Extended warranties, worth it?

       

Gordon Martin

When you make a considerable investment into the cost of a TV, brand-new appliance or even a new car it's very likely that you will be asked if you might be interested in an extended warranty of some type. Getting access to a new policy that can cover you for various repair costs or ensure that you can get access to replacement parts long after the manufacturers warranty expires may seem like a reasonable investment. However, it is important to consider the overall cost of the premium, the cost of a replacement and the hassle in making a claim.

If you're willing to invest in consumer goods that have a high price tag, it is reasonable to assume that you want to protect your investment. It makes sense that you want to make sure that you are covered should the worst happen and your gadget fails, however it is important to weigh the pros and cons of extended warranties before deciding to buy. Here are some of the benefits that you can receive from extended warranties as well as how you can determine if purchasing an extended warranty is worth it for your situation.

Could you be covered already?

It is worth checking if you have some form of protection already in place before looking to purchase an additional warranty. There are a number of consumer laws in the UK that mean that any goods that you purchase needs to be built to a satisfactory quality, fit to do the job advertised for a reasonable period of time. This means that if you were to buy a brand-new washing machine or television and it were to break down within the first six months then you have certain rights to take the whole thing right back to the shop and receive some type of reimbursement.


Car thief in action breaking into a car

To counter the manufacturer needs to be able to prove that the appliance did not have a fault when you bought it. For some products their reasonable lifespan can vary depending on use. Certain items may be able to be returned many years after you purchase them as long as you used them within the manufacturers guidelines. Generally, this involves the process of being able to prove that there was a fault in the product that was not caused by regular wear and tear. Given this base level of protection and the expected life span of the product, you may decide that this cover is good enough. There are however some other ways that you can save as well.

The manufacturers guarantee

It's likely you might also qualify for some type of manufacturers or retailer guarantee with any major purchase that you might make. Before you start to consider paying out for an extended warranty it's important to remember that many manufacturers can deliver a guarantee of 6 to 12 months on many of their top items. Usually these guarantees are delivered for free as an incentive for you to purchase that item through their particular retail outlet. Be sure to check into the base warranty that you have access to and any other type of existing guarantee that is on hand from a manufacturer as you could have access to greater protection than you might think.

Top gadgets that people insure

  • Mobile phone
  • Laptop
  • Tablet
  • Camera
  • E-reader
  • Sat-Nav
  • Speakers

Your credit card or bank

If you have made the purchase through your credit card or your debit card at certain financial institutions, you could be covered on the cost of repair or replacement for certain items as well. Typically items that range between £100 up to £30,000 will be covered under your credit card or covered under your financial institution in some form of warranty solution, but make sure to check your card issuer’s small print for exact details. Your card company may be responsible for covering the cost of the goods if they are not delivered as described or if they arrive potentially faulty. This is part of the agreement you make with the card issuer under the Consumer Credit Act (section 75), when you took out the card. This feature is another element of protection that you may already have making an extended warranty less attractive to purchase. Be sure to check into your credit card and the types of protections that are offered.



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Existing insurance

Mechanical breakdown and electrical breakdown of appliances are often not typically something that is covered by home and contents insurance but it is a fairly common add on. Check your policy to see if you have included this already. Accidental damages and even theft can also be covered under your home contents insurance. Be sure to check into the policy to see it you are responsible for paying any excess on the value of your claim. However, as with all insurance make sure you carefully check the policy terms as there may be things like conditions of use etc. that may prevent you from making a claim.


Mobile phone with a cracked screen

Value for money?

There are reasons why an extended warranty might be a good idea but also reasons as why they might not be, including:

While many electrical appliances are getting cheaper over time and easier to replace, repair costs are being driven up with the new complexities that come in the construction of many of these items. It's often cheaper to buy these types of appliances but much more expensive to repair them because they simply aren't designed to be taken apart or with replaceable materials.

Replacement goods are usually much cheaper and often far more efficient to run with the advancements in technology and energy efficiency. As a result there are many people that are simply giving up on the idea of adding an extended warranty on appliances because technology is going to advance to a point where when the appliance needs replacing, it's likely that a far better model will be available.

Whilst replacements are getting cheaper, oddly repair bills are sky rocketing. This is because tech is getting more and more advanced and even the simplest repairs are becoming very complex requiring bespoke tooling. As result in can be cheaper to buy new than repair.

Is it the retailer or is it a firm connected to the retailer? Ask yourself what is the incentive for the retailer to offer me this extended warranty? There have been occasions in the past where some salespeople were paid commission for the amount of policies sold which may have lead to a conflict of interest.

If the gadget or appliance was to stop working under what scenarios would the policy pay out? Ask yourself if there is a degree of hassle in making a claim. It may be that the policy does purport to offer cover but if you try and make a claim you may find that there a number of hoops to jump through which you mught not be willing to do.

Ultimately it's up to you to weigh the cost of replacement and the cost of extended warranties on most modern appliances. The problem with extended warranties on many types of electrical appliances is that they often come in at around half of the total cost of replacement especially on some of the smaller inexpensive appliances available.

Be sure to understand extended warranties

Appropriate levels of cover

An extended warranty may not cover the immediate cost of replacement on a particular item. It's important to read the fine print or at least weigh the options of an extended warranty while you still have time to purchase it. Usually the manufacturer will cover the cost of an item or replacement over a short period after you purchase it, during this time you can weigh the options of whether or not it's a good idea to purchase an extended warranty. As you think about whether or not your appliance needs to be repaired look into the explicit details of any extended warranty.

Factor in time

A great example of this could be the amount of time that it takes to actually get an item repaired during an extended warranty. Some policies will give you an immediate replacement on the item whereas some other policies may require that you wait 6 to 8 weeks in order to get the item completely repaired and replaced. For something like a washing machine or even your oven, it could be difficult to imagine going without these types of appliances for 6 to 8 weeks as the warranty covers the cost of repair.

Are you being overly pessimistic?

Consider some of the additional things that a manufacturer may be trying to sell you as well such as insurance on the appliances that you already own. It's likely that they could be delivering an additional insurance policy as part of your extended warranty that you may not need as you would be covered under home contents insurance already. Checking into these conditions and the other items which are included with an extended warranty could help you to opt out of various conditions and how to make sure that you aren't paying into extra claims that you simply will not need.

Follow the chain

Another very important point to consider when picking out a warranty is who will be carrying out the service contract for that warranty. If you are working with a small appliance dealer for example, if they are covering the service under a service contract it's likely that they will be the ones responsible for the service. A secondary financial service or maintenance service will not be able to step in if that company goes under or faces financial difficulty. This could mean that you have essentially no warranty if the company experiences difficulty. Going with a larger and more established company could give you more value in your warranty.

Conclusion

Consider some of these top factors and more if you are really considering the idea of purchasing an extended warranty. Remember that extended warranties can be a great investment on some items but regularly they may not be worth the extra expense in many situations.

Get in touch on any of our social media pages and let us know your thoughts. For more information on extended warranties check out this page.

Make sure to do your research before buying much like doing your research before committing to using bad credit loans.