Dave Taylor

Q: I just bought a new PC at a big box store and the company is telling me that I should also buy its extended service warranty. But I’m skeptical, are those warranties actually a good deal?

A: I’ll slightly misquote the iconic Clint Eastwood line out of the gritty 70’s film “Dirty Harry”: “Do ya feel lucky?”

Like any form of insurance, extended service warranties are a gamble, a bet that your car, appliance, smartphone, or computer is going to fail or break down. If it does, you win, and you get the damage covered by the warranty.

If your device survives the duration of the warranty without a problem, then you also win because it never broke, but lose vis-a-vis the money you spent on that warranty.

I have two great examples: My son’s extended warranty on his iPhone and my AppleCare+ warranty for my MacBook Pro.

Like every cellphone carrier, AT&T offers a $15 per month warranty against damage and other problems with your phone. My son’s had his iPhone for about a year, during which time he’s had a single claim: A broken screen. It was a $150 repair, of which he only paid $30. Now we can do the math: 10 months at $15 = $150 versus a $120 credit against his repair. Net result? -$30.

My 2019 MacBook Pro is a more interesting example since the costs are higher. The battery failed so I took it in to Apple for a replacement. The quote? $678 + tax. Since my computer is more than a year old, the purchase warranty had expired, but my AppleCare+ covered the repair.

My fully configured Apple MacBook Pro originally cost (you might want to sit down for this) $3,199. AppleCare+, offering two additional years of warranty, was a relatively modest $379 add-on. Almost exactly the same price as the AT&T iPhone warranty, which would cost $360 for two years of coverage.

With the MacBook, it’s a clear win. While my son might not be ahead ten months into his AT&T service warranty, I definitely am, paying $379 in advance to have a $678 repair bill covered.

The house always wins

To some extent it’s similar to people who head to a swanky Las Vegas casino, convinced they can beat the house. But the house always wins because otherwise how would it pay for the casino? In the same way, extended service warranties are ultimately a profit center for the issuing companies. They don’t lose money in the aggregate.

Should you buy one? It’s all about your estimation of whether the product might fail during the extended warranty period. TVs? Probably not, they’re incredibly well made and have almost no moving parts. Phones, especially for teenagers? Yeah, that might be smart. That new computer you bought? Depends on whether it’s for watching Netflix while in bed or a workhorse you’ll tote around the world as part of your job.

Dave Taylor has been involved with the online world since the early days of the Internet. He runs the popular AskDaveTaylor.com tech help site. You can also find his gadget reviews on YouTube and chat with him on Twitter, too.