Alternatives to Costly In-Store Warranties

You’ve just spent big dollars on a new iPhone. Maybe you shelled out hundreds of bucks to purchase a new laptop or the latest iPod. You want protection should your high-cost gadgets fail. But is the extended warranty (offered in addition to the manufacturer’s warranty) — that your local retailer provides your best bet?

The answer, often, is a resounding “no.”

Today’s saavy consumers are eyeing third-party warranty providers as a way to get extra protection for their electronics and other purchases without the extra costs of  in-store warranties.

Third-party warranty providers offer protection for pricey computers, smartphones and music players. Yes, you’ll have to pay for one of these warranties – but often you’ll pay less than what you would for a warranty from your local Target, Best Buy or Wal-Mart.

A Look at Some Popular Third-Party Warranty Providers:

SquareTrade: If you’re leery of the pressure that stores like Sears or Best Buy place on you to pay for their extended warranties after you’ve purchased a computer, tv or smartphone, you should know that you have alternatives – such as SquareTrade.

SquareTrade, which has been in business since 1999, provides its own warranties (that tend to run about 40% less than the extended warranties offered by major retailers).

For instance, a three-year warranty on the Flip Video UltraHD Camcorder runs $19.99. Best Buy offers a two-year warranty on the same product for $22.98. You can take out a three-year warranty on the Brother All-in-One Laster Printer from SquareTrade for $32.99. A four-year warranty on the printer from Best Buy costs $69.99.

But price isn’t the only benefit SquareTrade offers; there’s also online record-keeping. Once you take out a warranty with SquareTrade, you can always log onto your online account to see if that product is still covered. So if your dishwasher starts spilling water across your kitchen floor, you can log onto SquareTrade to see if your warranty is still in effect.

ElectronicWarranty.com: SquareTrade isn’t the only third-party warranty provider on the market. There’s also ElectronicWarranty.com, a third-party site that, as its name suggests, specializes in providing warranties for electronics. If you’re in the market for a new video camera, smartphone or laptop, ElectronicWarranty might be a site to investigate.

The warranties offered on this site can save you as much as 70% when compared to in-store warranties.

When you log onto ElectronicWarranty.com, you can request a free quote on video games, car audio and stereo systems, iPods and a host of other electronic equipment. The site recently offered a three-year warranty on an HP Touch Smart Desktop for $112.99. That compares with Best Buy’s three-year warranty for the same product at $329.99.

American Express Extended Warranty: If you own an American Express card, you can double the original manufacturer’s warranty on any product that you purchase with it. For example, if you use your card to purchase a laptop that comes with a two-year warranty, American Express Extended Warranty will automatically increase that warranty to one lasting four years.

The best news is that you don’t have to do anything to activate your extended warranty coverage. It’s a basic feature for any American Express cardholder.

Picking the Right Warranty:

The key to selecting the right third-party warranty service is to look carefully at their terms. That cheap three-year warranty on your new desktop computer may look great, but if it doesn’t cover the damage that your toddler does to it after spilling orange juice on its keyboard, then it’s not worth the money you’ve spent on it.

In-store extended warranties have a generally bad reputation. Critics complain that they’re too costly for the amount of money you’ll spend. Others say that consumers have the bad habit of forgetting that they’ve paid for these services when their computers, TVs and car stereo systems fail.

One way to protect yourself from paying too much for an extended warranty is to never make a warranty decision in the store when you’re purchasing your items.

Instead, do some research from your home. The odds are good that you’ll be able to find an extended warranty that costs less and offers the same or a better level of protection.

Dan Rafter is a freelance writer and editor with 15 years of journalism experience. Dan blogs via Contently.com.