Are Extended Warranties on Appliances a Rip-off?

Your impulse to work in the best interest of the customer is really the only way to do business for the long term. Your question about whether or not you're fleecing the customer by offering extended warranties is wholly dependant upon the actual service that would (or would not) be provided in the event the customer needed to exercise that warranty. In other words, the warranty is only as good as the service to back it up.


I look at extended warranties as a type of insurance which, in reality, they are. In fact, most of the large, reputable extended warranty plans, such as Whirlpool's Homewise plan, are underwritten by major insurance companies, such as AON Corporation. To this end, true extended warranties, backed up by real service, can be considered no more a rip-off than any other type of insurance. Is liability insurance a rip-off? You might think so as you pay the premium year after year...until someone actually sues you. Then it pays off in spades.



Is the arrangement set up for the insurance company (or extended warranty dealer) to make money? You bet it is! Could it be any other way? Businesses exist for one reason and one reason only: to make a profit. If a business can't make a profit offering a legitimate product or service then it goes bankrupt. And who benefits from that?


Some customers are willing to pay a premium for the extra security and peace-of-mind that they derive from owning a legitimate extended warranty policy. Others are not. Your role as an appliance salesman is to offer realistic and honest choices to customers. As long as you're doing that then you should sleep well at night and I charge you to "Go placidly amid the noise and haste..