Are Extended Warranties Worth It? What to Check Before You Buy

What an extended warranty is

An extended warranty is cover you pay for on top of what comes with the product. It may be sold by the retailer, the manufacturer or a separate company, and many are a form of insurance. Unlike your legal rights or the manufacturer's guarantee, it's entirely optional, and you never have to buy it to get your legal rights. Our guide to warranties, guarantees and your rights explains how the three fit together.

The overlap problem

For the first year or two, a new product is usually already covered twice: by your legal rights against the retailer, and by the manufacturer's guarantee. An extended warranty that starts on the day you buy can spend much of its term duplicating cover you already have. Check when it actually starts paying out, and what it adds over those first years.

You may also be covered elsewhere already, for example by your home contents insurance or a packaged bank account. Check before you pay twice.

What to check before you buy

• What's covered: breakdown only, or accidental damage too? Parts and labour? Call-out charges?
• What isn't: wear and tear, cosmetic damage, batteries, accessories and misuse are common exclusions.
• The excess: how much you pay towards each claim.
• Repair or replace: what happens if it can't be repaired, and whether a replacement is new or refurbished.
• Who provides it: the company that pays out, and how you claim.
• The cost compared with the risk: how does the price compare with the cost of a typical repair, or with replacing the item outright?
• Cancellation: how long you have to cancel and what refund you'd get.

You don't have to decide at the till

You can usually buy cover later, sometimes cheaper, from the manufacturer or a separate provider, so there's no need to decide under pressure at the checkout. If you've already bought one, you can usually cancel it:

• For domestic electrical goods, such as TVs, washing machines and laptops, the retailer must give you at least 45 days to cancel for a full refund if you haven't claimed.
• Extended warranties sold as insurance generally have at least a 14-day cooling-off period.

Check the policy for its exact terms.

When an extended warranty can make sense

• Expensive items that are costly to repair and that you depend on, like a boiler or a range cooker.
• Products with a short manufacturer's guarantee, or none.
• Cover that includes accidental damage, if that's the risk you're worried about.
• When it's cheaper than putting the money aside to repair or replace it yourself.

For many smaller electricals, saving the cost of the warranty and relying on your legal rights and the manufacturer's guarantee works out cheaper.

If you do buy one, don't forget it

An extended warranty is only worth something if you remember you have it. Note when it starts, which is often when the manufacturer's guarantee ends, and when it ends, and keep the policy with the product's receipt. Plenty of people pay for three years of cover and then never claim on a fault that it would have paid for.