Extended warranties, also known as service agreements, are designed to pay for any repairs to your purchase - washing machine, television, fridge, etc - if anything goes wrong within a specified period. The question is, are they worth it? The answer is an unequivocal maybe!
Typical extended warranties run for two four years beyond the manufacturer's guarantee, so in total goods are protected for up to five years. But with some extended warranties costing up to 50 per cent of the purchase price of the appliance, it is worth being sure you need it.
Questions to ask are:
- What is the cost of the warranty? The higher the cost is a proportion of the purchase, the less worthwhile it is likely to be.
- What is the likely cost of repair? A recent survey found that the average washing machine repair cost between ?45 and ?65, and the average TV repair between ?35 and ?55.
- What is the cost of a new appliance compared with the cost of an extended warranty? It might be cheaper to simply replace the appliance if it breaks down.
- Is the product likely to break down? Of course there's no way of knowing, but A Which survey (May 2006) reported that 81 per cent of washing machines didn't break down at all in the first six years.
Bottom line? If you're prepared to take the chance on dealing with any breakdowns, then a warranty might not be for you. But if you're a worrier, don't want to hassle with repairs, and the warranty doesn't cost too much, it could be a good investment.