Weighing a one-warranty-for-all offer
Imagine an all-purpose warranty that would cover, for less than $10 a month, just about every appliance and electronic gizmo in the house.
As of today, it exists. GreenUmbrella.com, backed by the giant credit-reporting agency Experian, offers a warranty that covers repairs or replacement of your home computer, blender, MP3 player, washing machine, stereo speakers, electronic toothbrush, coffee maker, refrigerator, iron, electric shaver and flat-screen TV. And dozens of other items.
But there is a big asterisk. No matter how many appliances and electronic goodies are in the house, GreenUmbrella allows its subscribers only two claims in a year.
For example, if your clock radio and clothes dryer give out this month and you make claims on both, you’ll have to wait until August 2009 to make another claim.
Mike Balducci, general manager of Irvine-based GreenUmbrella, said the two-a-year rule strikes a balance between providing coverage to subscribers and protection for the company.
“We think the typical consumer will have more than adequate coverage,” Balducci said, based on projected failure rates for appliances and electronics. “At the same time, we had to protect ourselves against fraud.”
But what if a paying customer has legitimate, back-to-back product problems?
Balducci suggested restraint.
“Consumers might need to practice some discretion,” he said, when it comes to “a small-ticket item like a coffee grinder.”
There are other less-daunting asterisks.
Like most service agreements, GreenUmbrella’s don’t cover accidental damage. Nor do they allow for problems because of natural disasters, such as earthquakes.
In addition, GreenUmbrella doesn’t cover two specific product categories: cellphones and exercise equipment.
The cellphone exemption has to do, in part, with the possibility of fraud.
“There are people who break them just to get an updated model,” Balducci said.
As for exercise equipment: “It takes a pounding.”
On the upside, the GreenUmbrella service is likely to replace smaller items rather than go through the possibly time-consuming process of repairing them, Balducci said.
Major appliance or electronic equipment repairs generally will be handled by in-home service calls.
The plans run concurrent with manufacturer warranties, which usually run out in a year or less, but GreenUmbrella might provide more.
For example, some manufacturers of rear-projection televisions, such as those using digital light processing (DLP), do not cover the replacement of the light-source bulbs in their free warranties. GreenUmbrella does.
Still, the new service is unlikely to sway watchdog magazine Consumer Reports, which has done several reports on extended warranties that go above and beyond what manufacturers offer for free.
“We found that it’s almost always a waste of money,” said Greg Daugherty, executive editor of the magazine.
The money poured into an extended warranty, he said, isn’t often surpassed by repair costs during its term.
He said warranty-type programs have their place, but he advised not getting carried away.
“You need to cover the big risks in life,” Daugherty said. “Life insurance, if there are people who depend on you. Car insurance. And you want to try to have good health insurance if you can find it.
“And then, if you want insurance for every clock radio you have in the house, feel free.”
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