# Warranty Value Calculator

> Is the extended warranty worth it? Expected payout vs. price and break-even failure rate. Enter the warranty price, how many years it covers, what is already covered by the legal or manufacturer warranty, a failure probability, repair cost, deductible and the chance a claim is approved. The calculator shows the expected payout, the expected net value and the failure rate at which the warranty would break even.

Part of usefulweb.site (https://usefulweb.site/). Results are deterministic calculations from the inputs and the listed assumptions; the API returns exactly what the web page shows.

## Use it
- Human interface: https://warrantyvaluecalculator.usefulweb.site/ (interactive tool at https://warrantyvaluecalculator.usefulweb.site/tool)
- JSON API: POST https://warrantyvaluecalculator.usefulweb.site/api/v1/calculate with a JSON object of inputs (schema: https://warrantyvaluecalculator.usefulweb.site/api/v1/tool)
- OpenAPI: https://warrantyvaluecalculator.usefulweb.site/openapi.json
- MCP (Streamable HTTP): https://warrantyvaluecalculator.usefulweb.site/mcp - tool `warranty_value_calculator`

## Inputs
- currency (text): Currency - Shown in results only; no conversion is performed.
- itemPrice (number, required): Item price
- warrantyPrice (number, required): Warranty price
- coverageYears (number): Warranty covers (from purchase)
- overlapYears (number): Of which already covered by legal / manufacturer warranty - E.g. 2 years of statutory warranty in the EU; set 0 if the warranty starts after it.
- annualFailureProbabilityPercent (number): Chance of a failure per year - Your estimate; reliability differs a lot by product and brand.
- averageRepairCost (number): Typical repair cost
- deductible (number): Deductible per claim
- claimApprovalPercent (number): Chance a claim is approved - Exclusions (accidental damage, wear) often reduce real coverage.

## Method
- Effective years = coverage years − years already covered by the legal/manufacturer warranty (floored at 0); during the overlap the extended warranty adds nothing for defects.
- Payout per claim = min(average repair cost, item price) − deductible, floored at 0 (a repair costing more than the item is replaced instead).
- Expected approved claims = effective years × annual failure probability × approval probability (at most one failure per year, years independent).
- Expected payout = expected approved claims × payout per claim; expected net value = expected payout − warranty price.
- Probability of at least one approved claim = 1 − (1 − p × a)^years, with p = annual failure probability and a = approval probability.
- Break-even failure probability = warranty price ÷ (effective years × approval probability × payout per claim).
- Verdict: worth it if net value > +10% of the warranty price, not worth it if < −10%, otherwise marginal.