Extended Warranty - do i need one?

Extended Warranty – Do Musicians Need One?

In a nutshell – most likely not.  It depends on a number of factors, but you would probably be better off putting the money aside in a “Gadget Fund.”  Let me go over what some of these factors are, and how I came to this conclusion.

Conclusion – Gadget Fund

Set aside the money you otherwise would have spent on extended warranties in a “Gadget Fund.”  The main advantage is that you still have the money after the extended warranty expires.  You can use the money for repairs (usually products fail after the extended warranty period), upgrades, or replacements.

Defects – You’re Still Covered

If I find the product is defective, I’m usually covered by the manufacturer’s warranty.  Since I’m already covered by the manufacturer’s warranty, the extended warranty doesn’t add much protection.  This depends on the terms, so make sure you are familiar with the terms of both warranties before making a purchase.

Accidental Damage – Only Multiple Cases

With accidental damage, I usually don’t save money unless there are multiple cases of accidental damage.  For the first case, I usually break even.  The extended warranty only saves me money if I have a second case of accidental damage.

Background Info

Extended warranties are a $40 billion business.  According to The Motley Fool, Best Buy makes more money selling extended warranties than it does selling electronics.

The margins on Apple’s Services business, which includes AppleCare, is double the margins of the company’s product sector.

Factors to Consider

Let’s start by assessing the extended warranty.  Some extended warranties are really good, and totally worth buying.  What are some of the things you would consider?

  1. How much is the extended warranty?
  2. Do I think the product will break?
  3. On average, how much are repairs?
  4. What does the manufacturer’s warranty cover?
  5. How much better is the extended warranty?
  6. Is there anything (ie – must take the item to a specific location) that would prevent me from using the extended warranty?
  7. Does my credit card offer extended coverage?

The last one is easily overlooked.  Check if your card issuer extends the warranty.  There are quite a few that extend the manufacturer’s warranty for one year.

Hypothetical Case

Let’s say I’m going to buy a 2019 MacBook Pro 16″ for $2400.  Do I buy AppleCare+ or not?

AppleCare+ for this model is $379.  AppleCare+ adds “up to two incidents of accidental damage coverage, each subject to a service fee of $99 for screen damage or external enclosure damage, or $299 for other damage, plus applicable tax. In addition, you’ll get 24/7 priority access to Apple experts by chat or phone.”

Without AppleCare+ repairs cost between $465-755.


I’m going to use my Capital One credit card because it adds 1 year to the manufacturer’s warranty.  This means I’ll be covered for a total 2 years.

Possible Situations

Let’s say the computer is defective and breaks in Year 1.  In this case, Apple’s manufacturer’s warranty would cover me regardless of whether I bought AppleCare+.

Since I used my credit card that includes an extended warranty, the same would apply for Year 2.

If the damage is accidental, I would pay $299 with AppleCare+.  Without AppleCare+ I would pay between $465-755.

If I had a second incident, the difference would be more significant.  The two incidents would cost $977 with AppleCare+ and up to $1510 without.

Now, let’s say there were no instances at all.  Without AppleCare+ I would have $379 in my pocket.

Have a “Gadget Fund”

Your computer (or whatever the case) will need to be repaired at some point.  It might not be tomorrow, but somewhere down the line, it’s inevitable.

It’s important that we prepare for the worst.  I’m just not convinced an extended warranty is the best way to do that.

Usually people consider what would happen when the item breaks.  How much better is it to have an extended warranty then?  But there’s also a decent chance the item holds up, and you never have to use the extended warranty.  They money you would save should also be an important factor.

My personal opinion is that I would be better off putting the $379 into a “Gadget Fund.”  If a gadget breaks, I have money to get it repaired.  If it doesn’t break, I’ll just use the money for something else down the road.