See my update on how London Drugs resolved this situation.

I know, I know…extended warranties are a scam, a way for electronics stores to up the profit margin on consumer electronics sales. But when our Olympus camera blew a pixel after less than two years, we replaced it with a Canon that we purchased from the same London Drugs that sold us the first camera — but this time we backed it up with an extended warranty. Maybe it was a scam, we figured, but at least we’d save ourselves some hassle if the thing broke down.

Sure enough, the LCD went wonky within months of our purchase, and our video captures became unwatchable. We took the camera back to London Drugs, who shipped it off for repair under the manufacturer’s one-year warranty. Six weeks later, we got it back…and then this spring, the problem recurred. Since we were just weeks away from the arrival of our second child, we took the camera right into London Drugs for repair, so we’d have it back in time to capture our new baby’s first weeks.
This time, the extended warranty kicked in, and London Drugs shipped the product off to Victoria Camera Service, the West Coast repair shop for VAC Service, who provides London Drugs with extended warranties. Another six weeks passed before we got our camera back — and less than two months later, the problem recurred again — just in time to screw up our photos and videos of new baby. And just weeks before the warranty is set to expire.
With a third-time recurrence of the same problem — just weeks after a previous repair — I figured VAC would want to resolve the problem conclusively, presumably by replacing the camera or providing credit towards replacement. After all, their web site says their warranties are all about customer satisfaction:

Our OEM programs are designed to increase customer satisfaction, long after the initial manufacturer’s warranty period has expired. Our programs will help you increase after sale product revenues while enhancing brand loyalty. Whether you’re looking for OEM branded service contracts or call handling and administration support, we offer cost effective solutions for the challenges faced by manufacturers.

Apparently, this message has yet to trickle down to their call center. Neither the phone rep nor the center supervisor could offer any alternative to shipping my camera off for another 6-week repair — hardly an attractive option when it means missing a record of my baby’s early days. I figured that if they couldn’t offer a credit towards a new camera, they could at least provide a loaner during their ridiculously slow repair process — but the company insists that my only option is to ship off the camera and miss the next six weeks of my baby’s early life.
I’ve learned my extended warranty lesson, at least as far as VAC is concerned. The extended warranty doesn’t save hassle — it makes hassle. Far better to save the dollars up front and apply it towards replacing the camera when it blows — which is what we would have done eight weeks ago, and which would only have shortened our replacement cycle by a few months.
The good news is that VAC doesn’t have a lock on extended warranty programs. They may provide the warranties for companies like London Drugs and JC Penney, but they DON’T provide the warranties for the Future Shop, Best Buy, or Staples — all good alternatives for buying our next camera.