Is Costco's Extended Warranty Worth It?

Costco offers a variety of products for its members, including many amazing buys for under $20. But when it comes to making big purchases, such as electronics or home appliances, customers may wonder whether to get an extended warranty. The warehouse club automatically offers a two-year free warranty extension on certain products for members. Members can also purchase up to an additional three years of warranty through Allstate Protection Plans for greater peace of mind. But is it worth the added cost? In this article, we'll take a closer look at what Costco's extended warranty offers, as well as examine the pros and cons to help you make an informed decision.

What is Costco's extended warranty?

One of Costco's biggest perks for its members is a free two-year warranty extension. Through Costco Concierge Services, Costco extends the manufacturer's warranty for a second year at no additional charge on the following devices:

• Televisions
• Projectors
• Computers (not including touchscreen tablets)
• Major appliances (Refrigerators -- larger than 10 cu. ft., -- freezers, ranges, cooktops, over-the-range microwaves, dishwashers, water heaters, washers and dryers)

These items are automatically enrolled in an extended warranty up to two years from the date of warehouse purchase or the date the item was delivered (if purchased online). Most items have a one-year manufacturer's warranty, so if something goes wrong, the item's maker will be responsible for the warranty. If something goes wrong in the second year, Costco may choose to repair it, replace it, or refund the purchase price.

What is the Allstate Protection Plan?

Members can opt to purchase up to an additional three years of warranty through Allstate Protection Plans. The protection plan offers up to five years of total coverage, depending on the product:

• Appliance and television protection plans include three additional years (five years total protection)
• Computer protection plans include one additional year (three total years of protection)
• Camera and tablet protection plans include two total years of protection (these are not covered by Costco's free two-year warranty).

Computer, camera, and tablet plans cover accidental damage, drops, spills, as well as mechanical and electrical failures. Appliance and television plans cover mechanical and electrical failures during normal use, including parts that can stop working years after purchase. These plans do not include intentional damage, loss, or theft, but covers 100% of parts and labor, and there are no deductibles or hidden fees.

How much does it cost?

The cost of an Allstate Protection Plan varies based on the item and its value. Plans range from as inexpensive as $34.99 and as costly as $399.99.

• For TVs under $500: $34.99 (Allstate 3 Years)
• For TVs $500 to $1,000: $64.99 (Allstate 3 Years)
• For TVs over $1,000: $99.99 (Allstate 3 Years)
• For new computers under $500: $69.99 (Allstate 3 Years Drops & Spills Protection)
• For new computers $500 and over: $99.99 (Allstate 3 Years Drops & Spills Protection)
• For tablets and cameras under $300: $29.99 (Allstate 2 Years)
• For tablets and cameras $300 to $750: $49.99 (Allstate 2 Years)
• For tablets and cameras over $750: $79.99 (Allstate 2 Years)
• For major appliances under $1,000: $89.99 (Allstate 3 Years)
• For major appliances $1,000 to $2,000: $119.99 (Allstate 3 Years)
• For major appliances over $2,000: $159.99 (Allstate 3 Years)
• For laundry suites under $2,000: $174.99 (Allstate 3 Years)
• For laundry suites $2,000 and over: $219.99 (Allstate 3 Years)
• For kitchen suites under $2,000: $174.99 (Allstate 3 Years)
• For kitchen suites $2,000 to $4,000s; $299.99 (Allstate 3 Years)
• For kitchen suites over $4,000: $399.99 (Allstate 3 Years)
• Allstate 2-Year iPad Warranty Plan: $79.99

What are the benefits of the protection plans?

The primary benefit of the protection plan is the peace of mind it offers. Extended warranties can be expensive, but they can help you keep your credit card bill in check by saving you a lot of money in repair or replacement costs. The protection plan also covers accidental damage, which is not typically covered in regular manufacturer warranty plans. This means that if you accidentally drop your device or spill liquid on it, you can have it repaired or replaced free of charge.

The plan offers worldwide coverage with free two-way express shipping. So if you plan on moving to a more remote area, then this may be worth it to help you keep more cash in your savings account.

In addition, if you use the Costco Anywhere Visa® Card by Citi to make a purchase, you are covered if the product is damaged or stolen within 120 days (90 days for New York residents). You are covered up to $10,000 per item, for a total of $50,000 per year.

What are the potential drawbacks of the protection plans?

One drawback of the Allstate Protection Plans are the added costs, however. The cost of the plan varies depending on the product and its value, and it can be as much as 20% of the product's purchase price. This can make the cost of the plan more expensive than the repair or replacement cost of the device. Another potential drawback is that the protection plan may not cover all types of damage or malfunction. It is important to read the terms and conditions of the plan carefully to understand what is covered and what is not.

Another potential disadvantage is that extended warranties may not always be necessary. Some products are well built and have a low likelihood of breaking down or needing repairs. In addition, some electronics are obsolete within several years. As technology continues to improve, many items are continuously upgraded. Before purchasing an extended warranty, it's important to weigh the cost of the plan versus the likelihood of needing repairs or a replacement.

Is a protection plan worth it?

The decision to buy a warranty plan depends on your personal situation and needs. If you are purchasing a high-end electronic device or home appliance and want to have peace of mind knowing that any accidental damage or malfunction will be covered, then the protection plan may be worth the added cost.

Allstate also offers a 24/7 customer service hotline, so you can get help with your warranty claims anytime you need it. However, if you feel that the cost of the plan is too high or the potential benefits do not outweigh the cost, then it may not be the best choice for you.

If you're a Costco member and are looking for a cost-effective way to extend coverage on select products, Allstate's protection plans could be a good choice. However, before making any purchases, it's important to compare different plans and read the terms and conditions to determine if an extended warranty is the best choice for you. You will also want to weigh the cost against the likelihood of needing to use the coverage. By doing your research, you can make an informed decision that suits your needs and budget.