Example 1: A couple of years ago, I purchased a "floor sample" Phillips DVD recorder from Circuit city. Even though It was a "demo", it came with a standard Manufacturer's warranty and before the 1 year period was up, it developed a problem. Phillips honored the warranty and accepted it for service at no charge. No sooner than I had received it back, the extended warranty sales department sent me a solicitation offering me a 3 year extended plan for about $60. The sales pitch listed two of the most common repairs priced out at over $200 each and then proceeded to extol the virtues and value of this $60 "investment", so I took the bait & went for it... Fast forward 2.5 years into this 3 year extended period & I realized that the original repair had not been done properly (I checked it out when I got it back, but had never actually used it). I thought to myself: "no problem" I called the phone number listed on my warranty contract and was told that Phillips WILL NOT service my unit. They did not say that they could not service it, they stated that they WOULD NOT. They also stated that my particular model had been discontinued, so they could not replace it either. Instead, they offered me a "comparable" refurbished unit. At first, I thought this was a good thing. The customer service rep. sent me the specs & I decided to browse C/net for reviews and comments. It turns out that the model that I was offered was riddled with problems, not to mention the fact that recordings did not conform to standard DVD format. So, I rejected the offer and asked for a different model. The customer service rep told me that internet reviews were not valid as reason to reject this unit & basically told me to "take it or leave it" I was incensed by this poor customer service & went to the Phillips website to find the head of Customer service. Instead, I came across the name & E-mail address of the CEO, so I wrote to him detailing this whole ordeal, starting with bad repair job. He wrote me back telling me that he was forwarding my claim to the "escalated issue" department where I was offered a "buyback of my $60 contract + $60 which I could use to either repair my existing unit or buy a new one. I took the offer, but was then harassed by the warranty department to send them the broken unit.
which I did at their expense.
Example 2: I purchased a Creative labs Zen from an Ebay dealer & was offered an extended warranty from SquareTrade. I decided that the $22 they were charging was a worthwhile investment. Since it was a small, portable electronic device, I thought that it would probably fail within a year. So far, it's been about 15 months and still going strong with no problems. However, one of my friends bought the same device for her daughter, but did not buy the extended warranty & hers failed just outside of the manufacturers warranty period. Total cost of out-of-warranty repair, was in excess of $100
The moral of this long winded story is that in many cases, products are discontinued and the service centers will no longer repair them, thus making extended warranty service difficult to collect. As stated in one of the other posts, READ THE TERMS CAREFULLY BEFORE SIGNING UP.