The truth about extended warranties

An extended warranty is insurance. Like all insurance, it is priced so the seller wins on average. The question is whether you are the average.

It can make sense on products with high repair costs and known failure rates, when the plan covers accidental damage, and when a failure would be a real hardship. It rarely makes sense on inexpensive products, on anything with a strong manufacturer warranty, or when your credit card already extends coverage — many do, automatically, by a year.

Read the exclusions. Batteries, cosmetic damage and 'wear' are usually out, and those are the things that fail. The two-year warranties on our Dyson picks and the five years on the Shark are worth more than most plans you can buy.