Are extended warranties a waste of money?
It's a grim moment. You've traipsed around a couple of electrical retailers, listened to the salesman's patter and finally decided to lay out a small fortune on a fridge, washing machine or TV. You approach the till, and here it comes: 'Can I interest you in extended warranty cover?'
This is irritating for several reasons. There's the sense the shop is trying to milk you for another few quid when you're already making a substantial purchase.
There's resentment that, before your highly-engineered machine has even left the store, they're talking about the possibility of it breaking down.
Worst of all, you know they're pushing insurance to meet commission targets set by head office. It's not about customer care, it's about sales quotas, and that's just plain grubby.
Business Cards From Only £10.95 Delivered www.myprint-247.co.ukView details
Our heavyweight cards have FREE UV silk coating, FREE next day delivery & VAT included. Choose from 1000's of pre-designed templates or upload your own artwork. Orders dispatched within 24hrs.
Terms: Visit our site for more products: Business Cards, Compliment Slips, Letterheads, Leaflets, Postcards, Posters & much more. All items are free next day delivery. www.myprint-247.co.uk
Contact: 01858 468192
Valid until: Wednesday, May 22 2013
But is extended warranty insurance actually such a bad idea? Even the best appliance can break down, and repairs can be expensive.
But if you like the idea of insuring your appliances against mechanical failure, you can probably find a better deal than the policy thrust at you by the retailer.
So let's have a look at the extended warranty market and work out where to buy if you want cover.
Making the market fair
Earlier this year the Office of Fair Trading lost patience with the way major electrical appliance retailers treat customers as far as extended warranty insurance is concerned.
It said competition was being stunted because retailers had the advantage of promoting policies at the point people buy their appliance.
It also found that retailers did not provide enough information to enable buyers to judge whether they were getting value for money, and that only a quarter of people shop around for cover.
Last month OFT accepted undertakings from Dixons, Comet and Argos that they will tell customers insurance is available elsewhere and carry out mystery shopping exercises to check staff are giving out the right information.
Shopping around is the key to securing a competitive deal. With MoneySupermarket's dedicated appliance warranty channel you can quickly and easily obtain a quote from a leading provider.
But what about the manufacturer's guarantee?
As a consumer you're protected by the Sale of Goods Act 1979, which says all appliances must be of satisfactory quality and fit for purpose - so the retailer should sort things out if an appliance is faulty.
And you'll get a manufacturer's guarantee whereby the machine will be repaired or replaced if a problem arises within 12 months. Extended warranty insurance covers your appliances beyond the manufacturer's guarantee.
When you buy, check the cover only starts once the manufacturer's guarantee expires - the warranty should not start when you make your purchase, otherwise you're doubling-up on cover.
Also check what happens to the policy if you make a claim - does this bring the cover to a close, or are you able to make as many claims as required within a given period (usually three or five years)?
Extended warranties do not usually cover accidental damage, so if knock a vase of water down the back of your TV or break the hinges on the fridge door, you'll have to check to see if you're covered by your home contents policy.
The extended warranty cover might also apply restrictions on the age and value of a single item. Warranty Direct, for example, covers appliances up to eight years old, with a single item limit of £2,000.
Warranty Direct also offers an innovative package policy that allows you to more than one appliance on the same contract - you simply list all the items you want to protect, and the premium is calculated accordingly.
Cover for two appliances comes in at around £10 per month. This approach means you can structure the policy to suit your needs - you're not tied to the cover offered by any particular retailer.
Remember, if you buy extended warranty cover from a retailer, you have the right to cancel with 45 days and obtain a full refund (providing you haven't made a claim).
If you cancel after making a claim or after 45 days, your refund will be adjusted.
If you buy online, you have 14 days to change your mind and cancel the policy. This period is shorter because you will be seen to have initiated the sale - the opposite of what usually happens in a store.
When you get your policy, it should include details of whether the warranty will still be effective if the company providing it goes bust. You'll be given guidance on how to complain if you're not happy.
If you receive a quote for a warranty, the price will be valid for 30 days, so there is no need to feel pressured that the cost will rise if you don't buy there and then.