An extended warranty or “service agreement” is the type of insurance that you buy to pay for repairs or replacement of appliances, such as washing machines and televisions, if anything goes wrong within a certain period, normally after the manufacturer’s guarantee ends.

Policies cover parts and labour, but there is usually a maximum amount that may be paid out during the life of the policy, and some may have a limit on each claim.

Some policies also cover appliances against accidental damage, theft or frozen food spoilage, but many people will not need this cover, or will have it included in their general household insurance.

Policies usually exclude misuse and non-domestic use, and do not offer cover for cosmetic damage, such as scratches and dents. Consequential losses, such as water or fire damage, won’t be covered either, as claims are expected to be covered under your household policy.

Consumer champion Which? has branded extended warranties a “rip-off”, saying there was only a 15% chance that customers would make a claim on a three-year warranty purchased with a washer-drier.

The Office of Fair Trading, for its part, has dubbed many extended warranties “unfair, uncompetitive and expensive”.

So, if you are nervous that your appliance will give up the ghost the day after the manufacturer’s guarantee ends, and you would like the peace of mind that extra cover gives, what can you do to ensure that you are not being ripped off?

Check your rights under the Sale of Goods Act

Depending on what appliance you are talking about, you could be covered anyway for repair or replacement even after the manufacturer’s guarantee has run out. This law only applies if the appliance had something wrong with it when you bought it, although you may not have discovered the fault at the time of purchase. It would be up to you to prove the fault was there when you bought the item, which could be tricky, but it is sometimes possible, and worth a try for expensive items.

Be choosy about the manufacturer when you buy

Some manufacturers make products that are more reliable than others. Also, some manufacturers offer a two-year guarantee as standard rather than the usual one year. 

Choose where you shop

Certain retailers, including John Lewis, offer free extended cover of two or five years on many items.

Register the appliance with the manufacturer

Then, when the guarantee runs out on a big appliance, they will very probably write to you asking you to purchase a service agreement. This is likely to work out cheaper than an extended warranty bought via the original retailer.

Consider a home appliances insurance policy

Instead of insuring each item separately when you buy it, companies such as British Gas and some insurers offer schemes that cover all your household  appliances for less than the cost of one extended warranty.

Shop with a credit card

A few credit card operators give extended warranty coverage to customers who purchase a product on their credit card. This is in addition to your rights under the Consumer Credit Act that all cards afford.

Consider the cost of replacement or repair

Extended warranties add as much as 50% to the cost of the appliance. Consider “self-insuring” – saving the money you would have spent on the insurance and then putting it towards a repair or replacement if the item does develop a fault. If you opt for a replacement, you have the latest model and a manufacturer’s guarantee once again.

CashQuestions Guide to Home Insurance
CashQuestions Guide to Mortgage Payment Protection Insurance

CashQuestions Guide to Payment Protection Insurance
CashQuestions Guide to Income Protection
CashQuestions Guide to Life insurance
CashQuestions Guide to Critical Illness Insurance
CashQuestions Guide to Motor Insurance
CashQuestions Guide to Travel Insurance
CashQuestions Guide to Pet Insurance
CashQuestions Guide to Extended Warranties

---

Tag this article :