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Before you’re in a checkout line and asked if you want to buy an extended warranty for that flat screen TV you’re getting this holiday season, it’s a good idea to do your homework first.

“Consumers buying electronics and other expensive items are often offered extended warranties. Whether it makes sense to buy an extended warranty is something only the individual consumer can decide. However, all consumers should understand how extended warranties work,” Insurance Superintendent James Wrynn said.

A warranty is essentially a promise that a manufacturer or seller will repair or replace an item, or refund its purchase price, if the item doesn’t work or if a defect in workmanship adversely affects its performance. There is usually no additional cost for a manufacturer or seller's warranty.

An extended warranty typically covers repair or replacement after the manufacturer’s warranty expires. Some extended warranties, however, run concurrently with the manufacturer’s warranty but may offer limited or no coverage during that time period. An extended warranty isn’t free; it’s an option a consumer may buy separately or decline to buy.

Many extended warranties are, in fact, service contracts. Unlike extended warranties where the seller or manufacturer is obligated, under a service contract, a third-party service contract provider is obligated to provide the service or replacement.

Service contracts come under the jurisdiction of the Insurance Department and consumer protections are in place when people buy them. Entities selling service contracts in New York are required to be registered as a service contract provider with the Insurance Department and consumers can verify registrations by contacting the Department or by checking the Insurance Department's website. The Department has proposed legislation to regulate extended warranties in the same manner as service contracts.

Under New York law, a service contract may be returned within 10 days after the purchase date if the service contract was delivered at the time or sale, or within 20 days after the date of mailing. An extended warranty that is not a service contract may or may not include a right for the consumer to return the contract. A consumer should always request a copy of the extended warranty or service contract and review it, noting any conditions, restrictions or exclusions, before buying it.

A consumer may file a complaint with the Insurance Department if a service contract provider fails to live up to its obligations under the agreement. In this type of situation, the Department will investigate the complaint and assist the consumer to obtain a settlement if appropriate.

Additional information is available on the Insurance Department’s website, Consumers needing additional help should feel free to contact the Department’s Consumer Services Bureau between 9 a.m. and 5 p.m., Monday through Friday toll-free at 800-342-3736.


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