Extended Warranties. To purchase or not....

Reviewer: Phil Conner

Many past and present consumers of plasma and LCD displays ask about whether or not to purchase the extended warranty for those products. I usually reply, "Absolutely, if you can get it at a good price." Here's why:

Consider the following statistics from the Custom Electronic Design & Installation Association (CEDIA): The average repair cost of an LCD TV is around $700 while the average repair cost for a plasma TV is upwards of $1500. One reason for this difference is that plasma TVs are manufactured in larger sizes. There are two reasons why these repair costs are so expensive: 1) the replacement parts are expensive to purchase from the 1 source manufacturer that makes the, and 2) the authorized local service center usually has a monopoly for the area and can charge exhorbitant prices.

Defect rates on plasma displays and LCD's have come down dramatically through the last several generations of product. The first generation of plasma displays (mass produced) experienced almost a 7% defect rate through the first 3 years of operation. The second generation cut that to 4%, and the 3rd generation pulled that number down to 2%. Now some of the better manufacturer's of plasma have that number down to 1%. However, there are exceptions to this. New models with big differences will have a higher defect rate than previous models with a few tweaks. Also new manufacturers that are just getting into plasma and LCD fabrication (think Costco or Sam's Club models) will have a higher defect rate. Some of these defect rates can again reach up into the 5% to 6% range. And it can happen after your purchase is outside of the manufacturer's warranty period.

I had an interesting exchange recently when researching this topic with a head of service for one of Pioneer's regional service centers. I asked him about repair incidence and other matters and received his thoughts on the analysis (of whether to buy an extended warranty) in general. He relayed that when a plasma or LCD goes out of the manufacturers warranty period, the service center which was previously being paid a contracted rate of $150 to repair a plasma, can now charge upwards of $250 per hour. Ouch!! This is their opportunity to make money. Compare that cost of repair with a $200 dollar extended warranty for a few years and it becomes clear. As he stated to me, "the extended warranties are the best thing going for the purchaser of a plasma or LCD." "Secondly, if the screen goes out he's lost the whole thing." By this last comment, he was referring to the cost of replacing a plasma display element (a.k.a. the glass) which can be done - but not for less than just replacing the plasma itself. Replacing plasma glass is a time consuming, tedious process and the glass itself is 75% of the cost of the plasma. As well, problems with plasma glass cannot be repaired. Pixel outage, vertical or horizontal line banding, or variations in color across quadrants are problems that most frequently require the whole glass panel being replaced. "It's really a no-brainer, get the warranty."

Make sure the extended warranty company is reputable and will be around years from now. While this is simple enough advice there are new warranty companies popping up every year. Retail stores charge exhorbitant prices for their warranties, often marking them up 300%. At this rate the extended warranty may not be a great deal. There are a few solid warranties out there that can be purchased from third party companies - whether you purchase the TV warranty from them or not. One warranty we can recommend is called XpresServ which has solid backing of AA rated Moody's insurers and is usually priced right.

An extended warranty can usually be purchased for 3 or 5 years. The extended warranty coverage actually begins when the manufacturers warranty ends though the extended warranty time begins from the date of purchase of the TV. With most good plasma and LCD products, manufacturers warranties apply for 1-year parts and labor. Therefore, a 3-year extended warranty extends your warranty period by two years past the manufacturers one-year warranty. Or an easier way to look at it is, the extended warranty starts from the invoice date of purchase. One word of caution here: if the manufacturer does not cover the plasma or LCD during the manufacturer warranty period (for instance because its a refurbished TV) then it will not be covered by the extended warranty either.

In sum, my recommendation is to buy a good quality product, and purchase a quality inexpensive extended warranty seperately from a third party dealer (not the retailer you purchased the TV from).