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Lafayette, LA
BBB offers tips on Extended Warranties and Service Contracts
March 06, 2014

Special note from Better Business Bureau of Acadiana President/CEO Sharane Gott: The Better Business Bureau of Acadiana is celebrating National Consumer Protection Week through March 7. Each day, the BBB will release a special tip on a variety of consumer issues.

If you’re buying a car, electronic deviceor a major appliance, you may be offered the chance to buy an “extended warranty” or service contract. Both service contracts and warranties provide repair or maintenance for a specific length of time.

But there's an important difference: a warranty is included in the price of an item; a service contract costs extra.It's an add-on that might not be worth the price.

Some service contracts duplicate the warranty coverage that the manufacturer provides; some cover only part of the product; and some make it nearly impossible to get repairs when you need them.

Here are a few factors to consider before deciding to buy a service contract:

Is the Product Likely to Need Repairs?

You may not benefit from a service contract if the product isn’t likely to need repairs or if the potential cost of repairs is low. Check websites that offer information about products that are most likely to need expensive — or extensive — repairs.

When you're shopping, compare specific manufacturers and products.If you buy a reliable product from a company with a good reputation, a service contract might not be necessary.

Does the Service Contract Really Provide Extra Coverage?

Before considering a service contract, make sure you know what your warranty coverage is. Compare the warranty coverage to the service contract to see if there’s any benefit to additional coverage.

Accidental damage may not be covered. And there may be clauses that allow the company to deny coverage if, for example,you don’t follow their instructions for routine maintenance.

A service contract might cover specific parts of the product or specific repairs. If the terms don’t list a part or a function as specifically covered, assume that it’s not.

Keep in mind that you may have other expenses, like a deductible or a fee each time the item is serviced.

How Are Claims Handled?

Find out if the retailer or someone else takes care of the repairs. What’s the process for a claim? For example, wouldyou return the item to the store where you bought it?

If a local retailer or dealer offers the service contract, you may be able to get local service only.

Is There a Better Option?

Some consumer advocates suggest that people are better off skipping extended warranties, and putting the money they would’ve spent in a savings account. If you need repairs, you’ll have your savings to fall back on. And if you don’t need repairs, you’ll have a little extra money in the bank.

BBB of Acadiana works for a trustworthy marketplace by maintaining standards for truthful advertising, investigating and exposing fraud against consumers and businesses. Find information at bbb.org or call (337) 981-3497 around the clock for information on businesses throughout North America.

The BBB of Acadiana services the parishes of Acadia, Evangeline, Iberia, Lafayette, St.Martin, St. Landry and Vermilion.