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What is an extended warranty?
An extended warranty, sometimes called a service agreement, a service contract, or a maintenance agreement, is a prolonged warranty offered to consumers. The extended warranty may be offered by the warranty administrator, the retailer or the manufacturer. Extended warranties cost extra and for a percentage of the item’s retail price. Occasionally, some extended warranties that are purchased for multiple years state in writing that during the first year, the consumer must still deal with the manufacturer in the occurrence of malfunction. Thus, what is often promoted as a five-year extended guarantee is actually only a four-year guarantee.
An extended warranty covers you beyond the end of the manufacturer’s guarantee period which is usually one year (although can sometimes be longer). The extended warranty covers you from the day after the manufacturers guarantee ends and covers you up to typically the end of the 3rd, 4th or 5th year of ownership. Some 3rd party providers will cover you for up to 8 years after purchase.
What you need to know before buying an extended warranty
Where are you buying the product you want to cover from?
If you have not bought the product you will have more choice of where to buy the extended warranty from. Most retailers will only sell you an extended warranty if you have bought the product from their shop.
How much the product costs
If buying the extended warranty from a 3rd party provider (not the retailer you bought the product from) you will need to tell them how much the product costs so they can give you an accurate quote.
How old the product is
Most of the retailers will only cover a product which has been bought from one of their stores or website within a short time frame (usually 30 days). Some 3rd party warranty providers will cover a product which is up to 7 years old. After the product is over 1 year old they will normally only offer you a 1 year (renewable) cover.
Where to buy your extended warranty
You can buy extended warranties from a number of different suppliers. You do not have to buy the extended warranty at the same time as buying the product. Retailers who sell extended warranties usually only cover their own products. 3rd party providers will cover products bought from any retailer.
Retailers who sell extended warranties for their own products
- Co-op electrical
- Hughes Direct
- PC World
- Richer Sounds
- Sonic Direct
3rd party providers who sell extended warranties on products bought anywhere
- Big Warranties
- Domestic & General
- Home appliance guard
- Square trade
- Switched on Insurance
- Warranty Direct
Some manufacturers offer extended warranties on their own products. They will normally cover any product you have bought as long as they have manufactured it.
Other alternatives to buying an extended warranty
John Lewis offers a two year free extended guarantee on all of their electrical products that covers you beyond the manufactures guarantee. In addition to this they cover TVs for 5 years and there own branded goods for three (except their microwaves). They also offer a chargeable extended warranty cover (they call it a service plan), to cover you beyond the initial extended guarantee which is included in the cost of the product. The free extended warranty does not cover you for accidental damage, but the chargeable service plan does. They also offer a price matching service however they will not match internet only stores e.g Amazon etc.
Marks and Spencer
Marks and Spencer offer extended warranties but they only sell a limited range of kitchen appliances (website only shows 2 products although they may sell more in larger stores). They offer a free 2 year M&S guarantee with these products. No forms necessary, you just need to keep your receipt. They stopped selling other technology products in October 2012. Extended warranties on purchases made before this date are being upheld as you would expect. They used to offer 5 years extended warranties on TVs that were over 26″and 2 years on other products. If you bought a product before October 2012 you will still be covered by the extended warranty provided at the time of purchase.
Manufacturer’s extended warranty
Some manufacturers offer a free extended warranty by registering your details directly with them. All manufacturers are different so do not rely on this unless you know it is included when purchasing the product.
A couple of credit cards offer you an extended warranty on products bought with their card, up to a certain limit. Most cards do not offer this service, so it is unlikely you will have protection on your credit card, unless you were made aware of it when you signed up for the card.
This is only for people with plenty of savings or people with very good budgeting skills. It requires you to either put the money aside to repair the product, or have enough spare cash saved to replace the product if need be. Extended warranties are not always the cheapest option available to you. If you have very good will power you could estimate how long you think the product you are buying will last, divide the cost of a replacement by the number of months and save that much money each month. The down side is when the product breaks you will need to try and find a trustworthy engineer to try and fix it. Even then the engineer might not be able to fix it. This could leave you with an unwanted bill and a broken product you still need to replace.
If you take into consideration all of the risks and do not value the peace of mind an extended warranty offers then you may wish to take this option.
Extended warranty FAQ’s
Do I have to buy an extended warranty?
It is not a legal requirement. However they do offer a number of benefits including:
- Protection against unexpected costs of repair
- Protection against paying for a replacement if the product can not be repaired
- Accidental damage (not all policies include this)
- Qualified engineers to fix your product
- Hassle free replacement of product if necessary (no need to traipse around the shops for an urgent replacement)
- Peace of mind
Do I have to buy the extended warranty from the same place I bought the product from?
Most retailers will only offer an extended warranty on a product bought from their own store. 3rd party providers of extended warranties are the only providers who cover products that were not bought from them. However they do not sell products themselves so could not impose this condition.
Do I have to buy the extended warranty at the time of purchase?
No. By law the price of the extended warranty offered to you at point of sale needs to honoured for a minimum of 30 days. The retailer can extend this time period if they decide to. 3rd party providers will either let you buy cover for the product within a short period after purchase or they can cover you many years after purchase. This varies between different providers.
How long does my manufacturers guarantee last?
To be sure you need to refer to the product manufacturer’s website or the literature supplied with the product. Most manufacturer’s guarantees are normally valid for 1 year although they sometimes can be longer. To view specific manufacturer guarantee information on TVs, laptops and washing machines go to the manufacturer’s guarantee section under the buyers guides on this website.
Do I get a free extended warranty with products bought on my credit card?
A small handful of credit cards will offer an extended warranty on products bought with their card. There are not that many out there so unless you know you have got one you probably haven’t. Check the terms and conditions of your credit card agreement to see if they offer this.
Can I cancel an extended warranty?
By law you have 45 days to cancel your extended warranty. This is something the OFT enforced on all suppliers. They also stipulate if the cover lasts longer than 1 year you can get a pro-rata refund if you want to cancel the extended warranty after 45 days, even if a claim has already been made.
Does the Sale of Goods Act cover me like an extended warranty?
The Sale of Goods Act 1979 is not the same as an extended warranty. Under the Sale of Goods Act all goods must be:
- as described
- of satisfactory quality
- fit for purpose
If the product does not meet the above criteria, the retailer is in breach of contract and you will be eligible to make a claim under the Sale of Goods Act.
The Sale of Goods Act covers you if the goods are not suitable for the purpose they were bought for. Often it covers people when there is a fault with the product, which you did not notice at the time of purchasing the product. It is generally easier to make the claim within 6 months of purchase. It is possible to make a claim outside 6 months but you may need an independent expert opinion to verify your claim. You will more than likely need legal assistance as well, which could be a considerable outlay and potentially could cost you more than you stand to claim back.
What happens if I make an extended warranty claim?
All policies are different. For most products they will attempt to repair first, however if the repair of the product costs more than a replacement they will more than likely just replace the product.
If the product is beyond repair then a replacement will be offered. Some providers will offer you a cash settlement instead of a replacement which then gives you the option to either purchase the same product, a different product or just pocket the cash.
Most providers will terminate the cover if the claim has resulted in a replacement. This would mean you would need to take out a new extended warranty on the new product if you required one. If the replacement was a reconditioned model you may not be able to get it covered with some providers. If you pay for the extended warranty in monthly instalments the provider will probably ask you to pay the remainder of the years cover before they offer a repair or replacement.
What is the difference between an extended warranty and accidental damage insurance?
A typical extended warranty covers an extension to the manufacturers guarantee and covers you for a number of years. Accidental damage insurance does what it says on the tin, it covers you for accidental damage to the product. A lot of extended warranties will also cover you for accidental damage as well, so its worth checking which suppliers offer this. Not all extended warranties include accidental damage cover. Some accidental damage insurance policies cover you for mechanical breakdown but not all of them so check the terms and conditions before buying.
Can I transfer my extended warranty to someone else?
Some covers you can and some you can’t. Check the policy wording. A fee may be payable.
Is my policy still valid after I have made a claim?
If you claim and they fix the product then the policy will more than likely still be valid. Most policies will cancel the policy if they have to replace the original item. All policies are different so make sure you check the terms and conditions of your policy.
Who underwrites the extended warranty cover?
A lot of extended warranty products are essentially the same product but are sold under a different logo/brand. To show you which extended warranties are underwritten by the same people, the list below shows you each underwriter and the companies they underwrite for.
Domestic & General Services Limited
- Argos (administrated by Domestic & General)
- Domestic & General’s own extended warranty cover (sold through their website)
- Hughes Direct
- The majority of manufacturer extended warranties
AmTrust International Underwriters Limited
- Squaretrade cover sold direct from their website (only for iPads & iPhones in the UK)
- Squaretrade cover sold through Amazon
- Tesco (administrated by Squaretrade)
- Asda (administrated by Squaretrade)
DSG Retail / Dixons Retail (trading as Currys & PC World)
- Currys – Under their “Know How” brand
- PC World - Under their “Know How” brand
Corporate Support Solutions
- Co-op electrical shop
- Sonic Direct
UK General Insurance
- Appliances Direct
- Direct TVs
- Laptops Direct
- Aircon Direct
- iView Cameras
Pinnacle Insurance plc
- Warranty Direct
Lloyd’s of London
- Warranty Direct
London General Insurance Company Limited
Richer Sounds manages their warranties in house.
How long does an extended warranty last?
An extended warranty normally lasts 3-5 years from the date of purchase. Some 3rd party providers can cover the product until the end of the product’s 8th year. Laptop extended warranties are usually 2 or 3 years from the date of purchase.
How much does an extended warranty cost? / What is the price of an extended warranty?
An extended warranty can cost any where from 10% to 50% of the purchase price.
The things that affect the cost of the warranty are:
- cost of product replacement
- type of product and how likely it would need to be fixed or replaced
- age of product
- where you buy it from (different retailers sell the same cover at different prices)
When a provider has the information above they can give you a price for the cover.
What does an extended warranty cover?
A extended warranty covers you for mechanical breakdown i.e. when the product stops working. For example a button on a TV that no longer works or a failed heating element on a washing machine / tumble dryer . A lot of policies cover accidental damage such as a cracked screen on a laptop dropped accidentally. Be sure to compare the prices and features of the cover so you know you are getting the right product for you.
How do you pay for an extended warranty? / Is it a one off cost?
The majority of extended warranties are a one off cost which covers you for an agreed period of time. Some providers do offer a monthly payment plan to spread the cost. It is important to compare a one off payment vs a monthly payment because the monthly option most of the time will cost you a lot more.
Does my home insurance or content insurance cover me like an extended warranty?
Home insurance often covers you for theft and accidental damage but is unlikely to cover you for mechanical breakdown of the product. They sometimes cover you for personal possessions away from the home, usually at an additional cost.
When getting a quote for an extended warranty the providers do not take into consideration if you have made a previous claim, unlike insurance companies. An extended warranty policy price will not go up the following year if you have made a claim. A home insurance claim will cost you whatever your agreed policy excess is and an increase in your home insurance premium for the next few years.
Can I buy an extended warranty after I have bought the product?
Yes. You can buy the extended warranty at a later date. Most consumer goods retailers will only sell warranties for products that they have sold. So if you have bought the product from one retailer you probably wont be able to buy the warranty from a different retailer. However 3rd party extended warranty providers will cover products bought from any retailer.
Is a manufacturer’s guarantee the same as an extended warranty?
They are similar. A manufacturers guarantee is something usually included for free when you buy a product. An extended warranty (which is normally chargeable) covers you in a similar way to a manufacturers guarantee but will cover you when the manufacturers guarantee runs out. A manufacture’s guarantee is normally valid for 1 year and the extended warranty can cover you for up to 8 years after purchase.
Extended warranties sometime include accidental damage where as manufacturers guarantees won’t.