Are care plans and warranties worth it?
Buying an extended warranty or other forms of protection can add considerable cost to a purchase but could bring relatively little benefit beyond the rights you already have.
For some people the peace of mind of an extra policy is worth it, but consumer law already provides considerable protection if you are sold faulty goods.
So before buying an extended warranty or other forms of protection to cover the costs of any repairs to a new product, it is worth considering the benefit and the costs.
Andy Carrigan's television cost £900 back in 2007. He protected himself against additional costs such as repairs to his television via monthly payments on a Care Plan and ended up paying £700.
Yet when the TV needed to be repaired his policy initially didn't pay out.
Andy's story was broadcast on Watchdog, 9 October 2013. You can read the full story and company response via Watchdog website.
1. Don't be pressurised into buying a policy
You do not need to buy an extended warranty at the same time as your product.
When you purchase electrical or household items you already are protected under the Sale of Goods Act.
The items you buy should be of satisfactory quality, fit to do the job intended and last a reasonable length of time.
2. The way that you pay
If you pay by credit card, you're automatically covered on any faulty goods valued between £100 and £30,000.
The card company has to cover you to protect people from being driven into debt by buying faulty goods.
3. Are you already paying for cover?
The retailers should...
- State clearly the price and duration of one warranty next to the price of the goods.
- Provide a written price quote, if an extended warranty costs over £20.
- Tell you whether or not the extended warranty will come to an end if a claim is made.
Source: Office of Fair Trading
Check your household insurance policy as it may provide some protection.
Electrical and mechanical breakdowns are not usually covered by your domestic contents insurance, but theft and accidental damage are.
Manufacturers of electric goods and cars often guarantee their products for up to 12 months.
Some retailers will top up the period of guarantee on top of that of the manufacturer - for free.
4. Shop around
Do your research on finding the best extended warranty deal for your needs.
You can compare the cost of extended warranties via websites such as Compare Extended Warranties.
This website makes it much easier to shop around and compare extended warranties for a wide range of domestic electrical goods, according to the Office of Fair Trading.
Specialist insurers are often much cheaper than retailers, and multi-appliance deals can offer better value, according to the government's Money Advice Service.
Check with your bank or credit-card-company as they may also offer extended warranties.
5. Keep your receipts
Questions to ask about a warranty
- How long will the warranty last? Compare its cost to how long will you keep the item.
- Do the terms provide a new- for-old replacement if the item cannot 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?
Source: Money Advice Service
If there is an inherent fault with a new television or washing machine you can expect the shop where you bought it to offer a free repair or replacement within six months.
It is up to the company to prove that the appliance was not faulty when you bought it.
You can return goods up to six years after you buy them providing you prove that a fault and not normal wear and tear is the cause of any problem.
6. Cancelling a policy
When a warranty lasts over 12 months you can cancel it within 45 days of buying it and get a full refund where no claims have been made.
If you have made a claim under your warranty you can get a refund at a proportionate cost if you want to cancel the extended warranty after 45 days.
There is still time to reconsider or shop around for a better deal.
7. If your claim doesn't pay
In the first instance you should complain to the policy provider if you feel your claim has been unsuccessful.
Refer to the clause written in your warranty that you want to claim under and provide any copies of original receipts or paperwork.
If you think your policy was mis-sold or you think your complaint hasn't been resolved to your satisfaction you can refer it for free to the Financial Ombudsman.
Watchdog is on BBC One at 20:00 on Wednesdays.