Broken phone? Be glad for warranty

With the array of personal electronics that most people have, it might be time to rethink skipping the extended warranty.

Face it, many buyers think that the cost of the warranty adds too much to the price of the device -- and given how pushy salespeople can be to sell them, the company is making a big profit.

But warranties for personal electronics can offer more than peace of mind -- they can be a sound investment, especially with mobile devices. "I've been burned in the past by not having a warranty," said Christy May of Edina, "but I still worry that I'm getting sucked in."

Nearly 250 million extended warranties are sold nationwide each year, including 11 million for computers, according to the Service Contract Industry Council (SCIC), a Florida-based trade group. And it's true that they can be a nice profit source for retailers. Business Week estimated in 2004 that warranties accounted for 45 percent of Best Buy's profit of about $600 million. (The retailer no longer reveals its revenue from selling extended warranties.)

Consumer Reports advises skipping extended warranties, but the chances of a smartphone, tablet or laptop being dropped or spilled on can make a policy worthwhile if it covers accidents. A cracked screen for e-readers and tablets can cost $160 to $350 to repair or replace, for example, according to SCIC.

Prices are negotiable on some warranties, and consumers can often pay less for a warranty from a third party, such as Squaretrade.com. No matter who sells the warranty, don't buy until you've done your homework. Here's what you need to ask:

What does it cover? Ask to see a copy of the warranty. Look for exclusions such as accidents or theft, dollar limits on repairs and maximum number of repairs allowed. If you've already bought one and now have buyer's remorse, you can usually cancel the warranty for a full refund within 30 or 60 days, as long as no claims have been made.

Does it allow for in-store exchange or replacement? How will you survive while your smartphone or laptop is being repaired? Some warranties offer guaranteed replacement or repair within five days.

Is there excessive pressure to buy at the point of purchase? You generally have 30 days after a purchase to buy a warranty at the store or from a third party.

Would your credit card company or warehouse club extend the manufacturer's warranty at no cost? American Express, Visa Signature and most MasterCards offer an extension of up to a year in most cases. They usually cover the device for loss or theft, too, which most extended warranties don't, although it's for only 90 days on American Express. Some homeowners' policies also cover replacement due to loss or theft, but they're subject to high deductibles.

Costco and Sam's Club offer 30- to 90-day guarantees on TVs, computers, camcorders, e-readers, cameras and GPS devices, but even after 90 days, members get an additional one or two years of manufacturer's warranty. Accidents, loss and theft are excluded.

How does Consumer Reports rate the brand's reliability? The more reliable it is the less need for an extended warranty.

Would the extended warranty cover telephone support? Even though an Apple computer should last beyond the manufacturer's warranty, getting an extended warranty can lengthen Apple's commendable telephone support for an extra two or three years.

Could you keep the money in a savings account instead? Consumer Reports recommends doing this, but seriously, do they understand human nature? If the warranty and the savings accounts are out, consider a Smart Cover or Power Skin (Power-skin.com) for mobile electronics, or a rugged device such as the Panasonic Toughbook, which includes longer warranties and extra protection, but at a higher cost.