As we are in the busiest time of the year for buying electrical goods such as mobile phones, games consuls, TV’s and everything else that has a plug on it, it is also the busiest time for retailers to sell extended warranties. These are guarantees that give you greater cover against damage or breakdown than the guarantee that usually comes as standard with the item you have bought.
They can come as a product that is bought at a one off price at the time of purchase or can be a monthly payment that lasts as long as the warranty is designed to run. They can be specific to the item you have bought, or can offer “blanket cover” over several qualifying items. One thing they all have in common is that they are all a bit different!
Before you agree to buy an extended warranty on anything you need to find out a few things:
What does the guarantee that automatically comes for free with the item cover and for how long? You may well be happy with having that.
Is the cost of the warranty worth it? I once bought an iron for £20 and the optimistic salesperson tried his hardest to sell me the £15 warranty.
What does the extended warranty actually cover?
Let’s look at these a little more closely.
What does the guarantee that automatically comes for free with the item cover and for how long?
Most things you buy in this country come with some form of guarantee against it breaking down or developing a fault. Although this seems straightforward, there are things you should be aware of. Firstly, it relates to things bought in this country. Online purchases made from abroad or even purchases while you are in another country may not have the same protection as you can expect from buying in the UK. As a general rule, it is a wise move to make such purchases with a credit card as that will give further protection to you if things go wrong. The Money Advice Service gives a good summary of how this works, click here to read it.
The next thing to look at is how long is the guarantee? One year is quite common, but by no means can this be taken for granted. Any period is possible, and obviously, the longer the better! If the item has been “refurbished”, “display” or is sold as “seconds”, the guarantee may only be a month. It still should be of merchandisable quality though and you should enjoy the same consumer rights as if it were sold as new.
A lot of guarantees require you to fill out a registration card at the time of purchase so you can easily be found should you get in touch. I’m sure that acquiring names and addresses for marketing purposes doesn’t even cross their minds. If you do not fill out the registration, it can make claiming on the guarantee more long winded and awkward, but it should still be honoured, so be persistent.
Although Guarantees have a lot in common and meet broadly similar minimum standards, they can, and do, have wide variations. It should be treated as a legal contract and as such you should read what is in it. If there is anything in it you do not understand, then you should ask about it before purchase. Citizens Advice have a page devoted to The Consumer Rights Act 2015 which is well worth a visit
Is the cost of the warranty worth it?
Seriously, this is a matter of common sense. If you are buying an item that you can easily afford to replace if you accidentally throw it at the telly while watching England getting knocked out on penalties again, then don’t spend anything on a further extended warranty. You may have an accidental claim on the telly through your insurance though.
If it’s a warranty that you are going to pay for monthly, then add up the total to see if it is worth it. Often the retailer is getting a commission for selling the extended warranty. knowing this, I have occasionally used this to my advantage and got the price of the item reduced. certainly doesn’t work every time, but it has worked, and if you don’t ask – you don’t get!
When working out the value of the warranty, it’s not just the price you should consider. There will be a long list of terms and conditions on the contract and it really is down to you to read them and decide whether or not to run with it. These terms and conditions will set out the circumstances that the item can be repaired or replaced and who meets the cost of getting the item to and from the repairer. Do not assume anything. If its written in the forms, then that’s what they will refer back to. if it’s not written in the forms, then they will argue the point.
What does the extended warranty actually cover?
The big print will refer to breakdown and damage amongst other things. The small print will specify which parts qualify and which parts won’t, there can also be maximum cash limits and time limits. The fact of the matter is that you will be offered an extended warranty with no more than a “Would you like the warranty, it costs xxxx amount” If you buy it on that basis, you really have no idea what you have just bought and as the chances of a potential claim arising is very low, the chances of you paying for something you do not need and is no use to you is highly likely.
The events that are covered are set out in the warranty paperwork, you must read it as every one is slightly different. Most are “Service Agreements” rather than “Insurance” products and as such they are not regulated by the Financial Services Authority.
What can I do to make a good decision?
The main thing you can do is not buy it until you know exactly what you are buying. Be awkward and ask questions and ask to see the relevant paperwork that confirms what you are being told. The Money Advice Service has written an excellent piece on extended warranties which I recommend you read. There is also an online comparison website which is a really useful tool when deciding whether to buy one or not.