What’s better…

Extended warranties are almost always a bad deal for consumers. Warranty providers analyze product breakdown histories and repair costs, then structure their coverage to limit the number of claims — often by strategically limiting what is covered and/or how long coverage lasts.

Those tempted by extended warranties despite their drawbacks should at least read all the fine print to understand what they’re getting. For instance, you don’t want to have to pay high shipping charges to get your item to the repair center, especially if it’s a large item, and you don’t want a warranty that allows the warranty provider many weeks to make repairs, especially if it is an item that you use every day, such as a refrigerator.

Computers are especially likely to break down during their extended warranty periods, but the warranty is likely to cost up to one-half the price of the computer — more than most repairs. Also, many problems turn out to be software problems, which are not covered. And many laptop warranties do not cover damage sustained in falls.

ALTERNATIVES

Instead of buying an extended warranty, consider the following…

Use a warranty-extending credit card, such as American Express (800-225-3750, www.americanexpress.com) or Visa Signature (800-882-8057, www.visa.com/signature), which automatically doubles manufacturers’ warranties up to an additional year.

Self-insure. Ask how much the extended warranty costs, then put that amount into an interest-bearing account. Use this account to pay for repairs if something breaks.

AUTOMOBILES

Automotive extended warranties can easily cost more than $1,000 — yet most modern vehicles do not experience expensive problems during their extended-warranty periods, which rarely go beyond seven years or 100,000 miles. (Toyota offers coverage for ten years or 150,000 miles.)

If an extended warranty is worthwhile to you because it helps you sleep at night, bypass the dealership and opt instead for the “mechanical breakdown insurance” now offered by many major auto insurers. This serves a similar function but usually at a much lower price… and buyers can pay for their protection as they go, for increased flexibility.

Example: GEICO Mechanical Breakdown Insurance is available for vehicles less than 15 months old that have been driven less than 15,000 miles. It typically costs less than $100 per year — sometimes considerably less, depending on the vehicle. The coverage can be renewed for up to seven years or 100,000 miles, whichever comes first. There’s a per-repair deductible of $250 (800-861-8380, www.geico.com).

When considering any auto extended warranty or breakdown insurance…

Make sure the coverage allows you to select your own repair shop. Call your preferred shop to make sure it accepts the coverage before signing up.

Scan the contract for a list of parts that are not covered. Good coverage should include everything except parts that regularly wear out, such as brake pads, batteries and tires.

Avoid extended warranties offered by third parties other than large insurers. The terms might sound attractive, but these providers often hide important limitations in contract small print… try to deny valid claims… and/or go out of business, leaving customers with worthless warranties.