When you buy a big-ticket item, such as a microwave, stereo or television, you may be offered a service contract. Warranties are included in the price of the product.
Service contracts come separately from the product, at an extra cost.
It may only cover certain parts of the product or specific repairs. Service contracts do not cover repairs resulting from misuse or failure to maintain the product properly. Also, you may be obligated to take certain action, such as notifying the company of problems, to insure that the service contract is not voided. Before considering a service contract, make sure you understand your warranty coverage. Compare the coverage of your warranty to the coverage offered by the service contract to decide if the contract is worth the additional cost.