09/06/2026
Extended Warranties: The Very Profitable Consumer Trap
The sale of extended warranties has expanded to nearly every edge of consumer purchases including even eBay. What many do not realize is that many are not "extensions" of the manufacturer warranty at all. They often run at the same time and may, perhaps, cover different situations from the factory warranty.
Often times the person selling you these extended warranties has never actually seen or read the warranty at all. They are relying on what their buddy told them what it is. What is important to them is that they sell them as their sales performance and job is graded upon how many of these warranties they sell. I'll bet if you asked for a copy of that extended warranty to read they would be unable to produce it.
The reality is that most of the money, if not all, is booked as profit. Insurance policies (which extended warranties are not) are regulated by each state and each may require different percentages or monies to be held in reserve for claims, also known as contingent liabilities. So, once it is booked as profit, it's spent and there is nothing really behind the paper you bought. Some extended warranties, like from Best Buy or T-Mobile, are backed by Assurant who is the official obligor and administrator for the plan. That means that while the store may handle the physical portion of the claim, the actual party controlling what happens is based in Atlanta, Georgia. They have offices in various places but now you begin to see that some of the monies you spent for the policy is being consumed. I'll let you look up their reputation on line.
In general, however, even Consumer Reports has recommended against such purchases for years suggesting that you purchase a better product for the cost of the warranty. I'll let you look that one up as well.
https://audibleelegance.com
https://www.ebay.com/str/audibleelegance
