What Retailers Don’t Want You To Know About HDTV Extended Warranties

July 29th, 2011 · 34 Comments · 3D HDTV, Blu-ray Players, Connected TVs, Digital Media Receivers, LCD Flat Panel, LED LCD Flat Panels, News, Plasma

Call them “protection plans,” “extended warranties” or “service plans,” salespeople at the big box electronics retailers feverishly push these add-ons to their customers. Why?

Though Best Buy hasn’t reported its extended warranty income for over a decade, Business Week estimated in 2004 that it represented 45% of the mega electronic store’s profit, or about $600 million that year.

It’s Not Insurance

Unlike insurance policies, which are regulated by state laws to assure that along with other protections, policyholders get paid via cash reserves, these  are not considered insurance policies and so are not well-regulated.

According to a warranty industry source, in order to bypass state mandated consumer protections, service contract sellers successfully lobbied many state legislatures to have extended warranties classified as “plans” and not as insurance.

In New York State, for instance, companies are not required to cover buyers of these “add-ons”  in the event the plan seller goes bankrupt.

The good news is that some plans (including Best Buy’s and Square Trade’s), are underwritten by an insurance company, but others are not. Third party insurance underwriters did not cover Circuit City’s Firedog plan, leaving buyers holding the bag.

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HDTV Reliability

According to a number of TV manufacturers management personnel with whom we spoke, the overwhelming majority of set failures occur during the first year of ownership, which is within most new product’s factory warranty. A far smaller percent of failures occur in year two and failures continue to diminish in the third year and beyond.

Consumer Reports data indicates that most major brand flat panel sets have a 2-5% failure rate within the first 3 years. Obviously there is always a chance a product failing in later years, but the percentages there are fractional, with a typical TV lifespan of around 10 years. Remember, flat panel prices continue to fall, so the set you buy today for $1000 could cost around $400 if prices continue to drop at the current rate of about 20% a year.

Smart Alternatives

A.Our advice is to not buy an extended warranty on a name brand HDTV. Weighing the odds of an out of manufacturer’s warranty repair versus the cost of the warranty we (along with Consumer Reports) think it’s a bad deal. The best insurance you can buy is a Surge Protector. They’re cheap and guard against power surges that can knock out your TV.

B. Pay for the HDTV in full with a “Signature Visa card, MasterCard or an American Express card that automatically double up to one year the manufacturer’s warranty. Many cardholders are not aware of this benefit. Check out the links for terms and conditions. Like virtually all extended (and often factory) warranties, making a claim requires you possess your store receipt, along with your credit card statement showing the purchase.In the case of American Express, we have had first hand experience. It works; they credited our card account for the complete cost of a repair!

C. Check out third party extended plans like Square Trade . They cost less than many brick and mortar store plans and may be purchased within 90 days of your HDTV or other electronic item purchase.

D. Costco Warehouse Club members get a free two-year warranty on all HDTVs purchased from them (typically one year mfr. + one year Costco plan).


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34 Comments so far ↓

  • Brentley

    I sell consumer electronics and the best thing we could have done for our customers was to cover accidental damage vs the standard extended factory warranty most retailers offer. Kids knock it over horsing around? Its repaired or replaced and in a lot of cases a full credit of what you paid originally is given to you. And since electronics go down in price and up in quality over time you started with a 50″ plasma, and now you can get a 65″ UHD or even an OLED panel.

  • adrian

    Great information, its good to be aware of the fine print, whats promised or implied, compared to the reality.
    click this

  • Sam K

    Discover Card also doubles the manufacturer’s warranty up to an additional year.


  • PortalDeveloper

    I worked on the customer care portal for one of the warranty providers who sells aftermarket warranties at stores like BestBuy.

    By their own admission, its a rip off. Facts I became privy to while I was there; In excess of 97% of warranties are never exercised. Of the remaining two point whatever percent who have claims, more than half are denied for some kind of fine print issue.

    The company paid a minimum bonus of 5% to rank and file staff and as much as minimum bous of 30% to senior management. Those were minimums. That company was rolling in loot. Total ripoff IMO.

  • Miles42

    extended warranties are nothing but money makers and according to consumer guide lines not recommended. Of course if you are in retail then you are here touting them as they are your bread and butter.

  • Debbie Morfin

    I bought a Vizio 42″ flat hdtv Nov 2009 from Costco. April 2011 it died. Was told not repairable. Called again Sept 2011, because it turned on and was working and then died again. Finally died for good. Called Vizio was told to call Costco.Called Costco told to call American Express. Was told by Am. Express that since it was a Dillards card, even though it was an Am Exp card and had emblem on it and could use all over as a credit card, they would not honor warranty. Called Costco again, spent a total of 4hrs on phone that day. Costco was going to repair it but finally said that since it was not a Costco card we were out of luck. The young man was throughly disgusted with the way this turned out and told me I should send letters to all and complain,because we were getting shafted. I won’t buy a Vizio again after paying 1200.00 and only getting 2 1/2 yrs out of one. Vizio also told me some of the sets were repairable and some not. So you have to know your tv’s before buying.

  • ExSophus

    Scott said, “Actually, the BEST protection you can buy is a UPS (uninterrupted power supply) system. This will keep your TV or computer at a steady voltage during those annoying momentary power losses, and it will take the hit if there’s a major problem.”

    Not every UPS (Uninterruptible Power Supply) has that “steady voltage” feature…especially the cheaper and/or low-power units (which are usually simple “Standby Backup Supplies”. Be sure to look for it in the specifications or listed features. Look for “line interactive” or equivalent.
    For more info search Wikipedia for,
    There is also a good overview of several UPS categories in an article by falconups. Search the internet for an article titled,
    (include the underscores in both searches)

    Also, even a quality UPS can be “invisibly” partially damaged by a nearby lightning strike. It may still operate, but its ability to protect your equipment from surges, spikes, etc. may have been compromised. If other non-protected equipment in your building has been damaged during a storm, then it is much more likely the section of the UPS that protects from surges, spikes, etc. has also been compromised. Same thing goes for regular non-UPS “surge” protectors you have. For maximum on-going protection one must at least consider replacing them after such an event (as most don’t provide for replaceable those internal protection components).

  • Henry Bayer

    Could you afford a total replacement of that item? Then don’t buy extended warranty / insurance. Same if it’s a toaster, a TV or a car. It’s a casino bet with odds heavily against you. Do it repeatedly and you will have less money in the long run.

  • allen ray

    Does anyone else (besides me) use an HDTV as a computer monitor in their dorm room?

    For me, a 22″ tv was about the same price as a 22″ monitor, so I use a DVI to HDMI adapter with my laptop and save space in the dorm.

  • jes

    I bought a flat panel from RadioShack. It’s an AOC, (better known as Envision) great tv, 32 in and I loved it from the first minute. Bought the special super deluxe additional warranty for $88 in which they extend it for more time and come out to your door. Last month for the first time something weird happened to the background on the screen. I called, they came out to the house – very polite and professional. Well worth teh $88 as between taking the time and gas to get to a repair center as well as having to leave it there, that waranty was well worth it and I’ll “re-up” the warranty when it expires in 2012.

  • Matt Morrow

    It’s kinda like gambling. I hate buying warranties, but I have had to use them enough to feel the cost is acceptable.

  • Scott

    Actually, the BEST protection you can buy is a UPS (uninterrupted power supply) system. This will keep your TV or computer at a steady voltage during those annoying momentary power losses, and it will take the hit if there’s a major problem.

  • Trety

    I know in my old company I used to work for (not a big box retailer obviously), we stopped offering extended warranties because we made a lot more on repairs… with the warranties, we got one purchase, but then if anything happened our customer went somewhere else to get it repaired for free. (Ours was run by an outside company that required the customer to send it in to an auhtorized service center, but because we were smaller, we couldn’t get authorized as one)
    Does everything break eventually. yes… It’s just a matter of when..
    If your house hasn’t burned down before, you’ve never been in a car accident, or you generally don’t go to the doctor or hospital, you still have house, car, and health insurance.
    Do I buy the warranties on everything? nope… but I do buy them a lot and have had to use them multiple times… Even though I know how to fix PC’s, I still buy the warranties because some of the parts are expensive (and laptops are aPITA to completely take apart)

  • john albanese

    square trade rocks. reasonably priced plans, great customer service, user friendly. protect your purchases a 1000.00 dollar TV, can be a royal pain if you have to replace it after mfr warranty expires

  • EJM

    Bought a Panasonic LCD from Sears back in 2005 with the extended warranty. Used it 3 times because it covered bulb replacement, which costs about $35o ea. The last time I had to use the extended warranty in 2011, they told me the part was over $3,000 so instead of repairing my TV, Sears gave me a $1300 credit to purchase a new TV and they removed the old TV at no cost. Since most flat panels are between $1,000 and $1,500, I had several to choose from. So, although I paid a total of $600 to extend the warranty twice. Between the $1,050 for the replacement bulbs and the $1,300 credit for a 5 yr old TV, I think I came out way ahead in the end.
    BTW, there was still time left on the extended warranty which transferred to the new TV. So, if anything happens to the new TV during the manuf. warranty period, Sears will come out to the house and make the repairs.

  • Dennis Kelley

    I bought a 42″ Polaroid LCD HDTV on black Friday 2008. I spent $58 for the extended 2 year warranty. One of the backlights recently went out, leaving a dark stripe across the picture. Walmart replaced it with a 42″ Vizio, no questions asked, AND paid to have it sent UPS to my home. The set was 3 months away from being out of warranty. When buying off brand HDTVs, get the warranty.

  • MyCustomerWins

    Looks as if there are a few industry shills on the posts. Let’s separate fact from fiction:

    1. Extended service plan providers exist BECAUSE products, generally, have low failure rates.

    2. Extended service providers cover items in their LEAST RISK period. For example, what is year 2 in the life of a product?

    3. For every dollar you spend on an extended service contract/protection plan/warranty, only a small part of it goes to pay claims. Major consumer electronics/appliance retailers make 40-60% gross margin, then additional profit and fees go to the plan adminstrator and the underwriter. If you were donating to a charity and found that only 10% went to the actual charity and 90% to the people who run them, what would you think?

    4. Cashiers, due to mindless prompts, mindlessly offer service plans on items that have 2,3,5,7 year warranties already. No one has a clue.

    5. Retailers such as Best Buy offer 2 year laptop plans for over $200 when the laptop is under $500. Then they pitch it to you as if you are a moron who will drop the item everywhere you go. Laptops have a year warranty. One extra year and damage insurance??

    6. A stated “no lemon” policy does not include mfr repairs and must be for the same defect. You can have multiple repairs, have a horrific customer experience and still not have the unit replaced.

    7. Consumer electronics retailers customer experience scores are consistently horrible because of the badgering for needless services, the lack of customer service, and deceptive advertising and sales practices.

  • Eaamon

    just to add to the costco warranty info. 3 years but use to be 4. this if you use their costco credit card 1 year maker, 1 year concier and they add a third by the credit card.
    I had a set for just over 2 years they had it sent out for repair and during a burn test in the TV burnt up. got full refund bringing it back to costco and went from 37″ 720P to 46″ 1080i and got $450 back since prices came down.
    thank you costco!

  • Steve

    Well, lets see. Yes, extended warranties are not worth it, unless of course, you have bad luck with electronics. I bought an HP laptop from Circuit City some 9 years ago, 12 mo std warranty, battery died at 13 mo. Then I bought a laptop at Sam’s Club. Definitely took the extended warranty, when the laptop died at 18 mo, they refunded the money + the warranty. Replaced the laptop with a new one, and an extended warranty. Well, that one died about 10 mo later. Again, Sam’s refunded the money. So I bought another, that one, believe it or not, died 22 mo later. I was pissed, but very happy I had kept buying laptops from Sam’s club. 4 computers later (and about 6 years later), I have a computer that work’s perfectly, never had to put more money into the laptop and recommend Sam’s Club to all of my friends for electronics.

  • Glad I did

    I purchased a 42″ Sony XBR4 from BestBuy in Jan 2008 for my parents. 20 months later, one of the four display panels failed and needed to be replaced. A replacement was not available so the set was replaced with a “comparable” model. Well, for a pittance more, we upgraded and now my folks have a beautiful 46″ upper-mid level Sony that looks amazing. Oh yeah, at the time, BBUY was having it’s holiday sale. Included with this tv was a free Sony Playstation 3, a 3D starter kit (two pair of glasses and the transmitter), plus a discount on a new blu-ray player. Second best extended warranty I ever purchased and I’m not really a fan of them. The best was for my new car purchased in 2001. In 2006, one cylinder head cracked… that saved me thousands. Wish I bought one for my parent’s iMac though. 12.5 months after purchase, the hard drive failed. I replaced it myself, but not without some issues. Those who have been there will know what I’m talking about… that dreaded HD temp sensor fan control… but I digress. Guess I’m a fan. And BTW, the staff at BestBuy were all professional and helpful. No runaround, no BS. Just great support and assistance. My 2c.

  • Brandon

    OK GURU, spend a day telling the public you cant help them with their broken TV or any other product. Tell them to call the company who made it. See how far that will get you. BTW how much does it cost to send that 52″ tv back to the manafacturer? What do they require when you send it? Thats a fun process.

  • Brandon

    Obviously GURU doesn’t have to deal with any upset customers face to face when the tv or any other product goes bad or gets damaged. I deal with a least once per day and its much easier to say no problem I’ll help you with that rather than Oh sorry, call the people who made it. its easy to be sit on the other end of a phone or a computer screen and not have to take any responsibility. Try customer service for a day GURU and deal with the public and then tell me if you’re a know it all.

  • Leslie

    We all must take our own ignorance into account here. As a inforned consumer, I always read carefully any and all terms and conditions when deciding to purchase a Service Plan. I have been purchasing Best Buy’s plan s since 2002 and I am always happy. The plan clearly outlines in the T&C that you are not left hanging…and you are not. Many people buy things based on what was told to them – and never read! Then they return only to look like idoits when the conditions are pointed to them on paper (which you agree to at time of purchase). I refuse to be that kind of customer, so I listen then ask for the T&C for full details. With that said, you can choos not to get these plans if you have money to replace your broken items in full, but if you are like me and you don’t have much disposable income, Service Plans like Best Buy’s are great – as long as you read carefully and are not looking to get over.

  • Phil

    I’m currently going through an extended warranty problem with a HDTV…….basically what the big yellow tag store presents when you purchase the extended warranty is not you are told when you have a problem. If you have a problem and the TV is replaced, the extended service plan coverage is over, regardless of the remaining length of the service plan. If they don’t have a suitable replacement TV to replace your TV, a store gift card is issued…and NOT for the value of the TV you had purchased. BEWARE!!!

  • Ray


  • Darrell

    The problem here is that if you take this advice, and pass on the warranty, then you are on your own. The people here at HD Guru are not going to pay for your repairs because you took their advice and passed on them. Same with Clark Howard and all these other money guru’s who tell you to pass on the extended warranties or service plans. So is there a chance you could buy a TV and never have a problem with it? Of course. Is there a chance you could buy one and will have a problem with it, especially one that the Manufacturer will not repair? Of Course. You have to decide, for yourself, if you can afford to buy another TV if the one you are buying goes out. If not, get the warranty. This is the only sound advice I would take.

  • Harrison

    I totally agree with HD Guru. Extended warranties are merely a huge money makers for the retailer. One further issue I have is, if you do buy an extended warranty, WHO exactly would be doing the actual repairs. Would it be an outside contractor, or the store itself. I shudder to think of any Best Buy employee working on anything of mine!

  • William Castillo

    Yes they are if you want them, but you still get the 2 year warranty at no extra cost.

  • honest4sure

    HG Guru is right on the mark.
    The entire extended service/warranty/protection industry is one big hoax on the consumer – here’s why:
    These companies exist because product failure rates are very low. These “plans” add insurance to the “normal” life cycle period of the products.
    The combined mark-ups by the retailers – the consumer electronics retailers, the plan administrators whether it is NEW, Assurant, Warrantech, etrc. is significant so the actual claim costs for every dollar you spend is extremely low.
    Many of the plans “mask” the mfr warranty period, in effect, duplicate coverage.
    Plans that add damage coverage, especially at Best Buy, Office Depot, Staples, HH Gregg are exhorbitant. Excluding cell phones where the actual price of the product well exceeds what you paid, ask yourself if you really are that much of a risk to drop a laptop in years 1 or 2? How absurd!
    Even if you have to invoke a plan, based on all the complaint websites, you are much better off without as your experience will likely be horrific. The plan administrators pay much less than market price to outsource service. Let the service companies compete for your business if you need them – you’ll be better off.
    Here’s the kicker – what retail management either doesn’t know or turns its collective heads – the burdens on the stores are much greater as many customers come to the stores as opposed to using the toll free numbers – out of convenience or frustration – and this puts a much heavier burden on the stores who usually don’t have repair/diagnostic capabilities.

  • Robert

    I am not sure why, if the title is about HDTV warranties, you choose to mention Firedog plans. Firedog did not offer warranties covering your HDTV and therefore that information appears irrelevant to your article. If the intent was to point out that certain non-HDTV warranty related plans were not underwritten by insurance companies that could be more clearly stated within the article

  • daniel

    I work in electronics retail. I’ve seen so many customers who were very glad they had their extended warranty. I think its a really good idea.
    As shown in the comment by Mike, HDguru doesn’t have accurate information and should not be trusted.

  • Mike

    In New York the Extended Warranty is required to either be backed up with reserves or a CL Insurance Policy.

    Circuit City was backed by Assurant, an insurance company.

    Square Trade is a very small marketer of warranties but not an insurance company. You have to worry that they stay in business to assist in getting service.

    You should never have to pay first and then get reimbursed.

    1) Not according to NY State Insurance dept.

    2) You need to reread the article. We stated Firedog plans not Circuit City Assurance Plan. It is clearly stated here

    3) We don’t like the idea of pay (for a covered repair) and pray (you will be reimbursed in a timely manner) either. We spoke to a Square Trade customer service rep to learn about the reimbursement policy. We then made a inquiry to to a Square Trade media relations person to find out how long they take to “reimburse” approved claims, but we our still awaiting a response.

    In our opinion, all credit worthy HDTV buyers should use a free extended warranty qualified credit card mentioned above to pay for the purchase and get the second year for free.

    HD Guru

  • WOB

    Buy a warranty, or one will be given to you at a discount. look at it like this, a 2,000 dollar tv could cost you 250-300 for a 5 year. If you call the manufacture and it is not theree defect they will charge you and a warranty prevents this.

  • Michael Hamilton

    COSTCO is now selling extended warranties on electronics. They’re posted at the checkouts.

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