03 October 2017
Should You Buy a Protection Plan for a New Appliance?

If you’re in the market for a new home appliance, chances are you are wondering if you should spring for the protection plan offered by the retailer. Nobody likes having to pay expensive repair costs for refrigerators, washing machines, etc., but is it worth it to buy the protection plan, which may not be so cheap itself? Either way, you should be aware of your options before you make your purchase, and perhaps before you even visit the store.

The difference between a protection plan and a warranty

Many people get protection plans confused with warranties, but they are not the same thing. A warranty is essentially a guarantee on the merchandise, and means that you get the appliance repaired or replaced if needed, for no cost, should it experience problems within a specified timeframe. This comes from the manufacturer of the appliance.

A protection plan – sometimes referred to as an “extended warranty” – is offered by the store in which you purchased the item. Major retailers like Best Buy, Lowe’s, and Home Depot offer their own versions of these. A protection plan for a refrigerator, for example, will cost approximately $125 for three years of protection. A five-year plan will be more in the $200 range.1

Protection plans go beyond the standard manufacturer warranty to offer things like 24/7 phone and online support, power surge protection, partial reimbursement on replacement parts, payback rewards for not using the coverage, and for a refrigerator, even money to cover the loss of food items if food is spoiled as a result of the appliance not working.

Of course, features vary from store to store, and the question is whether there is a good chance you’ll need what’s being offered, and if so, is the price right? Look online to find out if the item you’re considering has a good repair record or a reputation for needing expensive fixes in the first couple of years. Then, try to choose a brand that seems to be reliable and hope for the best.

If you’ve made up your mind that you do want extra protection, you should research your options before you go to the store to purchase the item. If you’re buying a plan, you might be able to save some money by selecting the right store, though the options offered by the retailers are pretty similar.

Pros and Cons

Reasons you might elect to get a protection plan with your purchase include peace of mind and protection. Maybe you’ve dealt with faulty appliances in the past and wished you had bought the plan at that time.

You may be better off, however, by not purchasing the plan. The reality is that most of the time the appliances you buy will not give you trouble within the period the plan actually covers, and you can simply take the money you would have spent on the protection plan and put it in a savings account. Then, if something goes wrong, you can use that money to pay for repairs or to put toward a replacement.

For the reasons just mentioned, Consumer Reports advises against purchasing protection plans. “Service plans typically have many fine-print exceptions that a provider can use to deny your claim,” their website says. “Among survey respondents whose repairs were covered by warranties, 62 percent were highly satisfied and 19 percent were dissatisfied with their repair. Those numbers are similar to the percentages found for those who paid for repairs out of pocket. Notably, repairs covered by warranties had slightly more problems than repairs covered out of pocket.”2

In some cases, you may even be protected by the law, it notes. Products are required to meet certain standards; the seller may be on the hook for defects if these standards aren’t met. This, of course, depends on many factors, including state law, the product itself, and the nature of the issue.


In the end, the decision to purchase a protection plan is yours. The important thing is to remember that you will probably be encouraged to buy a plan when you go to purchase your item, and if you go in unprepared, you may feel pressured to accept. Do your homework, know what you’re actually getting, and then decide if it’s worth giving that money to the retailer rather than saving it in your own account.

1. https://www.thepennyhoarder.com/smart-money/home-appliance-protection-plan/

2. https://www.consumerreports.org/cro/extended-warranties/buying-guide


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.


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