Rip-off extended warranties could soon be a thing of the past, as online retailer Co-operative Electrical has today cut the price of the cover and promised to sell policies at cost.
The move means a typical five-year warranty – which is essentially long-term insurance for a cooker or TV – will cost just £80, rather than hundreds of pounds.
The warranties are sold through retailers and often cost as much as the item that they cover. A five-year extended warranty on a £400 washing machine, for instance, can cost £390 with a typical example costing £6.50 a month.
James Holland of Co-operative Electrical said: “We believe that this market should represent real value, particularly when you compare the price of the warranty with the actual price of the electrical product. In most cases it is just far too expensive.”
An investigation by the Office of Fair Trading in 2012 highlighted a number of concerns that customers were not getting good value for money, as well as specific issues around the high cost of pay as you go warranties.
Extended warranties can fair value, but it depends on the price compared to a replacement of the item covered and the quality of the policy. If the cost of the cover is close to the cost of the product, you could be better off taking the risk and if the product breaks simply replace it.
In any event, before stumping of for a warranty it’s worth checking whether your credit card offers a free on. Add it to the manufacturer’s free one-year warranty and that could mean two years’ cover for nothing.
It’s also worth checking your home insurance, which may cover accidental damage to your electrical goods, and it’s worth have a close look at the guarantee provided by the manufacturer. Some guarantees last for more than one year.
“If customers do choose to take out the additional cover we want them to benefit from one of the best policies on the market.” said Mr Holland. “That is why our warranty not only insures against breakdown or accidental damage, but also protects against food loss in the case of freezer breakdown, and if the product has to be repaired for a third time it will automatically be replaced with a new one.”Reuse content