Buy a warranty?

 When we buy goods or services we are often told that they are covered by a ‘guarantee

' or ‘warranty' and we therefore assume that we can make a claim if something goes wrong.  We are sometimes given the chance to extend the period of cover or increase the level of protection by paying for a warranty (often referred to as an extended warranty).  Consumers are often left confused and unsure whether they should pay for a warranty.

In this fact sheet we will explore the difference between a free guarantee and one you have to pay for (usually called a warranty) and consider the merits of paying for a warranty.

Free guarantees

Guarantees are often issued by the manufacturer of goods and are almost always provided with electrical items.  Sometimes guarantees are provided by companies offering services e.g. double glazing or central heating.

Some points to note about free guarantees:

The law does not require a trader or manufacturer to provide a guarantee with any product.

  • If a guarantee is provided it is legally enforceable.
  • If you make a claim under the guarantee you are only entitled to what the guarantee offers you which may be more or less than you are entitled to under your statutory rights.
  • Guarantees are not usually transferable to another person. If you sell the product or move house within the period of a double glazing guarantee, the benefit of that guarantee is unlikely to transfer to the new owner.
  • You can ask to see a copy of a free guarantee before you make a purchase. The guarantee should state details of who is giving the guarantee, what they are offering and how to make a claim.

Warranties

Warranties are normally issued by insurance companies and can be purchased at the same time as goods or services or at a later date.  Warranties usually last for a fixed period of time, commonly 5 years.  When you purchase a warranty the law sees this as a separate contract which is enforceable by law.  However, as with a free guarantee, you will only be entitled to claim the redress that the warranty offers you.

If you purchase domestic electrical appliances there are specific rules in place that are designed to make it clear to consumers what they are paying for and to give them added protection against mis-selling.  The rules require retailers to:

  • Show the price of the extended warranty alongside electrical goods in store, in catalogues, on website and in print adverts.
  • Give consumers information about statutory rights, cancellation rights and details of the warranty including whether or not their warranty provides financial protection in the event of insolvency and whether it terminates in the event of a claim.
  • Give consumers 45 days to cancel their extended warranty, including a written reminder of this right and the right to cancel at any time and receive a pro-rata refund.
  • Offer the extended warranty on the same terms for 30 days if the consumer chooses not to buy it there and then. Any discounts tied to the purchase of the extended warranty would also be available for 30 days.

Should I always purchase a warranty if one is offered?

You need to think carefully about the advantages of paying for a warranty.  Often the salesperson offering you a warranty is on commission and may be very persuasive.  However, do not feel pressurised into buying a warranty without checking the details and thinking it over.  You can buy a warranty at a later date - it does not have to be purchased at the same time as the goods.

Questions to consider are:

  • How likely is something to go wrong?
  • Is the company offering the warranty likely to be in business for the lifetime of the warranty?
  • How much would the item cost to repair? (it can sometimes be cheaper to pay for repairs than buy an expensive warranty.)
  • Is there any other insurance I could buy to cover the goods for repairs?
  • To what extent does the cover mirror existing insurance I may have (e.g. home contents insurance)?