You're right, it's sort of a dice roll. I think others are correct as well in that on a lot of items they are nothing but added profit for the retailer. However, I always look at the actuarial data before I advise a friend or relative whether to buy one. As to not offend anyone, I won't post here in public the statistical worst offenders (the ones that need a service contract in a bad way). With certain brands and, especially particular models within that brand, it's a rather poor decision to not buy a service contract.
Not to be nit-picky, but you can't buy a warranty. By law, a warranty is part of the selling price of the item you are buying, and cannot be negotiated out. A service contract is something you can either add to the warranty, or is put on the item by the dealer and can be negotiated out. This falls under the jurisdiction of the FTC and is regulated by the Magnuson-Moss act.
Also, with service contracts, there are only two types; a named peril contract, and an exclusionary contract. A "named peril" contract does just what it says, it specifically names the peril (break down or failure) that it will cover. Only those items are covered. Read; if it is not listed, it is not covered. The exclusionary contract is the opposite, it specifically names only those items which are not covered. Read, if it is not listed, it is covered. Period.
Now, armed with that knowledge (which is likely more than the guy trying to sell you the contract has), and being armed with the statistical data of the frequency and severity of repairs for the item which you are buying, you can then make an intelligent decision as to whether purchasing a contract would be a good choice for you or not. Be sure to ask if it is a named peril or an exclusionary contract, and also if the contract is reinsured by an A rated company by A.M. Best. I personally don't care for named peril contracts and absolutely would not consider a contract unless there is an A rated company backing them. Clear? /forums/images/graemlins/grin.gif
