Best Buy will sell you a four-year protection plan for a television for $329.99. It sits on the site as its own product, SKU 6730889, priced like a soundbar. The national average for a television repair runs $100 to $300, with a common fix like an LED backlight replacement landing around $210, according to 2026 cost data compiled by Angi. Put those two numbers side by side and the question of whether an extended warranty is worth it starts answering itself before you get to the checkout screen.
Here is the part almost nobody tells you, though. If you already bought one, you can probably get most of your money back this week. Every state that licenses service contract providers requires the contract to be cancellable, and the refund rules are written into law rather than left to the store’s discretion. That clause is the most valuable thing in the document, and it is the one section the person at the register will never read to you.
The price of the plan tells you the odds
A service contract is insurance. The company selling it has to collect more in premiums than it expects to pay out in claims, or it goes under. Industry benchmarking published in All Shield’s 2026 Warranty Program ROI Benchmark Report puts the healthy target loss ratio for a warranty program at 45% to 60%, meaning 40 to 55 cents of every dollar you hand over is never expected to come back as a repair. Gross margins on these plans commonly run 40% to 70% across product categories, against 4% to 8% on the electronics they are attached to, and the retailer typically keeps 25% to 50% of the plan revenue as commission.
Point of sale attach rates in that same report run 20% to 30%, which means roughly one shopper in four says yes, and that is why the offer follows you to the payment screen. The television is close to a break-even sale for the store. The plan is where the register actually makes money.
That does not make the plan a fraud. It makes it an insurance product with insurance pricing in it, sold by someone whose commission depends on you not doing the arithmetic.
An extended warranty is worth it only when the repair would actually hurt
Insurance is worth buying when the loss would be financially unsurvivable: a house fire, a hospital stay, a car totaled on the interstate. You pay a known premium to avoid an unknown catastrophe.
A $210 backlight repair is not a catastrophe. It is a bad week.
The Federal Reserve Bank of St. Louis made this point plainly in a Page One Economics essay on extended warranties, and the numbers it cites are worth sitting with. Drawing on Consumer Reports survey data, the essay notes that the average extended car warranty cost $1,214, while the median amount buyers actually received back in covered repairs was $837. The typical buyer overpaid by $377. And 55% of people who bought one never used it for a repair at all.
Service quality is part of the trade too. Among people who had an appliance repaired under a service contract, 23% said it took more than one attempt to fix it correctly, compared with 15% of people who paid for the repair themselves. You are not only paying a premium. In some cases you are also giving up the right to choose who touches your equipment.
You may already own some of this coverage twice
The Federal Trade Commission’s guidance on extended warranties and service contracts leads with a test most shoppers skip: compare the plan to the warranty that already came with the product. If the plan does not cover more than the manufacturer’s warranty does, it is not worth buying at any price, because the first year or two of what you paid for is coverage you already had.
The FTC also flags the costs buried below the sticker price. Some contracts charge a deductible or a service fee every time work is done. Some cap reimbursement. Some pay out the depreciated value of the item rather than the cost to fix it, which on a three-year-old television is not the same number at all. And if the cost of the plan gets rolled into a loan, you are paying interest on the premium for the life of the loan.
Check your credit card before you decide, too. Some cards still extend the manufacturer’s warranty by a year automatically when you pay with them, and some issuers dropped that benefit years ago without telling anyone twice. Open your card’s benefits guide and search it for “extended warranty.” If it is there, the first year of any store plan you buy is coverage you are purchasing a second time.
The four-year math on a $1,299 television
Run it with real numbers. Say you buy a $1,299 television and Best Buy offers the four-year plan at $329.99. That works out to $6.87 a month, which is exactly how the offer is framed to feel small.
Now price the risk. Assume one chance in ten each year that the set needs a covered repair, which is generous toward the plan for a modern flat panel. Over four years, the probability of at least one claim is 1 minus 0.9 to the fourth power, or about 34%. Multiply that by the high end of the repair range, $300, and the expected value of what the plan pays you is roughly $103. You paid $329.99 for it.
Push the assumptions hard in the plan’s favor and it still barely gets there. Raise the annual failure chance to 15% and the repair cost to $700, and your odds of a claim over four years reach about 48%, for an expected payout near $335. That is a coin flip that lands on break-even, and only if you accept failure rates and repair bills at the pessimistic edge of plausible.
Compare that with keeping the $329.99. Parked in a savings account paying 4%, it grows to about $386 over the same four years. If the television dies, you pay the repair bill out of that and keep the rest. If it does not, you have $386 toward the next one.
Every service contract has to let you cancel, and almost nobody does
This is where the money actually is, and it is the part the “is it worth it” articles leave out entirely.
Texas licenses service contract providers through the Department of Licensing and Regulation, and its rules under the Service Contract Regulatory Act give the clearest statement of the standard structure. A service contract must allow the holder to cancel at any time. Cancel within 30 days of signing and you get a full refund with no cancellation fee. Cancel after day 30 and you get a pro rata refund for the unused term, minus a cancellation fee that cannot exceed $50. Other states run the same architecture with local variations, and California requires the refund even when you have already filed a claim, prorated for the value of services performed.
Do the arithmetic on that $329.99 plan. Thirteen months into a 48 month term, you have used 27% of the coverage. A pro rata refund on the remaining 35 months is about $240, less a cancellation fee, so call it $190 to $240 back on a plan you forgot you were carrying.
To do it, dig out the contract or call the retailer and ask for the service plan administrator, send written notice of cancellation, and keep a copy. Texas gives providers 45 days to pay before a penalty attaches, and other states set similar clocks, so note the date you sent the notice.
Where the money goes instead
The move is not to lecture the clerk. Decline the plan, and if the pressure at the register wins, go home and cancel inside 30 days for the full refund.
Then take whatever the plan would have cost and route it somewhere it earns. A $330 repair fund covering the electronics in your house does the same job as four separate protection plans, except the money stays yours when nothing breaks. If you are buying big this quarter, the same logic applies to when you buy: our look at the best time to buy appliances in 2026 covers open box pricing, and the price adjustment blackout around Black Friday explains why the week you buy matters more than the discount tag.
Is an extended warranty worth it? For a small number of buyers with a genuinely failure prone product and no cash cushion, sometimes. For most people holding a $329.99 offer on a $1,299 television, no, and the refund window means saying no is still available after you have said yes.
