Extended Warranties - The Basic Principles
With Christmas approaching the number of domestic appliances being bought as either gifts or special offer treats is on the up and with them, an increased volume of warranties. It is estimated that around £150 million is spent on extended warranties over the festivity period, Christmas and New Year, without a thought being given as to whether or not they are truly a necessary 'extra' purchase.
Over the years, the selling of extended warranties has always been something which has raised controversy. The average shopper is generally pressured into buying a warranty at the point of sale after been sold on the idea that something can and will go wrong with their appliance over the course of time. Therefore extended warranties were nearly almost always thought of as a necessary purchase which goes hand in hand with the product they cover.
However, back in 2005 the Government introduced several rules for all retailers as a means to lessen the confusion over the sale of extended warranties. Retailers must now clearly display the costs of extended warranties alongside the actual price of the appliance. All retail showrooms are obliged to inform their customers of what the warranty covers, explain their statutory rights and provide information regarding cancellation of the policy. Customers now have up to 30 days in which time to buy an extended warranty and the quote given at the time of sale is valid for this 30 day period. Customers are also entitled to a 45-day cooling off period, an important feature of their cancellation rights.
But are extended warranties actually worthwhile? This question can only really be answered by the consumer his/herself after considering the initial cost of the appliance in relation to its functional reliability. Research was in fact carried out by the Office of Fair Trading which discovered that on average the repair cost for a washing machine is roughly £50-£60. Taking a basic washing machine appliance with a retail value of say £400, logic tells us that it would have to break down or need repairing a minimum of 5 times in order to recuperate the average 5 year extended warranty cost of £150.
Further alarming facts about the selling of extended warranties are:
- Retailers tend to cash in on the lack of knowledge a customer may have regarding both the performance of the product they are buying and the basic principles of a warranty
- Failure rates of the many different electrical goods are by no means reflected in the cost of extended warranty cover
- It is said that warranties are generally an afterthought purchase
- The profits actually made by retailers from selling extended warranties are exuberant considering the quality of electrical appliances improves dramatically with each year due to significant advances in technology
- Independent electrical retailers who do repairs onsite often offer a far better deal at a much more competitive rate compared to the cost of an extended warranty
When buying an extended warranty make sure you know the exact price you are paying, what you are paying for i.e. the type of coverage it includes such as accidental damage or theft and check that it contains a cooling-off period entitling you to cancel if you have second thoughts or are simply not satisfied. Before signing up for an extended warranty remember to check your home insurance policy, as you may just be covered already.
To compare low cost home insurance deals click on our Home Insurance Page and find yourself the best online deal in today’s market.
Published on November 9, 2007
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