Extended Warranties – Service Contracts – Q & A

Q.  I recently purchased a washer-dryer at a local dealer in town. The price was reasonable but the salesperson persuaded me to purchase an extended warranty/service contract on the product covering me for both parts and labor for an additional two years. I reluctantly agreed to purchase the extended warranty but now I want to cancel the service agreement. It’s been about three months and nothing has gone wrong with the product. What are my legal rights?

A.  Extended warranties or as they are sometimes called service agreements, are purchased separately from the product. The benefit of these kinds of agreements is that if something goes wrong with the product, your initial investment is still protected.

Under most circumstances, and depending on your specific state’s warranty and consumer protection laws, as a general rule, a consumer may cancel an extended contract in writing within 30 days of purchase for a full refund.

In truth, many retail appliance dealers, especially the large ones, strongly encourage their customers to purchase extended warranties when making their original purchase. These appliance dealers make big money selling extended warranties. Sometimes they make more on the sale of the extended warranty then they do on their product. Also consider that most products these days last for years before requiring any repair service whatsoever.

We believe that “service contracts” and “extended warranties” will likely add hundreds to your purchase price but are rarely worth the cost. You might wish to consider asking the applianc dealer the following questions.

Will the dealer you purchased your washer-dryer from sell the your service contract to an independent contractor?

Ask the appliance dealer whether the extended warranty  covers only certain parts of the washer-dryer or will it cover the entire product?

Ask what happens if the company you purchased the extended warranty from goes out of business?  Who will back the extended service agreement? Also consider if you will be required to obtain prior authorization before your repair work can be performed.

Finally, find out whether there are exclusions from the extended warranty coverage and under what circumstances would such exclusions apply.  If possible, it may be worth it to you to read the extended warranty before making the purchase.

 

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