When you purchase new electronics or appliances, chances are the salesperson will encourage you to buy an extended warranty to go with it.

But more often than not, consumers later learn that the warranties they purchased either don’t cover what they thought or the process is more complicated than expected.

Five tips to understanding extended warranties:

  1. Get all the facts: When considering buying a warranty, have the store employee thoroughly explain the extended warranty to you. Often, they tend to present only the portion that sounds good. Ask your salesperson what happens to the warranty if the store goes out of business.
  2. Know your options: Your credit card company might offer an additional warranty if you use its card at purchase. Many expensive items can be added to your homeowners‘ insurance policy for less than the cost of an extended warranty. Some retailers offer extended warranties at no charge.
  3. Check the terms: Your manufacturer’s warranty is free, so don’t buy extended warranties that start from the date of purchase. But those that begin when the factory coverage ends. Most extended warranties do not cover accidental damage. Your homeowners’ insurance may cover accidental damage, though.
  4. Consider a third-party provider: These providers tend to cost less for the consumer, up to 40 percent less in some instances, and may have a quicker claims process.
  5. Research the product: Before you buy, determine how the product has performed in the past. Can you afford to repair or replace it if it breaks? Would you be more likely to replace it anyway, rather than bother with and wait for a repair? How quickly will the technology change, and will you be ready to upgrade when this one wears out?