company ITSELF services the product). Many appliances, such as microwaves, grills, and disposers do not require a warranty because they require service less than 5% of the time, so statically it's a loss to pay for insurance for these items.Finally, consider the cost vs. benefit. If you pay $200 a year for 10 years, will the $2,000 be recouped on a failed appliance? The odds are against it, which is why these companies will sell you the warranty! You have to assume they have an army of statisticians and actuaries figuring out the risk of a claim and have thus concluded they will profit more often than not. Thus, like a Casino, "The house always wins".

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