The Case Against Extended Warranties

Welcome back to our new weekly blog post here at Expertel. In today’s entry we’re going to discuss a subject surrounded by many doubts and questions: Extended Warranties, and specifically Apple Care+. As many of you know, extended warranties are a staple addon for any electronic device purchase. They all come with different coverage conditions and periods of service, but they all serve the same purpose, which is providing insurance for your new device. But are they worth it? Before we go deeper into this topic, we want to point out that this post is intended to provide you with useful information to help YOU decide whether or not Apple Care+ is worth your money. With that clarification out of the way, let’s get down to the nitty gritty. Here’s our case against Apple extended warranties.

What’s Covered by Apple Care?

In order to understand why we think Apple Care+ is not worth getting, we first need to know what the basic plan covers and for how long. Every newly-bought Apple device comes with a basic protection plan called Apple Care that offers a one-year limited warranty to cover manufacturing defects, and up to 90 days of complimentary technical support. This basic plan is provided at no extra cost and can be very useful if the user encounters problems with the device right out of the box, however, this scenario is very rare. It’s important to know that the basic Apple Care plan does not cover accidental damage at all, so if you drop your phone and crack the screen, be prepared to shell out a big chunk of cash to get it fixed. You can tell by now, this is not a good start, but it gets worse. Let’s check out what Apple Care+ covers.

What’s Covered by Apple Care+?

Let’s say you’re at an Apple Store and you just bought yourself a new 128GB iPhone 11 for $919 (congratulations!). As the genius behind the counter rings up your new purchase, he asks if you want to add Apple Care+ for $199. You think to yourself about the big investment you just made and let your mind fly with terrible scenarios of your phone screen shattering in a million pieces, getting lost or accidentally taking a dive in a nearby pool. It might have happened before, and the memories of that repair bill alone are enough to convince you that you need Apple Care+. Without realizing, you just added almost 20% of the device’s cost to your bill if you paid upfront and almost 30% if you chose to pay monthly fees.But that fine, right? Now you’re covered, just in case. Well, yes and no (sorry!). AppleCare+ for iPhone extends your one-year warranty to two years, offers technical support after the standard 90 days, gives you 24/7 priority access to Apple experts and includes software support as well. Also, if your device gets damaged, you can mail it in for repairs or take it to the store for service. You know, more of the basics. The main reason most people buy Apple Care+ however, are the two incidents of accidental damage per year that it covers. With Apple Care+, the service fee for a screen replacement is $39 and $129 for any other damage. That means the first time you crack your iPhone’s screen will cost you around $238 (for the warranty + service fee). You can probably find the same screen replacement for less if you’re willing to take the time to look for other alternatives. This means that, unless you’re planning to crack the screen every 6 months, you’re not getting any savings from having Apple Care+.

Why Apple Care+ Doesn’t Add Up?

In our last example, a $919 iPhone 11 with Apple Care+ ended up costing $1118, even before any damage. Now, if you’re a business owner, multiply that number by the number of phones your company owns. If your business needs 100 phones, you’re looking at almost $20,000 in Apple Care+ costs alone. Even worse, most employees take good care of company phones, since they can get in trouble if they damage them, which means most of that money won’t even be put to good use. And even if they did damage their phone, most businesses usually have a reserve of old working phones to cover unexpected accidents. That’s not all though, there are more reasons to pass on Apple Care+.

– Manufacturer Defects Show Up Early

Let’s go back to the original limited warranty for manufacturing defects provided by both Apple Care and Apple Care+. Most defects for devices like iPhones usually show up during the first year of ownership, which means they’re covered by the basic 12-month warranty included with the purchase. Later failures caused by components wearing out, such as glitchy buttons, dead pixels, faded screens or loose plugs, often don’t appear until well beyond any extended warranty.

– Ask Your Credit Card

Another alternative to get your new device covered with an extended warranty without spending more is knowing your card. Some credit cards offer a purchase protection plan that doubles as a manufacturer’s warranty, for up to one extra year. This feature might take a little research to learn about, but if you’re really worried about your phone’s safety or your bottom line, it’s definitely worth giving a shot, especially if you’re about to buy new devices in bulk.

– A Dirty Little Secret

Most people don’t know this, but it usually doesn’t cost that much to repair most of the iPhone’s issues. Unless you’re very clumsy and not only crack the screen but also damage internal components, the average cost of a single repair is less than the cost of an extended warranty. Consumer Reports once put the median cost at $136 for a service plan for electronics, but only $16 more for the repair, however, we’re talking about a $199 extended warranty here, so take note of that little piece of information as well.

– Risk Aversion Is a Trap

You’re probably asking “then why do people get Apple Care+ if it’s such a bad deal?”. Part of the answer lies in your head, literally. It’s called risk aversion, and we humans are very bad at handling it. In short, risk aversion makes us think that it’s always better to not lose money than it is gaining it. In this case, we believe it’s better to pay $199 to get the protection for your $919 device, than paying $199 to fix it. The cost in this case may be the same, but our brains tell us that if you’re going to spend an extra $199 in something, it might as well be Apple Care, even though you might never need it.

– There Are Cheaper Ways to Care

At Expertel we believe that you don’t need expensive extended warranties to keep your devices safe from danger, sometimes simple solutions can go a long way. Instead of costly extended warranties, at Expertel we offer our clients all kinds of cases and screen protectors for their phones for a much lower cost than Apple Care+. In some cases, we can even help them renegotiate their contract earlier so they can renew their devices without paying more!

In Conclusion

Accidents will happen, there’s simply no way around it. It’s a fact you’ll have to come to terms with, even if you’re really careful with your phone. But if your goal is to save money, putting a little bit of cash aside in case of an accident is a much smarter investment than paying for an extended warranty. Seriously, unless you’re the type of person that completely breaks their phone on a regular basis, and we’re talking about serious internal damage here, not just a cracked screen, buying an extended warranty is not worth the money. However, if you know yourself enough to know that despite any preventive measures you take, your iPhone will still end up severely damaged multiple times a year, then maybe Apple Care+ could be the choice to go with.Hopefully you found useful information in this post, but if you’d like Expertel to help you find better alternatives to Apple Care+, get in touch with us. That’s it for today, but we’ll come back again in our next weekly post!