Should You Purchase an Extended Service Contract? Can You Afford Not To?

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The holidays are the time of year when consumers purchase TVs, digital cameras and other merchandise that can be protected through extended service plans. Assurant Solutions, a leading global provider of extended protection services, says deciding to buy such protection often depends on your personal finances and whether you can pay out of pocket for an unexpected major repair or a replacement.

Terms and benefits of service plans vary by product and the retailers through which plans are sold. If you decide to purchase a service plan, make sure that the plan that you purchase addresses your specific needs.

If your TV, digital camera or laptop needed immediate repairs or replacement, could you afford the cost? According to Assurant Solutions, that should be one of the questions when considering whether to purchase an extended warranty or extended service contract.

“If paying out of pocket for a major repair would strain your finances, you have a good reason to consider purchasing the extra protection,” said Joe Erdeman, president of Assurant Solutions’ extended protection services business.

The holidays are the time of year when consumers purchase TVs, digital cameras and other merchandise that can be protected through extended service plans. However, if an item stops working a year or so later – after the manufacturer’s warranty expires – and there is no extended service plan, who is going to pay the repair bill?

An extended service contract typically increases the total cost of a covered item by about 10 to15 percent, depending on the length of the contract and the benefits provided. Some plans cover accidental damage and will replace the merchandise or refund the purchase price if an item cannot be repaired at a reasonable cost.

Assurant Solutions, part of Assurant, Inc. (NYSE: AIZ), is a leading global provider of extended service contracts and related services. The company regularly monitors the cost of repairing consumer electronics and appliances through its vast network of service providers.

The following are two examples of what consumers can expect to pay an independent servicer – parts and labor – for some typical electronics repair costs:

  •     LCD/Plasma TV (42-inch model, initial purchase price $1,000) repair costs: LCD/plasma panel, $800-$1,000. Power supply circuit board, $398. Signal board, $467. Tuning system, $395.
  •     Digital Camera (SLR model, initial purchase price $450) repair costs: Lens assembly, $285. LCD display, $215. L.C. Chip (CCD device), $250. Printed circuit board, $305.

Erdeman said repair and replacement costs should be a major portion of the consumer’s decision of whether an extended service contract is a prudent investment. “If properly cared for and maintained, most home appliances, TVs and other consumer electronics will provide their owners many years of useful service and/or entertainment,” he said.

Other considerations in deciding whether to purchase a service plan:

  •     Where will you go for reliable repairs? (Service plans offer easy access to qualified service providers.)
  • How will I use my product? (Portable items have a higher propensity for damage.)
  • How long can I afford to be without the use of a product? (Again, easy access to service providers is a primary benefit of a service plan.)
  • How long do I plan to use the product? (Major appliances can last 10 or more years if properly maintained.)

“Terms and benefits of service plans vary by product and the retailers through which plans are sold,” Erdeman said. “If you decide to purchase a service plan, make sure that the plan that you purchase addresses your specific needs.”

About Assurant Solutions
Assurant Solutions businesses develop, underwrite, market and administer specialty insurance, extended service contracts and other risk management solutions through collaborative relationships with leading financial institutions, retailers, manufacturers, automobile dealers, funeral homes, utilities and other entities. With operations in 24 cities, including executive offices in Atlanta, Ga., Assurant Solutions serves clients and their customers in 12 countries throughout North America, the Caribbean, Latin America, Europe and Asia. http://www.assurantsolutions.com

Assurant Solutions is part of Assurant, a premier provider of specialized insurance products and related services in North American and selected international markets. Assurant, a Fortune 500 company and a member of the S&P 500, trades on the New York Stock Exchange under the symbol AIZ. Assurant has over $25 billion in assets and $8 billion in annual revenue. http://www.assurant.com

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