In this post I will share my feedback on an article written by Which? chief executive about extended warranties.
A couple of weeks ago Peter Vicary-Smith the Chief Executive of Which? posted an article on the Which? Conversation website entitled “Push back on warranty pushers“. The article was expressing the view point of almost every other article ever written that ALL extended warranties are evil. I agree that the extended warranty sales people who sell them will say whatever they need to say to get a sale. This is a result of the management pressure and the culture of target driven sales people. This is common with almost every sales person selling almost every single product out there.
Having spent a lot of time researching and understanding how extended warranties work it has made me think that the views of the Which? Chief exec are some what uninformed. He uses an example of a Panasonic TV when buying from Currys which costs £139 for the Currys premium 5 year cover. Based upon the £139 price point the TV would cost some where between £200-£300.
The table below contains every option in the UK extended warranty market for a similar priced TV. This table uses the Samsung UE32F5000 32-inch as an example. This TV costs approx. £269-£289. It was used as the example in our TV extended warranty guide.
Extended Warranty Comparison chart for £269-£289 television
Extended Warranty Retailer
Available for a TV bought from a different retailer?
Product cost (either from extended warranty supplier or cheapest retailers)
Cost of Extended Warranty
Per year cost
Accidental damage cover
3 year extended warranty including product
5 year extended warranty including product
|Amazon - Square trade policy||£269||£42.99||3 years||£14.33||£311.99||-|
|Amazon - Square trade policy||£269||£64.99||5 years||£12.99||-||£333.95|
|Argos Breakdown care TV LED||£349||£75.99||3 years||£25.33||£424.99||-|
|Asda Direct||£289||£39.99||3 years||£13.33||£328.99||-|
|Co-op electrical||£299.99||£59.99||3 years||£19.98||£359.98||-|
|Co-op electrical||£299.99||£94.99||5 years||£31.66||-||£394.98|
|Currys - Whatever Happens||£289||£3||Monthly||£36||£397||£469|
|Currys - Whatever Happens Premier||£289||£4.50||Monthly||£54||£451||£559|
|Currys - Whatever Happens||£289||£89||5 years||£29.66||-||£437.30|
|Currys - Whatever Happens||£289||£69||3 years||£23||£358||-|
|Currys - Whatever Happens Premier||£289||£99||3 years||£33||£388||-|
|Currys - Whatever Happens||£289||£139||5 years||£46.33||-||£520.65|
|Domestic & General Protection Plan||£269||£77.88||3 years||£25.96||£346.88||-|
|Domestic & General Protection Plan||£269||£98.88||5 years||£19.78||-||£367.90|
|Home appliance guard||£269||£60||Annually||£60||£449||£569|
|Hughes Direct||£279.99||£84.25||3 years||£28.08||£364.24||-|
|Hughes Direct||£279.99||£146.25||5 years||£29.25||-||£426.24|
|John Lewis inc free 5 year extended warranty||£289||-||5 years||-||£289||£289|
|Richer Sounds||£275||£27.45||5 years||£9.15||-||£302.45|
|Sonic Direct||£299||£99.99||5 years||£19.98||-||£398.99|
|Tesco - Drops and spills plan||£289||£42.99||3 years||£14.33||£331.99||-|
|Tesco - Drops and spills plan||£289||£64.99||5 years||£21.66||-||£353.99|
|TV Protect by Big Warranties||£269||£6.95||Monthly||£83.40||£519.20||£686|
We found 19 cheaper options than Which? Chief Executive
With the power of Google search we found a lot better extended warranty pricing. There are 27 options available to you if you want to buy an extended warranty on a TV in the UK. 19 of those 27 are cheaper options than the cost of the extended warranty shown by the Which? Chief Exec, (if you rank the options by cost per year). If you was to shop around you could have saved 50% over the Currys Premier Whatever happens cover. You could have reduced the cost from £139 down to £64.99 for the same 5 year period saving you £74.01.
Although the the Currys Premier option is one of the most expensive options on the market it does offer some things that most other extended warranties do not.
- They quote a response time for an engineer visit of within 2 days
- A guarantee fix or replace within 7 days of the engineer visit
- They also offer a loan TV while yours is being fixed
- A 24/7 technical support telephone number
I am not saying that everyone in the world will find these features beneficial but you need to compare apples with apples. Their basic extended warranty cover is £89. Which although is not the cheapest extended warranty on the market is £50 cheaper than the premier cover than Mr Vicary-Smith quoted in his post. It is like saying no one should buy cars because a super car costs £250,000 and it is not good value to consumers. If a consumer wants to buy a car they would look at all the options in the market not just the most expensive before they figured out what they should buy.
What Peter Vicary-Smith got right
I do not agree with the overall message that you can say “all extended warranties offer poor value” but some of what he says is right.
- Sales people do lie and put pressure on consumers to buy extended warranties (but this is not limited to extended warranty sales people, it is a bigger problem with target driven sales people)
- Not all extended warranties offer the best value
What Peter Vicary-Smith should have said
As the head of such a large consumer interest group I believe he should represent a more opened minded view on things. It does not help consumers at large to jump on the band wagon and slag off extended warranties. Doing exactly what every other journalist/blogger/writer who wants to write propaganda articles to scare monger people against extended warranties.
The Which? mission is to:
To make a consumer as powerful as the organisations they deal with, he should have given a more researched view point. I agree that on face value an extended warranty that costs half of the price of the product may not be good value to everyone if that is the only option you consider. However dodgy sales people aside some people find value and peace of mind in what an extended warranty offers. I do not think any one would not want an extended warranty if the price was right.
What the article should have done is to
- Question the value of the extended warranty presented at point of sale by the sales person
- Encourage people to shop around to get the most value
- Help people understand what the benefits of an extended warranty is so they can make up their own mind if they present enough value to justify the cost
- Remind consumers of their right to go back to the shop and purchase the extended warranty at a later date once they have done addaquate research if they decide it is good value
In December 2012 I wrote an article about what I thought the future of business was. My headline statement was about how the use of the internet was going to see the equilibrium of power restored between organisations and individuals. As you can tell by the views I expressed last year I totally agree with Which’s mission. In fact it was an organisation which was one of the inspirations for me to set up my company. However, I think this post has been written from an ill informed, negatively biased view point.
I do not know if Mr Vicary-Smith actually wrote this article or if he had a ghost writer write this for him but I believe the article was not true to Which’s overall mission. This does not make a consumer more powerful, it takes a dictatorial approach rather educating and informing consumers to make the right decision for them.
I do not think that every extended warranty offers good value nor that everyone should buy an extended warranty. I do feel that well informed consumers should be able to make their own decisions about buying an extended warranty based upon the an independent and unbiased point of view. I would like to see Which take a more neutral view point and look to empower consumers not write in such a propaganda lead fashion.
I welcome your feedback on my view point and I would be happy for anyone to comment on my the argument I present on this
The editor of Which? Conversation Patrick Steen replied to the original comments with the follow remarks:
Hello Chris, thanks for your comment. The goal of Which? Conversation is to start a debate, without going into too much detail about the research itself.
This post refers to a wider investigation conducted recently by Which?, which is featured in the October issue of Which? magazine. The investigation involved our mystery shoppers visiting five major retailers to see how store staff were selling extended warranties and service/care plans at the point of sale.
This revealed that consumers were often not getting useful and clear information from high street retailers at the point of sale, and sometimes were not being informed of their basic rights when it comes to warranties. We think that retailers should make sure their staff provide accurate information so consumers can decide whether to buy an extended warranty. To read a more detailed summary of the research, please head to http://blogs.which.co.uk/technology/news/great-extended-warranties-rip-off/
We think that many extended warranties don’t offer value for money, and our investigation demonstrated this. Most products are already covered by a manufacturer’s warranty of one or two years, and the Sale of Goods Act gives consumers the rights to return a product if it develops a fault. Consumers can also often get more comprehensive cover through their home insurance policy, although this may increase premiums.
However, for consumers who do want to buy extended warranties, we advise them to always shop around to get the best deal.
I still do not think Which? is adhering to it core mission to “make a consumer as powerful as the organisations they deal with”. Making a blanket statement telling someone not buy something is wrong when it is only part of the story is wrong. I agree that bad value products and dodgy sales people should be exposed but this only only part of the story. They should shine a light on the good options and not just focus on the bad. The approach that Which? (and most other news reports) take is a style which is more akin to a sensationalized story ran by a misinformed journalist.
Which? is not a newspaper they are a consumer rights charity. I believe they should help empower consumers with information so they can make an informed decision not dictate a perspective which only takes in to consideration part of the story. They should highlight the good and the bad because in the case of extended warranties, I do not believe that every extended warranty should be boycotted. There are some that are on the market which offer good value and could be of benefit to some people.