SquareTrade 4-Year Appliances Warranty ($100-125 Items) Review

Average Reviews:

(More customer reviews)I did a fair amount of looking into this extended warranty service since there weren't any Amazon reviews yet, so I thought I would report what I learned in case it is helpful to anyone else.
Short version for impatient readers:
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If the item is $100 and the warranty is $25 for 4 years, then you're paying $25 for up to $100 of any repairs occurring within 4 years, with zero deductible. In effect, the first $25 of repair costs are prepaid (the purchase price of the warranty is basically an up-front, one-time deductible), and up to $75 of further repair costs will be free. This is a bad deal if you believe you're buying a reliable product, or you expect to upgrade within 2-3 years anyway (iPod, cell phone). This is a good deal if you believe there is a high risk of failure on an item you want to last you for 5+ years (microwave oven).
My rating is three stars because they're more likely to make money from you than you are to have a faulty product, and because I have no experience with their claims process.Long version for OCD consumers like myself:
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THE SELLER
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SquareTrade's rating as a seller on Amazon is very high, but skimming through those comments it appears they are all from customers who just purchased the service, not from customers who have seen their warranty through to the end. Unfortunately I didn't find any that commented on any their claims experience, as the quality of an extended warranty is ultimately decided by the fine print of the contract and the customer service of the claim process. But for what it's worth, I'd rate the ease of purchase 4-stars. The procedure is:
1) add to cart & purchase
2) create an account on the SquareTrade website
3) forward your Amazon purchase confirmation email to them with a special code copied from the SquareTrade site pasted into the subject line
4) no paperwork needs to be saved, the contract and receipt are maintained online
HOW IT WORKS
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1) if your product breaks due to electrical or mechanical failure, file a claim through the SquareTrade website
2) they send you a free shipping label to send the item to their central repair center and they guarantee a 5-day turnaround or the price of your warranty is refunded
3) they decide whether to repair it or to reimburse you the original purchase price if the repair will be more expensive than the reimbursement
WHAT YOU'RE REALLY BUYING
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The warranty works kind of like a debit account. If your original purchase price is $100, then the maximum value of the warranty is $100 and any repairs or reimbursements are deducted from that amount. For example, if they gave you a $100 repair or reimbursement in year 2 of a 4-year warranty, then the warranty "is considered fulfilled", in other words you are no longer covered for the remainder of the 4-year period.
During the time the product is covered by the original manufacturer's warranty, SquareTrade will do nothing more than give you the contact info to file a claim with the manufacturer. If the item is repaired or replaced by the manufacturer, the SquareTrade warranty will continue to apply to the repaired/replaced item from the original purchase date.
IS IT WORTH IT?
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It depends on what product you'd be buying it for since repair rates and costs vary. Although their price is cheaper and/or their warranty is longer than some other options, 20-25% of the purchase price still isn't exactly cheap. And if this warranty worked out in the customer's favor more often than not then SquareTrade wouldn't be in business.
I purchased this warranty for a microwave oven, because in my opinion the failure rate is unacceptably high for any brand. I expect a microwave to last much more than four years but I don't trust that it will because it's not to the manufacturer's advantage for it to have a long life. Read the review section for any microwave on Amazon, on you will find from 10-50% of reviewers angry that their new microwave suddenly died. Many complain that their old [insert name brand] microwave lasted 10+ years, and this new [insert name brand] microwave died within two years. I suspect that microwaves are the sort of product that manufacturers have tuned their cost/quality/warranty trade-offs so that the price is low, the failure rate is high, and the mean-time-to-failure is only slightly longer than the typical warranty period of one year.
So I thought this coverage was worth it for a new microwave. If it dies, I'll essentially get a new one for $26. If it doesn't die, then I dodged a bullet and in four years I won't mind having paid $6.50/year for lemon insurance.

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