A few weeks ago, a tree company dropped a limb on the power line to our house and sent a massive surge through our house. The surge blew out almost all of our appliances and a few small electronics. So we had to buy all new appliances (thankfully, the tree company's insurance paid for most of the damage).



When you buy electronics these days, regardless of size or cost, the salesperson always asks if you want to purchase an extended warranty. So we listened to sales pitch after sales pitch in our quest to fix our kitchen. Thanks to shorter manufacturers' warranties, the offerings seem like a smart move. But buyer beware! While a few of the warranties are worthwhile, most of them are a waste of money. Here's how to tell which ones to buy and which ones to avoid at all costs.

First of all, remember that the sales staff is paid to play on your fear of the worst-case scenario. Such scenarios do happen, but they're so rare that placing a large bet that they will happen (which is essentially what an extended warranty is) is not a wise use of resources. Heeding Jesus' warning to not worry can definitely save you some money here. Over time, and considering all warranty payouts for repairs and replacements, you'd typically spend a lot less money if you never bought an extended warranty than if you always bought one.

Make your decision to buy a warranty based on rational thinking, not the emotions that come up when you hear the sales pitch. The electronic components of a product almost never break (unless they're hit by a power surge, as we found out). So if you're buying something that is primarily made up of these components (which includes most warranted products), save your money. The chances it will break are almost nil.

When most products fail, it's a moving part that's worn out. This can include a motor, a belt, an icemaker or dispenser, or a turntable in a microwave. Beyond that, there just aren't too many gadgets with a lot of moving parts. This should tell you that the chances of having a problem are really small. And the cost to fix these parts if they do fail is rarely more expensive than the cost of a warranty.

Products such as ovens, stoves, freezers, most refrigerators, stereos, and digital cameras have almost no moving parts. So a warranty is pretty much worthless. And it's better to replace anything that costs less than $300 than to pay for a warranty. Most microwaves, for instance, are cheaper to replace than to repair or insure.

There are exceptions to every rule. So we can't say that you shouldn't ever buy warranties. Plasma TVs, for instance, typically have a lifespan of about 10,000 hours (though that's improving, I understand). If you watch as much TV as most Americans, then you'll want to buy the extended warranty (or watch less TV). This goes for some of the really high-end rear-projection TVs now on the market as well.

Laptop computers are another exception -- especially if you carry them around a lot (isn't that why you buy a laptop?). Unlike desktops, laptops tend to break more frequently. Every laptop I've owned has needed a service call within the warranty period. But none of my desktops have ever needed service.

But if you still want to buy an extended warranty, look for the ones straight from the manufacturer. They tend to be cheaper and more comprehensive.