In general, extended warranties make most sense for products that cost a lot and are based on new, largely untested technologies. One example: big, flat-panel TVs. "They're very expensive and haven't been on the market long enough to know how reliable they are," Heim says.
For those products, the plans are typically what is called a break/fix warranty, says Michael Neumann, manager of culture, training and enrichment at Service Net Solutions, a provider of warranty and service contracts. That means if a big-screen TV goes on the fritz while under the extended warranty, the service company will fix it rather than simply replace it with a new one.
http://www.usatoday.com/money/perfi/...-mym_x.htm#how