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Extended warranties – are they worth it?

An extended warranty is a form of insurance policy that covers you for repair costs after the manufacturer’s or retailer’s guarantee has expired. But are they worth the money? Extended warranties can be expensive. Most new goods are made to a high standard and you already have statutory rights which give a high level of protection.

You’re covered already

The Consumer Rights Act 2015 is already on your side.

It states that goods should be of satisfactory quality, fit to do the job intended and last a reasonable length of time.

If you buy a new TV or washing machine and it breaks down within six months, you can take it straight back to the shop.

It’s up to them to prove that the appliance wasn’t faulty when you bought it.

You might even be legally allowed to return goods up to six years after you buy them.

But this depends on whether you’re able to prove that a fault was present when you bought it and that normal wear and tear wasn’t the cause of any problem.

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Check the manufacturer’s and retailer’s existing guarantees

Before you think about paying for an extended warranty, remember that manufacturers often guarantee their goods for up to 12 months and in some cases longer.

Plus, some retailers will top up the period of guarantee on top of that of the manufacturer – for free.

This can add up to five years total cover and it’s all included in the price.

Credit card protection

If you pay by credit card, you’re automatically covered on any goods valued between £100 and £30,000.

The law states that the credit card company must cover you if goods are faulty or not as described, or if they’re not provided under the contract.

Home contents insurance

Electrical and mechanical breakdown aren’t usually covered by your domestic contents insurance, but theft and accidental damage are.

So it’s worth checking the details of your policy – there’s no point paying twice to cover the same thing.

But check whether your contents insurance policy needs you to pay an excess when you make a claim. Many extended warranties don’t.

Are extended warranties for electrical appliances value for money?

There are reasons why an extended warranty might not be, including:

  • most electrical goods and appliances are getting cheaper over time
  • they’re also getting more reliable, so you’re less likely to need a warranty
  • repairing is getting more expensive as appliances get more complex – so it can be cheaper to buy new than repair
  • technology is advancing, so replacement goods are not only usually cheaper, but are often going to be better than the one you had before – perhaps more energy-efficient and so cheaper to run, or with the latest features included in the price.

Treat extended warranties with caution – know what you’re buying

While some retailers sell extended warranties for electrical appliances and white goods, these warranties often have time limits for the repair.

This might be as long as four to six weeks, so you need to think about whether you would want to wait that long for your appliance to be repaired.

For example, could you manage without a washing machine for six weeks?

Some policies cover repair costs but not all of them cover parts and labour, while others place a cash or time limit on claims.

So it’s important to read the details very carefully before signing up.

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Some retailers also sell insurance for appliances you already own but which are not currently insured.

But these come with lots of conditions and usually a ‘no-claim’ period immediately after the start of the cover, during which claims for breakdown won’t be paid.

Also, some policies are only ‘service contracts’ so aren’t regulated by the Financial Conduct Authority or covered by the Financial Ombudsman Service.

That means if the retailer goes bust, there’s no guarantee that your claim will be paid.

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To get the most from the Compare Extended Warranties comparison website, enter:

  • the price
  • the electrical item, for example ‘dishwasher’
  • how many years the manufacturer provides a warranty for.

You can then see results by price or how long the warranty is for.

Want to buy an extended warranty?

This checklist might be useful.

  • Shop around – specialist insurers are often much cheaper than retailers, and multi-appliance deals can offer better value.
  • Check how long it will last and think about how long you’re likely to keep the item.
  • Do the terms provide a ‘new for old’ replacement if the item can’t be repaired?
  • Check the exclusions – do you have to use an authorised repairer?
  • Is there a limit to the number of claims you can make or the amount you can claim for? Does the cover stop once you have made a claim?
  • Read the small print, especially for loopholes and exclusions.
  • Be careful of extended warranties where you pay monthly – over the long term these can work out to be very expensive.
  • Is it a service agreement, not a guarantee? These are not regulated by the Financial Conduct Authority (FCA) – so if the company goes, under you have no legal protection.

Your legal rights allow you to cancel the warranty within 45 days after purchasing it and get a full refund under the Supply of Extended Warranties on Domestic Electrical Goods Order 2005 regulations.

So, even if you buy one, there’s still time to change your mind or shop around for a better deal.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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