Are extended warranties worth the cost? Or are they a scam?

What do furniture warranties actually cover?

Why did furniture companies start offering extended warranties?

What’s the difference between extended warranties and factory coverage?

Answer:

Furniture warranties & Extended warranties have three primary purposes:

Marketing

Creating the “perception of quality” for a brand or product.

Legal protection

For retailers and manufacturers against consumer complaints.

Additional profit for retailers

Extended warranties are the highest profit item sold by furniture stores.

How warranties are used by retailers & manufacturers to avoid costs and increase profits.

At the end of the article is an annotated copy of a Wayfair extended warranty.

A Flexsteel manufacturer’s warranty is also analyzed in detail.

My annotated comments at the end of the article highlight specific terminology used in actual warranties.

They provide detailed explanations of how retailers & manufacturers avoid liability for most warranty claims.

Warranties Are A Marketing Tool

Customers want to be told that their furniture is well made and will last a long time.

They want to be told that they will be protected if the furniture is defective or arrives damaged.

The large bold print at the top of the warranty tells customers the things they want to hear.

Very few customers read beyond the big bold broad coverage terms to the smaller print, often scattered in multiple places throughout a long document, that disqualifies almost everything they think is being promised.

Warranties Are Legal Documents

They’re written to protect manufacturers & retailers – not consumers!

Furniture is fragile. It can be damaged in shipping or can “wear out” in just a few years.

Wood furniture shipments often arrive at the retailer’s warehouse with minor damage.

Often it is uncartoned, inspected and “touched up” before delivery to your home.

Before picking up cartoned furniture at the retailer’s store or warehouse, have it taken out of the boxes.

Then inspect it carefully.

The receipt you sign may certify that you have picked up the furniture in good condition. This is a legal document!

If the cartons remain sealed and you do not inspect the furniture until you get home, the retailer may disclaim any responsibility for damage you subsequently discover.

Large, heavy upholstered furniture is more likely to have hidden damage from shipping.

Reclining sofas or sleepers are especially vulnerable to being dropped or mishandled during shipment or delivery.

Inspect the furniture as soon as you can.

There is often a time limit for claiming shipping or delivery damage.

If you have even a small suspicion that something might be wrong, notify the retailer immediately.

Do not phone! You want a paper trail that can be referred to later, if necessary.

Send emails so that you can later show proof of the date when the defect was first discovered.

Aside from damage caused during shipping, most customer complaints and warranty claims concern problems that occur over extended time periods.

Warranty coverage that doesn’t cover.

Most common types of problems will be excluded from coverage. These include:

Cushion problems:

Worn-out, sagging or uncomfortable cushions are all excluded.

This includes cushions that have lost their shape or resilience, even after a very short time period.

If you read the preceding paragraph and think to yourself, “That doesn’t apply to me. My warranty says my cushions are covered for life,” keep reading this article until you get to the detailed analysis of an actual warranty document.

Fabric problems:

Exclusions include peeling, pilling, stains, discoloration, open seams and “normal wear and tear.”

Frame and foundation problems:

Squeaks, sags and wobbly arms that occur over time will not be covered.

Proving that a frame problem is a manufacturer’s defect can be a long and difficult process.

Unless this is noted when the furniture is brand new, it will be attributed to either “normal wear and tear” or “customer abuse.”

Watch out for an incredibly tricky clause that will specify the warranty only covers “accidental” damage.”

Damage that occurs over extended time periods is excluded.

Mechanism problems:

Defective mechanisms are usually covered if the problem occurs during the limited time period specified in the manufacturer’s warranty.

Don’t be surprised if the warranty coverage does not include shipping and installation costs.

For older or discontinued items, replacement mechanisms may no longer be available.

The Burden of “Proven” Defects

Manufacturers will cover proven defects in materials or workmanship.

But proving that your furniture has a manufacturing defect can be extremely difficult and frustrating.

You may have to prove that the defect was present when you first received the furniture.

Manufacturing defects that do not show up (and are reported) within the first year are usually excluded under the standard “normal wear and tear” exclusion clause.

Repairing or replacing defective furniture or parts is expensive.

From a retailer’s perspective, repairs and replacements are a direct cost against profits.

These costs can be substantial. Retailers do everything possible to avoid them.

Furniture quality has declined over the past decade.

The dramatic increase in lower quality furniture products has resulted in far more warranty claims than in the past.

Reclining furniture, the fastest growing industry category, also has the highest rate of consumer complaints and warranty problems.

Manufacturers & retailers are well aware of the massive costs they could be exposed to because of lower quality furniture products.

Upholstered furniture average lifespan has declined from 10 years to 5 years.

This reduced lifespan (and higher inventory turn) increases profits for furniture retailers, unless increased warranty and repair costs overwhelm the financial benefits of selling more furniture.

Repairing defective furniture is expensive and disruptive to the normal manufacturing and selling processes.

Taking care of warranty claims is neither profitable nor enjoyable for manufacturers and retailers.

Manufacturers have traditionally reacted by structuring warranties so that very few potential problems are actually covered.

Retailers used to follow the same logic, but have recently evolved into a far more profitable solution.

Over the past decade, furniture retailers have transformed warranties from a significant negative cost on their income statements into a highly lucrative profit center.

Introducing the Extended Warranty

Extended warranties have been available in the furniture industry since the 1980s, but were not fully weaponized until the past decade.

The pressure to add an extended warranty is intense.

The basic pitch is that without the extended warranty, you have no recourse for any problems that might occur.

With the extended warranty, you have complete protection for almost anything that can possibly go wrong.

The language of the warranty seems to confirm this – all the way up to the point where most people stop reading the warranty document.

Very few furniture purchasers (or retail salespeople) actually read and understand the entire warranty document,

The sad reality is that the legal and furniture industry terminology hides the fact that warranty documents offer very little protection for most potential problems.

From the retailer’s viewpoint, the extended warranty is a “win-win” product. They make substantial profits for doing nothing.

The retailer does not stand behind the extended warranty.

Although the retailer receives about 1/3 of the money you paid out, they have no responsibility for servicing claims.

Even better, it completely eliminates all of the costs the retailer used to incur for servicing warranty claims.

Manufacturers do not receive any of the money you pay for your extended warranty.

Extended warranties transfer responsibility for servicing customer claims to a 3rd party insurance-type company.

That 3rd party (which is not a furniture company) is who you contact if you need to make a warranty claim.

3rd party service companies are impervious to customer complaints, since those are almost always directed at the retailer.

Manufacturers’ warranties also do not apply if you are covered under an extended warranty.

Extended warranties do not apply if the manufacturer’s warranty is in effect.

It is not unusual for consumers to find themselves bounced from one warranty to the other.

Determining responsibility for warranty coverage is not always obvious.

Manufacturers’ warranty costs have to be built into their administrative costs.

As a result, manufacturers are careful to craft warranties so that they have very little exposure to anything that might result in a significant cost.

Manufacturers will take responsibility for repairing (or replacing) products with provable manufacturing defects.

The problem is that proving that a product is “defective” in a way that is covered by a manufacturer’s warranty can be quite difficult.

Many of the costs involved in repairing defects are shifted to the customer.

Customers are often responsible for shipping costs.

They may also be responsible for labor costs.

Shipping and labor typically costs far more than the cost of replacing a damaged part.

Cartoning and shipping large pieces of furniture can be prohibitively expensive.

The cost of shipping small items can be surprisingly expensive.

For example:

Shipping a set of replacement seat cushions will cost at least $100.

Shipping costs can easily exceed $200 for individuals without access to special shipping rates.

Retailers earn a sizable profit on your extended warranty.

According to ConsumerAffairs.com this can be 200% or more.

About half of this amount will go to the 3rd party actually servicing the warranty.

The other half is pure profit for the retailer.

The 3rd party insurance company servicing the warranty needs to make a profit on only 50% of what you paid.

Keep in mind that if the furniture store thought they could make a profit servicing the warranty for the amount they pay the 3rd party, they would have kept the entire amount you paid and serviced the warranty themselves.

Extended furniture warranties are different.

Extended furniture warranties are different from extended warranties for cars, appliances or electronics.

Car companies keep the full amount you pay and do the servicing themselves.

Electronics and appliances have predictable, fixed costs and a very predictable lifespan.

Even with these advantages, most experts who study extended warranties do not recommend them.

From an economic perspective, extended furniture warranties are almost never worth the cost.

The only way an insurance company can make a profit on an extended furniture warranty is by reducing costs.

Costs are reduced by discouraging and rejecting as many claims as possible.

Eliminating potential claims is the most important factor in making profits.

Extended warranty providers are experts at this.

Extended warranties do not cover anything that is also covered under a retailer or manufacturer warranty.

This can include denied claims under other warranties.

Example 1: You call the extended warranty company to fix a sofa with a broken (non-removable) leg.

They will immediately refer you to the manufacturer’s warranty.

The manufacturer agrees to repair the broken leg, but points out under their warranty you are responsible for all shipping and labor costs after the first year.

These costs amount to several hundred dollars.

Because the problem was covered under the manufacturer’s warranty, it is ineligible for the extended warranty coverage.

Example 2: The manufacturer rejects your claim for warranty coverage of the broken leg on the grounds that an inspection indicated “customer abuse.”

The extended warranty does not apply for the same reason.

Extended warranties exclude coverage for anything that falls under the jurisdiction of the manufacturer’s warranty.

This applies whether or not the manufacturer accepts or denies the claim.

When you purchase an extended warranty your salesperson will tell you all of the things the warranty covers.

They will never tell you about what the warranty does not cover.

For example:

Wayfair’s advertises its extended warranty as covering “accidents, common malfunctions, and product failures from normal use.”

This is further defined as “Coverage for accidents (like stains, rips, burns, and chips) and coverage for common malfunctions (like broken hardware and seam separation).”

Wayfair’s SquareTrade Protection Plan includes a paragraph stating that its coverage includes:

Where the problem occurs as a result of normal use of the Product, as follows: seam separation; broken hardware and pulls; separation of joints and welds; structural defects to frames, cases, seat or back construction; broken hinges, casters, slides, drawer pull/guides or swivels; and damaged mechanical elements.

Taken together, the coverage listed above sounds pretty comprehensive. But that is before any exceptions have been listed.

Below is a list of exceptions taken from Section 8A of the SquareTrade contract.

The title of this section is, “WHAT IS NOT COVERED.”

My annotated notes are in RED.

(A) Except as otherwise provided, normal wear and tear;

The term “normal wear and tear” is used to exclude the most common problems that customers are likely to encounter.

It includes worn out cushions, loss of foam resiliency, worn out or peeling fabrics and many other problems that customers think are covered.

(B) Any and all pre-existing conditions that occur prior to the Coverage Start Date of this Protection Plan;

(C) Natural flaws or inherent design or manufacturer’s defects;

For upholstery this can exclude frame or foundation problems, fabrics that fall apart and cushions that collapse.

For wood products this can exclude: delamination of wood or plastic surfaces, staples that pull out, fasteners that loosen, warpage and many other problems.

(D) Intentional damage;

(E) Lost, stolen or irretrievable items;

(F) Any Product that is fraudulently described or materially misrepresented;

(G) Secondary or collateral damage;

(H) Except as otherwise provided, maintenance, service, repair or replacement necessitated by loss or damage resulting from any cause other than normal use, storage and operation of the Product in accordance with the manufacturer’s specifications and owner’s manual;

This is a wonderful clause.

Paragraph (A) excluded coverage of damages caused by “normal wear and tear.”

Here we are excluding “loss or damage resulting from any cause other than normal use.”

The extended warranty will not cover any repairs that you have attempted yourself or had done by other professionals.

This includes damage or stains that were not removed by professional cleaning services.

(I) Damage caused by exposure to weather conditions, improper electrical/power supply, improper equipment modifications, add-on products or accessories, attachments or installation or assembly, collision with any other object, vandalism, animal or insect infestation, corrosion, battery leakage, act of nature (any accident caused or produced by any physical cause which cannot be foreseen or prevented, such as storms, perils of the sea, tornadoes, hurricanes, floods and earthquakes) or any other force majeure or peril originating from outside the Product;

Many people who purchase extended warranties believe it will protect them in case of hurricanes, floods etc.  It does not!

(J) Damage caused by “accumulation,” including, without limitation, damage from any repeated use or gradual buildup of dirt, dust, oils or similar, such as hair and body oils, perspiration or darkened bodily contact areas;

(K) Damage caused by: any improper care, negligence, neglect, intentional acts, misuse or abuse of the Product; any repair, replacement or handling of the Product other than as recommended or authorized by the manufacturer and/or Us; or any failure to comply with the manufacturer’s warranty;

This clause can exclude coverage for many reasons you may not associate with negligence or abuse.

A few of these may include: Damage related to smoking, using common fabric protection or cleaning products, damage caused by pets or unsupervised children, and more.

(I) Damage caused by cleaning methods, products or materials;

Damage caused by not cleaning or maintaining the product will be excluded elsewhere.

Paragraphs J through L refer to non-furniture products and have been left off this article.

(M) Defects due to the installation, assembly or hookup of Your Product;

(N) Damage caused by transit, delivery, redelivery, removal or reinstallation of the Product, or the Product being moved between different locations or into or out of storage, including damage caused by packing or unpacking of the Product;

A significant percentage of customer complaints relate to damage related to these causes. They are not covered!

(O) Claims made under any improperly or incorrectly purchased Protection Plan;

(P) Except as otherwise provided, “cosmetic damage,” defined as any damages or changes to the physical appearance of a Product that does not impede or hinder its normal operating function as determined by Us, such as scratches, abrasions, peelings, dents, kinks, changes in color, texture, or finish or similar conditions;

This is important! 

Many salespeople selling extended warranties (and many marketing materials) will specifically tell you that these damages are covered.

They are not!

Paragraphs Q through U refer to non-furniture products and have been left out of this article.

(V) Except as otherwise provided, any product used for heavy commercial, educational, rental or industrial use;

(W) Product(s) with removed or altered serial numbers;

(X) Manufacturer defects or equipment failure which is covered by manufacturer’s warranty, manufacturer’s recall or factory bulletins (regardless of whether or not the manufacturer is doing business as an ongoing enterprise);

It is not unusual for furniture manufacturers to be out of business or have the name sold to to a new owner.

Extended warranties do not cover you in that case.

Paragraphs Y and Z refer to non-furniture products and have been left out of this article.

(aa) Items sold in a private sale (e.g. flea market, yard sale, estate sale, Craigslist);

(bb) Any Product that is a demonstration/in-store model, or that is sold “as-is”;

(cc) A Product that is no longer in Your possession;

(dd) Any failure, damage, repairs or loss that is covered under any other protection plan, warranty, service plan or insurance.

Anything covered by your manufacturer’s warranty is excluded from this coverage.

Additional exceptions and exclusions are listed in Section 8C of the extended warranty:

(A) Products made of “X” coded fabric, dry cleaning only fabric, non-colorfast fabric or silk fabric;

(B) Natural flaws, inherent design defects or manufacturer’s defects, including, but not limited to, natural inconsistencies in wood grains, fabrics, coloring or leathers; wood stains; delamination of microfiber; manufacturer’s defects of leather or upholstery;

(C) Stains caused by from incontinence, hair and body oils, perspiration, paints, dyes, bleaches, flooding, rust, fire (including cigarette burns), smoke or other caustic materials as determined by Us;

(D) Damage caused the application of topical treatments to the Product;

This includes fabric protection or cleaning products.

(E) Damage to the Product caused by gum, mold or mildew, fading, color loss, non-stain related discoloration, dust corrosion or similar;

Almost all claims related to fabrics will be disqualified.

(F) Odors, pet or animal damage from teeth, beaks or claws;

(G) Splitting, cracking and/or peeling of A&P leather, bonded leather, bycast leather or coated fabrics;

Peeling bonded leather is such a major problem (and so expensive to repair) that it gets its own exclusionary clause.

The other terms used here are sometimes used to describe bonded leathers.

(H) Scratches of any type;

Many salespeople and marketing materials will tell you this is covered.

(I) Loss of resiliency;

This is the number one complaint for upholstered furniture owners.

Cushions on popularly priced couches typically wear out within 3 – 5 years.

For larger individuals (or especially cheap sofas) they may wear out even faster.

This is especially significant for reclining furniture or couches with non-removable seats and backs.

When the foam loses resiliency, the furniture becomes uncomfortable (and may look worn out.)

Most people buy new furniture rather than pay the cost of replacing worn out foam.

(J) Separation of seams along mattress seam lines.

This is the most common complaint about mattresses that have passed the trial period allowed for free returns.

Section 6 of the SquareTrade extended warranty includes still more restrictions:

Depending on the Product and failure circumstances, at Our discretion, We will either:

Repair Your Product (on-site, mail-in or local repair service may be available, in Our discretion);

Replace Your Product with a product of like kind, quality and functionality (replacement products may retail at a lower price than Your original Product); or

Provide a cash settlement or a Gift Card reflecting the replacement cost of a new product of equal features and functionality up to the Coverage Amount.

If We elect to repair Your Product, We will, at Our option,

(1) provide cleaning or repair advice,

(2) mail You a stain removal kit, including products to aid in stain removal,

(3) mail You a parts kit to replace missing or broken parts and/or

(4) arrange for on-site service as described below.

Please note that We cannot guarantee that any such repair or replacement will result in exact matches (such as color matches) with the original Product due to differences in dye lots, natural grains, external conditions or other similar reasons.

Extended warranties have become an important profit center for retailers over the past decade.

It has the highest profit margin of any product sold in the store.

Salespeople are instructed to push hard to add these warranties on to every sale.

They receive a substantial bonus for each extended warranty sold.

This creates a tremendous incentive for sales personnel to oversell the warranties, exaggerating the benefits and completely ignoring exceptions and exclusions.

Extended warranty non-performance is one of the three most common types of complaints cited in furniture reviews.

The other two are worn out cushions and bonded leather.

Most furniture purchased online or through major retailers is now sold with extended warranties.

In addition to an extended warranty you will also be protected by a manufacturer’s warranty.

The manufacturer’s warranty is designed so that it appears to offer tremendous benefits to furniture purchasers.

An equally important function is to shield the manufacturer from potential service, repair and replacement costs.

Manufacturers have a different perspective than extended warranty companies.

Negative reviews do not affect Extended warranty companies.

Complaints are always directed at either the retailer or the manufacturer – never the extended warranty provider.

Manufacturers are more sensitive to negative reviews that can result if their warranty practices appear to be too restrictive.

Although manufacturers also use exceptions and exclusions to limit liability, they also use more subtle strategies.

The Flexsteel warranty listed below is an example of a manufacturer’s warranty.

Upholstered Furniture Limited Warranty Information

Lifetime Limited Warranty

Internal structures:

Springs

Wood frames

Metal bases

Reclining mechanisms

Seat cushion foam

Feathers

Five-Year Limited Warranty

Electrical components

Mechanical components

Sleeper mechanisms

Sleeper mattresses

One-Year Limited Warranty

Finished wood

Plastic components

Metal components

Battery packs

Filling materials

Pillow fiber filling

Upholstery materials*

Very few people read beyond this part of the warranty.

Flexsteel’s warranty appears to indicate that they stand behind the high quality of the brand’s products.

There’ appears to be a lifetime warranty on important parts, including cushions.

Many customers specifically look for long lasting cushions before purchasing.

Cushions are a major source of complaints for mid-priced upholstered furniture brands, including Flexsteel.

The next part of Flexsteel’s warranty document is titled:

Exclusions

The first paragraph states:

“Flexsteel products are not warranted against wear and tear or damage resulting from neglect, abuse, misuse, rental or commercial use, pets, extreme temperatures, exposure to sunlight, chemical treatments, excessive soiling, accidents, or improper storage, care, or cleaning.”

The furniture is not warranted against “wear and tear.”

This is usually interpreted by the manufacturer as meaning that any condition resulting from “normal use” is not covered.

This includes the most common complaint for sofa owners – Cushions that look or feel worn out after only a few years.

Cushion replacements are also excluded from warranty coverage by another clause:

“Slight softening and flattening of seat cushion foam and fibers as a result of normal use and aging is not covered under warranty.”

If that is not sufficient, there is another exclusion which states:

“Under normal use and conditions, cushions may lose up to one inch of the original height standard of the cushion foam core within the first year of use.”

If you call with a complaint that the foam core has lost more than one inch, you will run into another obstacle:

The foam is not the only thing inside the cushion.

There is also a layer of fiber above and below the foam.

Proving that the loss of height was in the foam core and not caused by compression of the fiber is difficult and rarely successful.

Going back up to the top of the document – “seat foam” is listed under the heading of “lifetime warranty.”

This intentionally gives customers the impression that the cushions are so good they will last forever.

On the other hand, when the cushions wear out (a process that is indicated by “softening and flattening”) in the usual 3 – 5 years after “normal use.” they will not be covered.

Flexsteel’s list of exceptions and exclusions is nowhere near as comprehensive as the SquareTrade extended warranty discussed above.

Although Flexsteel takes great care to exclude its most common complaint (cushion and foam replacement), it appears that many other important parts do have excellent warranty coverage including frames, springs, recliner mechanisms, etc.

But there is a catch!

Hidden at the end of a paragraph relating to how a claim should be reported there is a small clause.

After the first year of the warranty period, the purchaser is responsible for “labor and shipping costs associated with returns and repairs.”

Major parts such as frames, springs, mechanisms, etc. are unlikely to break down within the first year, unless they are damaged during the shipping or delivery process.

If the damage occurs during shipping or delivery, Flexsteel is off the hook.

Either the shipping company or the retailer will be liable for repair or replacement costs.

If the damage occurs after one year, Flexsteel is also off the hook (mostly.)

The cost to you of shipping large upholstered pieces to and from a manufacturer’s factory, combined with the cost of labor, will be far more than Flexsteel’s cost of supplying replacement parts.

At this point, you may turn to your extended warranty, which your salesperson assured you “covers everything.”

Unfortunately “everything” does not include anything addressed by the manufacturer’s warranty.

Since you have the option of shipping your furniture off to the factory, it is still covered under that warranty.

The extended warranty does not apply.

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