Extended warranties: what you need to know

toy robbot against blue background

toy robbot against blue backgroundWhen you buy an electrical item in a high street retailer, you’ll probably be encouraged to also buy an extended warranty for it.

However, buyer beware: many warranties and guarantees are poor value for money – and some are completely unnecessary!

Here’s what you need to know when buying an extended warranty.


What is an extended warranty?

In legal terms, there is actually no difference between a warranty and a guarantee. Both are essentially contracts which allow you to return goods that don’t work, within a certain period of time.

You may also be urged to pay extra for an extended warranty, usually lasting between two and five years. The retailer will tell you that the extra payment will mean the item is covered for a longer period of time.

Different extended warranties cover different things. Some will only provide protection if a product breaks down, while others also cover theft or accidental damage.


Reasons to be wary

When a retailer tries to persuade you to buy an extended warranty, there are several reasons to be wary:

1. Overpriced

Most extended warranties sold with electrical items are overpriced. And extended warranties are now often sold to cover relatively low-value items, as well as more expensive ones.

For example, it probably doesn’t make financial sense to pay £10 for a two-year extended warranty, if the kettle it covers only costs £15.

Most modern electrical goods are relatively reliable and long-lasting. That means you’d probably be better off just replacing the kettle at the end of its life!

2. Exclusions

Many extended warranties come littered with exclusions, making certain claims very difficult to make.

For example, a warranty may be invalidated if a product isn’t serviced at regular intervals. Alternatively, cover for ‘natural wear and tear’ may be excluded.

This means it’s crucial to read all the small print carefully before you buy any warranty.

3. You may already be covered

I think this is a particularly sneaky loophole. Many extended warranties sold on the high street say or imply that they’ll provide extra protection for the buyer.

However, as a shopper you already have certain statutory rights under the Sale of Goods Act. For example, every shopper has the right to get faulty goods repaired or replaced, whether or not they’ve bought an extended warranty.

In a similar vein, you may already be covered for ‘accidental damage’ – under the terms of your home insurance package.

And if you’ve paid by credit card, you have even more buyer protection, under Section 75 of the Consumer Credit Act.

In a nutshell, this means that if you pay more than £100 and less than £30,000 for a single item, you can claim against your card issuer as well as the retailer if that item is faulty.

So, you need to be aware of the protection you already have before you’re tempted into buying an extended warranty. Otherwise, you may be paying twice for exactly the same cover!


Where to buy a decent extended warranty

If you’re still sure you need an extended warranty for an item you’ve purchased, avoid buying one that’s sold alongside a high street item.

Stand-alone warranties (sold online by specialists like Warranty Direct and Warranty Care) are usually far more competitively priced.