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Extended warranties typically cover 12% of the statistical probability of an item breaking, such as electronics, computers, or cars. This means that only a small portion of the money paid for the warranty goes towards covering repairs, with the majority going towards salaries, overhead, profit, and marketing fees. For example, if you buy a $1500 extended warranty for your car, the dealership likely profits around $700, but the average repair cost would only be $180.
