Extended appliance warranty???

So we had to get a new fridge. I was hoping our craptastic one would make it a few more months, no such luck.

Ran around today looking at fridges, found one, bought it. Now I have a question.

I had always been told on tools that getting the extended warranty was a scam, is that the same for large appliances?

For this fridge it has a 1 year factory warranty. The extended warranty is 3 years for $350.

If it matters fridge is a Samsung purchased from Sears.

all I can say.. "durable goods" are not so durable anymore

How much is the fridge?

I am trying to remember if it was a conversation here, or with one of my engineering co-workers, but...

Basically, equipment failure rates (of any equipment) is an exponential decaying curve. Most failures are infant mortality type ie: never make it past being turned on/started due to defects from being made.

Any "problems" due to manufacturing usually kill equipment in short order, as they obviously aren't meant to operate with those defects. At that point, it basically comes down to random chance at which point a piece of equipment will die.

In short, ANY extended warranties are a ripoff (sans some warranties on well known unreliable car manufacturers, but even then...). One local store gives you an instore credit for your extended warranty to purchase new items if you haven't used it by the time the warranty has expired. That is a pretty legitimate way of doing things, but the reason why you are offered these warranties is because it makes the seller MONEY. Its better for them, not for you.

I've never had a piece of residential equipment fail, and if I have, I take it back and get a new one (if it is within the factory warranty). If not? Throw it in the gutta, and go buy anotha. You have to pay to play, but there is no point in needlessly throwing money at the person playing you.

My 5 cents ;)

Hi HiTempguy,

FWIW, there are actually three components that make up a reliability distribution…infant mortality, random failure, and end of life. These three components taken in aggregate typically form a “bath tub” shaped distribution with the majority of failures occurring early or late in an item’s life cycle leaving a relatively low rate of failure in the middle. We quantify the bath tub distribution using something called Weibull analysis which produces what is known as a Beta value. Beta’s < 1 indicate high infant mortality, Beta’s > 1 indicate high EOL failure.

I teach advanced engineering statistics and provide reliability analysis demonstrations by using a power supply to overload a bank of twelve light bulbs. Once a few have failed, I lead my students through the Weibull analysis process to predict when the remaining bulbs will fail. I’ve done this many times and it’s surprising how accurate the predictions tend to be.

Hi octavious,

All insurance premiums consist of three components, expecting payout, administrative costs, and profit. Assuming the people that estimated the expected payout have burnt up a few light bulbs themselves to get good at making predictions, you’re likely to spend more on the insurance than you will receive in benefits.

Bottom line, you should only buy insurance on things that would impose a big hardship to replace. This is anecdotal but my understanding is that appliance insurance typically has a ridiculously high profit margin making the cost / benefit ratio really bad.

I spent 14 years in the cell phone industry. I personally pass on the extended warranties of electronics and appliances.

The retailers make a large profit off extended warranties. How large? Well, as anecdotal evidence, the Best Buy employees are quick to point out that they don't work on commission. This statement is made to make you feel confident in their advise. What they don't tell you is that if they do not sell enough extended warranties then they will get fired.

I do agree that extended warranties are in general a scam. Nevertheless, I recently had a $900 Kitchenaid diswasher crap out on me after about 18 months. When I bought my new 50" LCD TV, I spent the $49 for a 4-year warranty from Sam's. YMMV.

Logically, a "solid state" appliance like a TV should last a reasonable lifespan if it survives initial powerup. Electro-mechanical items like dishwashers, washers, and dryers, not so much, and I would consider a reasonably-priced extended warranty on those.

I'm convinced that 90% of the so-called "durable goods" you can buy today are total crap designed to last the warranty period and spontaneously self-destruct.

I usually pass on extended warranties. Experience has been that appliances usually fail within the factory warranty period or last until we are tired off them and ready to replace them anyhow.

Two years ago we bought a new refrigerator and the wife insisted on getting the extended warranty (persuasive salesperson). This past summer a neighbors tree fell on and shorted out the power line (blew the transformer that serves several houses). The only problem we had was that the fancy computer controls on the fridge went out. Repairs would have cost more than the cost of the extended warranty. Guess it's one of those "you don't need it till you need it" kind of situations.