Q. What happens to my extended warranty if the store where I purchased it goes out of business?
A. In most cases, you'll still be covered because extended warranties are typically provided by third-party companies. But before you agree to buy that extra protection, read the actual contract. You'll want to see who is the service provider and investigate that company's reputation through an online search. You'll also want to check the fine print for limits and exclusions on coverage.
Consumer Reports and other expert sources say that extended warranties are usually not worth their cost. They are heavily promoted by retailers because stores typically keep 50 percent or more of the warranty's cost, often a higher profit margin than they make selling the covered product.
Here are the realities: Products seldom break down within the extended-warranty window, and when they do, the repair typically costs about as much, or less, than the price of an extended warranty.
A better approach: Before shopping, check with your credit card issuer. For purchases made with plastic, many provide free extended warranty coverage for up to a year beyond the original manufacturer's warranty. And if a product fails not long after the original warranty has expired, try approaching the retailer or manufacturer for a replacement. Ask for the manager, stress that you're a good customer and ask whether something can be done for you.
Sid Kirchheimer writes about health and consumer issues. Have a question for Sid Kirchheimer about a new product, a new kind of bank account? Check out the Ask Sid archive. If you don’t find your answer there, send a query.