Would I have been better off with the service plan?

We just had to have one of the sump pumps in our basement replaced.  This is probably just bad luck, but you could make a good argument that I brought this on myself.  When Hurricane Irene passed through New England, I jinxed myself by offering on Facebook that if anyone needed to borrow our 16 gallon wet-vac, they were welcome to it.  The wet-vac had been sitting idle in our basement for over 5 years.  We bought it when we had some serious water leak issues, but in 2006, we brought in Boston Basement Technologies to put in water barriers and a second sump pump, and it had been dry ever since.

Naturally, about 15 minutes after posting the offer of the wet-vac, an alarm started going off in the basement.  It turned out that sump pump was not working, and the water level in the hole where the pump sits had risen high enough to trigger an alarm.  I brought the wet-vac out of retirement to pump out the hole and then worked with my father to see if we could fix it (my parents somehow seem to conveniently time their visits with major weather events like monster snow storms or hurricanes).  While we managed to clean out some sediment and try snaking the the discharge pipe, we couldn’t get it working.  The motor would hum, but no water would move.  Fortunately, Irene never hit Cambridge, MA directly, so we never had any rise to the point of leaking into the basement itself.  We pumped the water out of the hole with the wet-vac a couple of times, but I don’t think it was necessary.

A few weeks after the storm, I made an appointment for Boston Basement Technologies to come out and try to fix it.  While they do excellent work (that water barrier has been great), their service scheduling is pretty poor.  Back in 2006, they cancelled my installation appointments twice.  This time, sure enough, they called 1.5 hours into my two hour service window to say the tech had a personal issue and they needed to cancel.  They finally made it out this past Friday morning.  The tech checked the pipe, then determined that the sump pump had failed and would have to be replaced.  He had a new one in the truck.

How much for the sump pump?  $850.  For a sump pump?!  But the fact of the matter is that I needed the sump pump fixed and really did not have the time to start comparison shopping with other services.  So I agreed.

Then I asked about the warranty.  They told me the warranty was one year from the manufacturer, but as long as I had Boston Basement Technologies come out for an annual service visit, they would extend that warranty indefinitely. How much was the annual service visit, I asked?  $165.  I had no recollection of them telling me back in 2006 that an annual service appointment would extend the warranty indefinitely, but I’m sure they did.  As a general policy, I never purchase warranties or service contracts.  

My experience with most technology is that it either fails within the first few months or it lasts for years, probably beyond its usefulness.  Since warranties often run around 15-20% of the cost of the original item, self-insuring seems a much better deal to me.  I look at it this way: if a warranty costs 20% of the cost, and I buy warranties on five different products I buy, I effectively bought a 6th product up front.  If one of those five fail within the warranty period, I would get a replacement, but I effectively paid for it up front when you factor in all the warranties.  Or, I could wait until one of them actually fails and pay for a replacement myself then, costing me the same money in the end.  I would need for more than one out of every five products fail within that extended warranty period for it to become cost effective.  This hasn’t been my experience with most products, so I’d rather save my money.

The failed sump pump made me revisit my bias against warranty and service contracts in my head.  Let’s see: I bought the original sump pump in 2006, and this is five years later.  That would mean five service appointment visits (5 x $165) for a total of $825.  Since the new sump pump cost me $850, that was right about break even.  Had the sump pump failed last year, the service plan would have made more sense.  Had it failed next year, it would have undoubtably been better to skip it.  Even beyond the dollars, getting these annual service plans is a major hassle.  I have to arrange to be home from work on the day of the service appointment, and Boston Basement Technology’s track record for showing up at their service appointments has been less than stellar in my experience.  Once I factor in the time I have to spend dealing with them, it clearly is not worth it.

So I think I made the right decision.  I don’t think i will be getting annual service plans on this new sump pump either.  I’d rather keep the cash in my pocket as long as possible and avoid the scheduling headaches.  More importantly, I watched everything the tech did when he replaced the sump pump.  It doesn’t look that complicated, now that I see how the pipes fit together.  If it fails again, I think I might take a stab installing a much cheaper one from Home Depot myself now that I know what to do.
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