To Buy Or Not To Buy: The 'Protection Plan' Conundrum

A wasteland of appliances. i i

Wasteland: Consumer advocates say appliances break down more frequently than cameras and camcorders. iStockphoto.com hide caption

itoggle caption iStockphoto.com
A wasteland of appliances.

Wasteland: Consumer advocates say appliances break down more frequently than cameras and camcorders.

iStockphoto.com

Why is it that when we shell out big bucks for state-of-the art products we get lured into agreeing to a multi-hundred-dollar service agreements? Buy an Apple product online and a suggested $300 protection plan also appears in your basket.

It's a point of contention for me right now, because I have to shell out loads of cash to replace a broken computer. So on the new one, do I buy the plan or not? My appliances go on the fritz often and they are a mere four years old. I have shelled out more than I wanted for product insurance, but what gives?

Is the extra 300 bucks — in product insurance — worth the peace of mind?

In a recent New York Times article the pros and cons of "Warranty Psychology" are debated.

Turns out washers, dryers and refrigerators break down more frequently than cameras, camcorders and laptops. The article says most consumer advocates advise passing up on all the warranties.

Just before Thanksgiving, Consumer Reports warned consumers against purchasing extended service plans.

CNET has posted its warning too. In fact, CNET states a warranty is rarely a good idea:

Laptops need service about 43 percent of the time after 3 or 4 years, desktops 31 percent, while camcorders and digital cameras very rarely, about 13 percent and 10 percent of the time, respectively. Three to four years is also a really long time when it comes to technology now. And as the cost of laptops and desktops, for example, continue to decline, sometimes the cost of replacing the device isn't that much more than getting it repaired.

N.E.W. Customer Service Companies is a leading provider of these service agreements — claiming to provide coverage to some 150 million consumers. N.E.W. wants to set the record straight. In their Savvy Shopper blog Jamie Breneman, N.E.W.'s marketing director, writes:

There are many benefits of protection that often go untold and even more myths that continue to be repeated throughout the media that are simply untrue. ...
In today's portable environment, consumers who own products such as MP3 players, laptop computers, cell phones and digital cameras really benefit from this type of coverage. Additionally, service plans give the consumer an added level of protection through a 'no lemon' clause, which replaces products that require multiple repairs for the same failure.

I decided to pass on the extended warranty for my new laptop. But whether "for" or "against," there's a question that still nags me: Doesn't it really come down to the fact that our purchases just don't seem to last as long? What ever happened to the idea that a company stands behind its product?

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