Many of us have seen the offers to extend your electronic product’s warranty on eBay or Amazon by purchasing an extended warranty from a company called SquareTrade. SquareTrade offers warranties or warranty extensions for electronics for a claimed 60–70% off. Not bad. But the question is what you are actually buying when you purchase a warranty from SquareTrade. That’s what this week’s Fine Print Friday aims to find out.
SquareTrade considerately provides a one-and-a-half-page “plain English” version of the SquareTrade Service Agreement (PDF) prior to the main service agreement, which is a great feature. I love when companies provide these summaries, but it’s still nice to read through the fine print and see precisely what you are bound to. So the following analysis is straight from the fine print, not the “plain English” translation.
1. Coverage: The warranty covers mechanical or electrical failure of the product for which you purchased the warranty. You need to have been using the product normally (e.g., not using your iPhone as a hammer), and SquareTrade will only repair/replace the item if it is not covered by another warranty at the time. Some things that are not covered are normal wear and tear, theft or loss, battery leakage, cosmetic damage that does not affect the operation of the device, television/monitor screen imperfections, equipment intended for heavy commercial or industrial use, consumable items such as ink or toner, damage to computers from software or viruses, and jewelry or watches that are refurbished at the time of purchase. There are other unsurprising items that are not covered as well. For a full list of what is not covered, see section 10 on page 5 of the Service Agreement.
2. Optional Accidental Damage from Handling: Accidental Damage from Handling (or ADH) coverage is optional additional coverage you can purchase for your device, providing warranty coverage for drops, spills and liquid damage. ADH still does not protect you in the case of theft or loss, abuse of the product, cosmetic damage, or damage caused during shipping—that last one includes shipping between SquareTrade’s service providers and you. Presumably that would be covered by the shipper, although it is not spelled out in the Service Agreement, so it might be a good idea to buy the shipping insurance when shipping your device for repair.
3. Watch Coverage: Watches are covered for parts and labor for defects in workmanship and wear and tear, and covers the watch band, case, crown, cracked crystal, etc. Repair to watches involves you paying for the repair first and SquareTrade reimbursing you, but you should call them about using the warranty prior to getting the watch repaired.
4. Repair and Replacement: Depending on the circumstances, SquareTrade will do one of the following: (a) repair the item, (b) provide cash or a gift card up to the coverage amount, or (c) provide a new or refurbished item with equivalent features and functionality. Two things to note here: (1) The “coverage amount” may not be the full replacement price for your covered device. Each time you use the warranty service, the value of that repair or replacement is subtracted from the coverage amount. That means that only so much repair or replacement will be covered according to dollars in addition to time. (See section 8 of the Service Agreement for more detail on how this works.) (2) It is possible that a replacement device will not be new, and it is also possible that it will not be the same device. So long as it has equivalent features and functionality, it can be substituted for your broken device under this agreement.
5. Your Responsibilities: In order to be able to submit a claim, you need to have the complete receipt for the item you purchased. SquareTrade offers to store a copy of your receipt for you, or you can just hold onto it yourself. I would think that having SquareTrade store a copy and keeping a copy for yourself would be your best bet to make sure that it is available should you need to make use of your coverage. You also need to have selected the right protection plan for your device (no guidance is given as to what happens if you select the wrong plan, or what an incorrect plan is considered to be—does coverage for an iPhone 4 cover an iPhone 4S?). Finally, you need to handle your device with care, maintain it properly, and use it according to the manufacturer’s instructions.
6. Lemons: If your covered device has the same problem repaired 4 times within 12 months, on the fourth instance, SquareTrade will replace the device for you rather than repair it again. The cost of the replacement will not be more than the original purchase price, although that’s not likely to happen anyway given how technology drops in price over time.
7. Surge Protection: Your SquareTrade warranty does cover problems with the device due to power surges so long as the device was plugged into a UL-approved surge protector. Good deal.
8. Free Shipping: For all repair work that requires shipping, your shipping will be paid for by SquareTrade, including shipping to the manufacturer if the manufacturer does not provide shipping coverage.
9. Worldwide Service: SquareTrade’s policy also applies when you travel outside the country. If the device needs to be repaired in a foreign country, you will first need to call SquareTrade to receive an authorization number. Then the device needs to be brought to an authorized repair shop, the repair needs to be paid for by the owner, and the owner needs to apply for reimbursement. It’s a bit more of a hassle than if the problem occurs stateside, but at least it’s still covered regardless of your destination.
And that’s about it for SquareTrade’s Service Agreement. If you need to contact SquareTrade, you can do so by going to http://www.squaretrade.com or by calling 1-877-927-7268.
About Graham Martin
Graham Martin is a solo practitioner focusing on Contract law (including drafting, review, and litigation). He operates Martin Legal Services, LLC in the Minneapolis-St. Paul area.
