/ Money, Shopping

Have we really got time for extended warranties?

Keyboard with plasters on it

Extended warranties are under the spotlight again – this time the OFT is investigating their value for money. But do we really need a study to find out what we already know – that warranties are largely not worth buying?

Earlier this month, the Office of Fair Trading (OFT) announced it was going to launch a market study into the warranties sold with domestic appliances, such as computers, TVs and washing machines.

It wanted to find out whether its suspicions – that basically, they’re poor value for money – were true.

Look to Europe for answers

Well, it doesn’t need to do a market study to do that – all it needs to do is look to Europe. Over here, domestic appliances tend to come with a one-year manufacturers’ guarantee. Whereas in Germany, most domestic appliances come with a five-year manufacturers’ guarantee.

This simple fact explains why the extended warranty market in this country is worth well over £750 million.

To make matters worse, according to EU Directive 1999/44/EU, a minimum two-year guarantee should apply to the sale of all consumer goods everywhere in the EU.

Might the OFT’s time be better spent getting a government department to force product manufacturers to comply with EU law? There’s a little saying that I like to live by, which goes something along the lines of: doing the same thing over and over again and expecting a different result is madness.

What about the Sales of Goods Act?

It was only in 2008 that an OFT evaluation showed that ‘the Supply of Extended Warranties on Domestic Electrical Goods Order 2005, introduced to improve competition, was by that time only addressing around £19m per year of an estimated annual consumer detriment of £366m’.

How many more market studies and evaluations does it need to carry out before it changes tact, and does something effective? Let’s not forget that under the Sale of Goods Act you have a legal right to a repair or replacement if a product you’ve bought breaks down.

The Act states that goods must be of a ‘satisfactory quality’ and last a ‘reasonable’ amount of time. So, here at Which? we believe that, in most cases, extended warranties aren’t worth buying. Do you agree that they’re poor value for money, or do you feel more secure if you have bought one?

Comments

I’ll pass your suggestion onto our news and investigations team wavechage. And I would imagine that problems being reported on forums could form part of the evidence of a problem – as long as it’s the same problem that you’re experiencing.

It would be very helpful to know where to get an ‘expert’ opinion for my Kodak looking online for engineers, most don’t deal with Kodak (could there be a reason for this?) and in any case take the view that domestic inkjet printers are not worth repairing. But over and over the consumer is at a disadvantage because by the time you’ve paid out for an expert opinion and court costs you’ve spent as much as a new printer costs anyway. I’m pretty sick of the way the government fails to protect its citizens.

Nicky says:
16 October 2013

I have had a few extended warranties with Domestic & General which have proved worthwhile. I have had a bosh dishwasher repaired several times until they finally wrote it off & replaced it after 5 years. The warranty cost me about £120 but the replacement dishwasher was over £600.
I have also had a Miele fridge freezer repaired (door seals went & new doors fitted) this repair was costed at £800. The fridge freezer has now conked out & they will pay 40% towards a new one as its over 6 years old.
One question I do have is can I insist on buying the item from a supplier of my choice? D&G have a preferred online supplier (appliencesonline.ao.com) who do not stock the item in the colour I want.

Wildgunman999 says:
9 May 2014

Interesting to see that this discussion is still going.
I’m sure for most purposes an ‘expert’ is someone qualified to repair the item, and a scribble on their letterhead with the right wording will do the trick. Worked for me back then with my microwave- my ‘expert’ was the owner of an authorised microwave repair shop, and he kindly did me a couple of lines on his letterhead- sorted.
Note though Argos offered to pay the cost of the expert’s expenses, though I don’t know if this works across board.

andrea says:
10 September 2014

my mom purchased a new cooker in feb and under the warranty its already been repaired 4 times,one being the control knob markings were coming off and were getting red hot ,engineer told her we will supply new knobs but it will probably happen again so just keep calling us!! To me the knobs shouldnt be getting hot is this possibly a design fault or a saftey nightmare,should she be allowed a new cooker under the title’not fit for purpose’?

Les the Greek says:
25 October 2014

Interesting comments in this and I must agree that, for the majority of UK users, warranties are over-priced as most consumer goods these days are ‘throw away’ with a life expectancy of about 5 years.
In support of them (warranties) and one in particular, Currys etc., I would say that they are excellent value if you are intending to take your purchases abroad. We live in Greece, on a small remote island, and the cost of an engineer visiting would exceed the price at which the appliance would likely be written off. Although it would be a nuisance that they will only supply a voucher to replace the item(s) with, at least we do have a Currys subsidiary in Greece and the voucher would be valid there.
Why don’t we buy from the Greek shop(s) in the first place? Well, we have to come back here every year anyway, by car, so buying here isn’t a problem. The real reason though is that the goods aren’t available there and/or the prices are greater than buying here. Unfortunately the average UK consumer doesn’t seem to realise that the UK is actually very cheap as far as most consumer products are concerned. You may find the occasional bargain abroad, but because the majority of purchases here are being made on the internet the prices are very competitive.

At one time it was normal to sell goods with a one year guarantee or warranty, but an increasing number of products come with longer warranties, either provided by the manufacturer or the retailer.

In the car market, longer warranties have become an important selling point and we need to push for longer warranties because it is so difficult to get retailers to take any responsibility for goods that break down outside the warranty period by making claims under the Sale of Goods Act.

If manufacturers offer longer warranties free of charge, this will improve product quality because if they have to pay for repairs, they are less likely to manufacture sub-standard products.

Great point about car warranties, most now come with at least a 3 year warranty; but your humble household appliance is still only 1 year. Very simply it comes down to cost rather than quality of the product.

I’ve been keeping an eye on warranties for a couple of years and an increasing number of appliances are sold with longer warranties. Sometimes it is a manufacturer’s promotion and you have to register the appliance to qualify for the free extended warranty. Retailer John Lewis offers a two year warranty on all electrical goods and five years on TVs. Longer warranties are more common on more expensive goods but some manufacturers and retailers are being more generous. Of course, no warranty, either included or paid for, will cover misuse or wear and tear – so reasonable care is needed.

John Murray says:
19 May 2015

Beware people selling extended warranties for washing machine. Here is a scam.

Jamie from so-called ‘Appliance Protector’ asked to speak to my wife re our Hotpoint washing machine warranty expiring today he said. He was offering an ‘extended warranty’ with 3 year protection costing £58.33 per year, £175 in total. I said I needed to go downstairs to check file. When I did, I discovered we already had an extended warranty from 31 July 2014 – 30 July 2017 organised through John Lewis.

I think the same person phoned me the other day but wouldn’t answer me when I asked him who was providing the warranty now as he implies that it is them. So last time I put the phone down. This time it was the same spiel and the same reluctance to say who was providing the warranty now. He obviously has details from John Lewis as he knows the name of machine but was wrongly claiming our warranty ended today, 18 May. The actual date on our paperwork was 31 July. So they must just phone people up and try and trick them into agreeing by implying they are already providing protection.

So beware Jamie from ‘Appliance Protector’ who incidentally I couldn’t find on the internet.

Pete says:
7 August 2015

A simple ?? Or not if I buy a washing machine from Germany am I covered by their five year cover or only by England’s cover

I bought a TV in 2005 which came with a free 5 year guarantee. After this Mastercare contacted me & suggested taking out an insurance which I have been paying every year at a cost of nearly £100.00 a yr. The contract stated that should the tv breakdown and not be repairable I would be offered either a reconditioned TV or a new one to the same standard as the original one. However,the TV was declared to be unrepairable & I have been offered vouchers to choose a new TV from Currys. I was shocked to find the value of the vouchers offered were for £250.00! I have paid out more than this in insurance premiums. I know that I have had the use of the TV but there was no mention of’ wear and tear’ in the contract. Therefore I expected to receive a new TV as stated in the insurance documents. This case is still ongoing & I fully intend to fight to get the result that I feel is correct! Warning -do not take out a product insurance cover with Mastercare.

Hi Jan – I suggest that you study the terms & conditions carefully and if you are certain that you have a cases, show the company a copy of the document.

I don’t think Mastercare exists any longer and if you were buying today, this is the protection you would have:
Product replacement
If we cannot repair your Product you will be given a voucher to obtain a replacement in one of our stores. The value will be based on an equivalent or similar specification product up to a maximum of your original Product purchase price. In some instances, at our discretion a replacement product may be given instead of a voucher. “

We had the same problem with one of these plans.

We had a top of the range 29″ CRT (before flat screen TVs) that cost around £1200. When the TV became unrepairable they gave us an insult of £60 I think it was. CRT TVs were no longer being made so they classed it as the most basic of flat screen TVs and the fact that it had been top of the range didn’t factor at all.

So never again will I buy this sort of product insurance.

It is not a Panasonic that turns itself on and off is it by any chance?

I’ve suggested in The Lobby that this might be a good time for Which? to review the extended warranties that are available.

I bought a new Fridge/Freezer in 2016. I took out a warranty for labour costs as the F/F was guaranteed for parts for 5 yrs. I had to get 2 engineers out after just 15 months. It was worth taking out the Insurance. Had I not, I dread to think how much it cost me!. At the same time, goods should last longer than 15 months. It’s costing me a fortune to have Insurance on my cooker, washing machine, dishwasher, and fridge/freezer. At £70.00 a year for each item, surely it would be cheaper to buy a new item. Then again, new items should last longer than 1 yr. It’s a rip off, also, Firms shouls be able to make goods of better value. It’s a disgrace.

A warranty is normally similar to other forms of insurance and arranged with a separate company that is in business to make money. On average, customers lose money on insurance, gambling, etc. My approach is to take the risk and accept that occasionally you will occasionally lose out by not having insurance cover but in most cases buying cover will be a waste of money.

You have statutory rights against the retailer if a product fails outside the manufacturers guarantee period but within six years (five in Scotland). It can be a challenge to get retailers to face up to their responsibilities but providing that you have not misused a product then it’s worthy giving it a go. There is useful advice here: https://www.which.co.uk/consumer-rights/advice/what-do-i-do-if-i-have-a-faulty-product and a great deal of discussion on Which? Conversation.

Sometimes products are offered with a ‘free’ 3, 5 or even 10 year guarantee, which usually means the manufacturer’s guarantee plus an insurance-backed warranty for the remainder of the time. These might work out better value and at least the cost is included in the advertised price. You would probably have to register the product for the additional warranty to be provided.

I would like to see Which? examine extended warranties on offer, both single item ones and multi-item versions. Some may like the peace of mind they bring.

Personally I’d like to see longer life appliances, and have Which? begin to look at the durability of different brands/manufacturers to see just how we should get best real value for money – not normally the cheapest. If we do have longer warranties they must be sensible – not silly exclusions. One of my appliances came with a 10 year parts warranty, but only if the manufacturer’s repairer fitted them – and at a high price. All appliances should be open to be fixed by independent repairers.

Many products qualify for a longer guarantee or warranty if registered, though it is not always clear which applies and these terms are often used interchangeably. For clarity it’s probably best to refer to a manufacture’s guarantee or an extended warranty.

In order to qualify for an extended manufacturer’s guarantee, some companies insist on registration of products within a month of purchase, or other specified time.

I purchased a Humax Freesat receiver on behalf of a friend a week or two before Christmas 2016. To avoid the uncertainties of Christmas post it was bought from a Currys shop. (Had it been for myself I would have chosen a different retailer.) When it was about a year old a bright horizontal line appeared on the screen and the owner assumed that the TV was faulty. I disconnected the Freesat box and the TV picture was fine, demonstrating that the fault was with the box and not the TV. The product had not been registered but as the purchaser I managed to register it to extend the guarantee to two years.

This morning I rang Currys, explained the problem and was told that I would have to contact the manufacturer. I have been there before, even with products a few months old. I explained politely but firmly that the product had a two year manufacturer’s guarantee and that my legal rights were against Currys, the retailer and I would like to return it to the shop for repair or replacement. The unexpected reply was ‘OK’. 🙂 I was not expecting that, based on previous experience of dealing with Currys, even when goods were less than a year old.

I wonder how many take advantage of registering products to benefit from free extended guarantees/warranties, especially where products are received as gifts. Why do we have to register products to quality for extra cover at no extra cost?