The fear of spending hundreds of dollars (or more) to repair a broken electronic component is often enough motivation to buy an extended warranty. But it's not always necessary. Here's a few rules I apply when considering extended warranties on a stereo component or system.
Does the Product have Moving Parts or is it Delicate?If the product has moving parts, or is delicate (DVD players, laptop computers, etc.) and is expensive to repair, I would consider the warranty depending on price. Mechanical items are more susceptible to wear and tear and are often expensive to repair. DVD players have a mechanical transport and motors to rotate the disc and operate the disc drawer while laptop computers can suffer screen damage. Compare the price of the warranty with the cost of repair or replacement before purchasing the additional coverage. Also consider how long you will own the product.
Is the Product Based on New, Unproven Technology?If the product is a relatively new technology, such as flat-screen television, I would consider the warranty based on price and coverage offered. Flat-screen TVs have become significantly more reliable since their introduction, but suffered from reliability problems when first offered. Before buying the warranty, inquire about coverage for issues such as 'burn-in', which can occur if the same image is left on the screen for an extended period of time. Read a thorough description of coverage before buying.
Is In-Home Service Provided?If the item is large or heavy and requires installation, such as a projection TV or wall-mounted flat-screen TV, I would consider the warranty if in-home service or pick-up and return is included. These products are too heavy to consider moving yourself, and you might do more damage or risk personal injury by trying.
Electronic Items and Speakers Don't Need CoverageOther products including receivers, amplifiers, speakers and similar electronic components are generally very reliable and if they are defective will probably fail soon after purchase, which may entitle you to an exchange. Also, consider the cost of replacing the product compared to the cost of the extended warranty. It may be cheaper to buy a new one if it breaks than to pay the additional cost of an extended warranty. The conclusion is that extended warranties are always profitable for the dealer, but not always for the customer, so consider them carefully.