Many shops try to scare us into buying costly warranties for all electrical and white goods - most are a complete waste of money.
Yet if you want peace of mind, there are tricks to get totally free cover or multiple-item policies for as little as £10/month. This is a step-by-step guide on whether to get a warranty, the cheapest deals if you do, and how to maximise protection without one.
The five facts everyone should know
Before we get to the nitty-gritty, here are five key points to take in about warranties:
Warranties sold in shops are often massively over-priced
Many shops will try and flog a warranty on virtually everything - even if the goods only cost a few quid. Sometimes the warranties cost almost as much as buying a new product - in which case, better to take the risk, save the money, and just rebuy if it breaks.
If you do want a warranty it's far cheaper to get a stand alone policy from a specialist provider. Full details below of cheapest warranties.
Free extra year's warranty available on some credit cards
A number of credit cards give you a free extra year's warranty if you buy electrical or white goods on them - as most companies automatically include a year's warranty that means you can get two years for no cost.
So if you've a decent credit score, it's worth getting one of these specialist cards just for buying these goods. Though only do it if you can repay in full so there's no interest. See the top free warranty credit cards section.
You have consumer rights without warranties
By law goods are faulty if they're not of satisfactory quality or fit to do the job intended.
If you have faulty goods, take them back within six months and the onus is on the shop to prove they WERE NOT faulty when you bought them - only after that must you prove they were. Yet all goods must also last a 'reasonable time', this can a long time for some expensive ones. Full info below on consumer rights.
Your home insurance might cover you
Some home insurance policies will cover electrical items and white goods from theft and damage, though breakdown is less likely.
Plus 'all-risks' cover usually includes items taken outside the home too. See full details below of what you should check on your home insurance policy.
You can use warranties as a haggling chip
Sales staff often have targets on the number of warranties they must sell on a weekly, monthly or quarterly basis. Reaching this target is often crucial to them; therefore it gives consumers a real bargaining tool to haggle down the cost of products.
The best bit is you're free to change your mind within 45 days of purchasing under The Supply of Extended Warranties on Domestic Electrical Goods Order 2005, so buy the knocked down item then cancel the policy for a full refund. (This applies to both service agreements and insurance products).
Comet, Dixons & PC World are especially good for this loophole, with one MoneySaver getting a Sony LCD TV reduced to £750, from £1000 at Comet. For full tricks and tips see the full High Street Haggling guide.
What are warranties?
A warranty, also known as an extended guarantee, is an insurance policy lasting 1-5 years after you've bought an appliance, which will cover you against the cost of repairs & replacements.
While the concept is good, the problem is they can often cost as much as the product itself and account for a large proportion of retailers' profits and salespeoples' commission.
Worse still, some warranties used to advertise rights that were already yours by law; though the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) now prohibit this.
What do warranties cover?
Warranties usually cover your appliance for mechanical or electrical failure, not accidental damage. You should get a repair including parts and labour or, if it can't be repaired a replacement (though you may have to pay towards this).
It won't pay out out for theft, or damage caused by sun, sea water or other natural elements. Stand-alone warranties won't pay out if you're covered by a manfacturer's guarantee so there's little point in having both.
Different warranty types
Retailers of pushed warranties have dragged the name of the product through the mud.
Worse, in recent years some have changed from being insurance policies to service agreements and the Financial Conduct Authority doesn't regulate these providers in the same way. More on protection below.
Yet they're not the only ones offering warranties, there are others out there that may be far cheaper.
Most manufacturers include a one-year warranty with their product, yet it's always worth checking in the box to see if they offer an extended warranty service.
This simply extends the one year manufacturer's warranty for less than the cost of a standalone policy, though often can only cover manufacturing defects. Also be aware you don't have to buy an extended warranty at the time of purchasing the goods.
Direct insurance for products
Effectively you buy an insurance policy for the product from the manufacturer, and it's often half the cost of retailer versions, plus these tend to be more tailored to the product.
So if your washing machine manufacturer includes a free 5-year parts-only warranty, ask the insurance company for a warranty excluding parts - cutting your premium. You can usually buy these at any time.
These specialist insurance policies cover a number of appliances in one. They’re often based on monthly premiums and are better value than single policies. Price depends on the appliances you want covered and their age, though be aware of maximum claim caps.
Do you need a warranty?
Before you consider a warranty, it's worth understanding your rights and checking if you're already covered.
Is there a manufacturer's guarantee?
Most appliances come with a 12 month manufacturer's guarantee, so problems within that time will get you a repair or replacement but it's unlikely to cover you for accidental damage. Make sure you register your appliance or you risk invalidating the guarantee.
If you're wondering about the difference between a guarantee and warranty...
is usually a free promise by the manufacturer or retailer to fix or replace the problem.
You have strong statutory rights anyway
When you buy anything, a key rule is the Sale of Goods Act 1979. It says goods should be of satisfactory quality, fit to do the job intended and last a reasonable length of time.
Where goods are faulty, take them back within six months and this law means the shop has to prove they WERE NOT faulty when you bought them.
Even after that you still have strong rights for six years, but from then on you must prove they WERE faulty when you bought them. So at the very worst, if you buy, take it home and it doesn't work, take it back and you are entitled to a full repair, replacement or at least a percentage towards one.
What is a 'reasonable' length of time?
The law also states things should last a reasonable length of time. This is a deliberately vague description, where the answer depends on common sense judgement...
Most would say it's reasonable for a £1,000 plasma TV to last 18 months, but not for a 50p plastic torch.
In a way this means if legitimate wear and tear breaks the product the likelihood is you have no claim. Yet if it was an unreasonable fault, you do; however the burden of proof here is on the consumer...
The problem with your rights, especially with goods you believe should last longer, is stores often won't agree. If that happens your only recourse is to take them to court - see the full Consumer Rights guide for more on this, and the Sales of Goods Act.
Does your home insurance cover it?
Some home insurance policies will cover electrical items and white goods from theft and damage, though breakdown is less likely. Plus if you have 'all-risks' cover it may cover portable items taken outside the home too. So it's worth quickly checking:
If it'll provide a replacement. If so, how long will it take?
If you'll get current or new value. If you get cash for the item, check whether it'll pay to buy a new one, or just enough for its current value
If you'll need to pay an excess on the reclaim. You may have opted for a hefty home insurance excess to make the policy cheaper (excesses on warranties are usually small). If the excess is more than the item is worth it will be pointless to claim.
If you'll have to pay call out fees. If you need a repair, it's possible you may have to cover the call out fees yourself.
If it includes portable items? Some home insurers will exclude items that can be taken out of the home, check first.
Home insurance can be an extremely cheap solution, in fact using the Cheap Home Insurance system, some MoneySavers have actually been paid to take policies out.
Does the shop give a free warranty?
A number of retailers offer their own warranties for free. For example, John Lewis offers a five year guarantee on all TVs, as does Marks & Spencers or two years on all other technical products, and ocassionally Argos does too.
Yet these retailers can be more expensive for the products, so you have to balance the two out. Yet in the case of John Lewis, as it has a price match promise, if you find it elsewhere cheaper, use the price match and get the warranty added in for free.
Free section 75 protection on credit cards
Credit cards can help protect your goods. Buy something costing over £100 on a credit card and you get Section 75 legal protection; this doesn't happen with cash, cheque or debit card transactions.
So buy anything costing over £100, and providing some of it's paid on the card, the card company’s equally liable with the retailer if things go wrong.
Yet of course, the interest cost usually dwarfs any gain. So only use a credit card for this purpose if you pay it off in full every month so there's no interest.
Always set up a direct debit to repay the balance in full each month, otherwise the interest you'll be charged will outweigh the benefits.
Could you repair it yourself?
If the problem is a simple one, getting it repaired yourself may be a cheaper option if you're nifty with a tool set or it's a low tech appliance.
Get parts or spares which you can then use to fix the item yourself. Even calling a repairman might be cheaper than the cost of a warranty over a few years.
Average cost (1)
% that haven't required repair after six years (2)
Average cost of common repair (3)
Cost of the cheapest 12 mth warranty (4)
|£3-£10 (new belt)||(only up to £200) £19.02|
|£5-£20 (new filter/dustbag)||(only up to £200) £19.02|
|£20-£50 (Internal blockage)||£45.83|
|£25- £65 (New hose and valve)||£88.05|
|£73 (element failure)||£88.05|
|£40-£100 (New heater)||£45.83|
|(1) Based on the average of Which's best buys (2) From Which's reliability survey (3) From Which's repair or replace report (4) Based on appliance four years old. June 2006-Jan 2010|
Self insuring means instead of paying for an insurance policy, you put the money aside each month into a high interest savings account.
This way if you lose or damage the item you've got cash to pay towards a replacement, and if you don't, the cash and the interest are yours rather than the warranty company's. The risk is you'll need the cash before you've saved up enough.
BEST BUYS: The cheapest warranties
If you want a warranty, free ones via credit card perks are the cheapest way to get them.
A poor second is via specialist stand alone providers and the cheapest depends on what the appliance is, how much it's worth and how old it is. Usually stand alone warranties won't cover goods over eight years old.
Free credit card extended waranties
Always set up a direct debit to repay IN FULL each month, so there’s no interest
In general multi-appliance rather than single appliance policies are cheapest - though cover is not as comprehensive.
Ulster Gold Mastercard (16.9% representative APR) gives an extra year's manufacturer's cover for 1 year after the manufacturer's 1 or 2 year guarantee expires. Register up to six appliances per year.
To qualify for cover, registrations must be made within 90 days of purchase and for appliances costing between £75 and £2,000, check for exclusions.
What does it cover? Six appliances per calendar year for one year's extended warranty. Appliances costing between £75 and £2, 000. Accidental damage? Yes Theft? No What does it NOT cover? Call out costs if no fault found, delivery of parts Registration? You must register with 90 days of purchase
The Warranty Direct* plan costs from £12.75/month for three appliances and offers cover against mechanical, electrical or electronic breakdown only. Accidental damage is not included, even for another appliance.
The plan covers all items up to £2,000 but there is also an annual claim cap of £2,000. So if you claim once for a TV worth £2,000, you won't be able to claim again that year.
- Price: From £12.75/month
- FCA regulated? Yes Full details on safety
- Covered for theft? No
- Annual claim cap: £2,000
- Includes parts? Yes
- Excess? £20
- Max. age of appliance: Eight years for multi-appliance policies, five years for others
Warranty Care is a much smaller provider but worth checking on price. There is very little feedback on it, so it's not got a proven track record.
- Price: From £10/month
- FCA regulated? Yes. Full details on safety
- Covered for theft? No
- Annual claim cap: £2,000
- Includes parts? Yes
- Excess? £20
- Max. age of appliance: Eight years for multi-appliance policies, five years for others
When it comes to protection there are two types of policy; service agreements and insurance policies.
Insurance policies are fairly well protected, service agreements have almost no protection if something goes wrong.
Service agreements offer less protection
Service agreements which are usually the ones sold at the point of sale, eg, Argos' Replacement Product Care, are not regulated by the FCA and therefore if the company goes under you have almost no protection.
Insurance policies are government backed
Insurance policies from providers that are regulated by the FCA are covered by the government-backed FSCS scheme.
There are two main ways in which it protects you.
If you need to claim from a bust insurer
The FSCS's main objective is to 'maintain continuity'. This means if your insurer goes bust, it will try and find another provider to take over your policy, or issue a substitute policy. However, if you have any ongoing claims, or need to make a claim before a new insurer is found, the FSCS should ensure these are covered.
If it goes bust and you paid upfront
If you've paid for cover for a year, but the company goes bust after a month or two, then you would lose out.
To protect against that, if the FSCS can't transfer your policy to another provider, you'll be given a period of time to take out alternative insurance, and any money you've already paid will be refunded as compensation via the FSCS. To help explain, here's a quick example...
You paid for a year long policy in January and the insurer went bust in September. If the FSCS can't get the policy transferred elsewhere, then you will receive 4 months compensation of the original cost.
The limits of the compensation depend on whether the policy is compulsory or not.
Compensation for policies like third party car insurance, which you are required by law to have, are unlimited, so you get 100% of the premium back. Non-compulsory policies (e.g. warranties, home, travel, life and PPI) have cover 90% of the money paid.
The small print varies between policies so make sure you check the following before parting with any cash.
Is accidental damage or theft included?
Accidental damage is sometimes covered, a big benefit over manufacturers' guarantees. However while theft usually isn't your house insurance might so check you're not paying twice for the same cover.
when does the policy start?
Some extended warranties start after your manufacturer's policy ends but most will run from when you buy it (which often needs to be within 30 days of purchase) so a five year policy is only really covering you for an extra four years after the manufacturer's guarantee ends.
Do you have to pay for extras?
While the policy may cover the cost of parts it might not pay for delivery of these parts. Some providers may not cough up for call out fees, particularly if it needs to be done outside normal working hours.
You may also have to pay for the repair up front, then claim back the cash. These types of policy can be cheap but if you're likely to forget, don't bother.
Is it 'old for new' replacement for unrepairable goods?
Most policies try and repair the appliance up to three times before even considering offering a replacement. When they do, check whether you'll get the cost of buying a new appliance or the price you paid for it initially.
Can YOU extend THe warranty beyond its original life?
Some providers may offer you a renewal at the same price you paid originally, however others will requote and take into account how old the appliance is.
do you get full cover for the entire duration of the policy?
Sneakily some policies will only cover the full replacement costs in the first year of purchase when you're still covered by the manufacturer's guarantee. After this you may only get a proportion of the replacement costs in a descending ratio. For example in the third year of purchase you may only get 30% towards replacement costs.
Is there an annual claim limit on multiple warranties?
Many of the specialist extended warranty providers offer one warranty for multiple items. This is usually cheaper but beware of annual claim limits. Often you can only claim £1,500 in a year and if you have an expensive item insured this allowance can be wiped out in in one hit.
is it a cashback policy? if so avoid like the plague
Cashback warranties give a full refund if you don't use the policy after a certain number of years. However they'll make you jump through hoops and it's notoriously difficult to get your cash back.
There is usually a very tight time deadline in which you have to reclaim the cash. These policies are best avoided but if you have one use the Free Tart Alert to send yourself an automatic reminder 6 weeks before you need to send in the forms.
What's the cancellation policy?
With shop bought policies by law you can get a refund, provided you haven't claimed, up to 45 days after you purchased it. With stand alone policies cancellation policies differ though you can usually cancel with one month's notice provided you haven't claimed - otherwise you're entitled to a refund within 7 days under the distance selling regulations.
Guarantees are legally binding so if the retailer or provider doesn't do what it should, you have legal recourse. Hopefully it will never get to this, but it is worth being aware of your rights if there's a problem.
Step 1: Complain to the policy provider
Escalate the complaint as far as you can with the policy provider. Include all the details of previous communications. Quote the clause in your warranty that you want to claim under to help your case.
Step 2: FCA regulated? Complain to the free Ombudsman
Specialist providers of warranties are usually regulated by the Financial Conduct Authority meaning if you encounter any problems claiming you have recourse with the Financial Ombudsman, the independent arbiter of financial disputes.
The most important thing to remember is that with any FCA regulated company you have a right to be "treated fairly" - which of course is a very wide statement. So if you think you haven't been treated unfairly refer your complaint to the Financial Ombudsman.
Hopefully, just the threat of this to the policy provider should be enough in the first place. If not, make a complaint, there's no cost, and it should be fine. Read the Your Financial Rights guide for full details of how.
Policies you get direct with retailers are usually service agreements meaning they're not regulated by the Financial Conduct Authority, in which case you'll have to skip to step 3.
Consider the small claims court
As a very last resort you could consider going to the small claims court. There’s a fee from £25 to £100 depending on how much you're claiming, but it's refunded with successful claims. We don't focus on court action - but you can find some notes in the going to court section in the Bank Charges article.