Nowadays, service contracts are offered on everything from toasters to stereos to automobiles. A retail clerk may urge you to buy a service contract at the point of sale, or you may get letters or phone calls later promoting the contracts. Service contracts might be offered by the retailer, the manufacturer, or a separate third party. Sales of service contracts can be lucrative, and that's why sellers work hard to promote them. Profit margins on the contracts sometimes are higher than on the sale of products themselves.
Some companies find loopholes or other reasons to deny coverage.
A service contract might be a waste of money if the manufacturer's warranty is sufficient, or if the product is unlikely to need repair at all. Take your time to make a decision. Be sure to get a copy of the full contract and read it carefully. If an item isn't listed as covered, assume that it is not covered. Check if you are required to have repair work done only by the retailer who sold the service contract.