Should I buy an appliance extended warranty?

 Is buying an extended warranty on a new appliance worth it? I never take out any extended guarantees myself because I prefer to look at the bigger picture. I also don’t believe I should be so scared of breakdowns and accidents that I need to insure virtually everything I ever buy – especially when most of what is likely to happen probably won’t be covered. Over a lifetime of owning all my appliances and devices it’s pretty near certain that I will pay out far less if I just pay for repairs as opposed to paying out year after year regardless of whether the product breaks down or not.

Research I've read from organisations like Which? backs this view up as they’ve found that statistically, even the least reliable of appliances such as a washing machine isn't likely to break down enough to make buying the extended warranty financially viable for the average consumer.

Fear of breakdown

Extended warranties are about a specific mindset, which is that products can break down so we must be protected from that. When you think about it, it’s crazy. Why? Because that same “logic” applies to virtually everything we own. My washing machine, tumble dryer, fridge, freezer, cooker, microwave, dishwasher, hob, television, dvd player and so on and so on can all break down needing expensive repairs. So logically we should take out cover on them all? Plus our alarm systems, car, central heating, the chairs we sit on, our laminate flooring and virtually everything in the house! Doing so would cost so much money we’d be penniless. Ironically if you didn’t buy cover for all these products you’d be much more likely to have the money to deal with any breakdowns.

Big Business

Big Business

Extended warranties have been very big business. Billions of pounds have been made selling them over the years and they became so profitable that at one time some retailers relied on them almost exclusively to make profits on appliance sales putting great pressure on their salesmen to sell them. This resulted in an investigation by the Office of Fair Trading. These days most consumer advice seems to have turned against extended warranties and advises against buying them, but prices should be more competitive now because of the investigation and forced changes to practices. Ultimately these products can only be so profitable if the vast majority of people buying them either don’t claim or have claims rejected.

 So logically you don’t take out extended warranties to save money. Here are some potentially legitimate reasons for buying one though –

  • To save the stress and inconvenience of unexpected repair bills
  • So that you don't have the hassle of trying to find someone to fix it*
  • To cover specific appliances that you feel are so important you couldn’t bear to be unable to afford to have it repaired or to replace it

So if these things are important to you then you may be happier taking an extended warranty out.

*NOTE: It can take longer to get an appliance repaired when covered under a warranty because of the way repair arrangements with third party repairers are often set up, and the fact you are a captive customer and cannot go anywhere else.

Some appliances like Hoover or Hotpoint come with a free 5 year parts guarantee. This would cover you for any major parts in the first 5 years but you still have to pay expensive labour charges. You might be satisfied with this level of cover, which can limit some of the most expensive repairs but if you aren’t careful you could end up paying expensive call out charges for minor repairs – see I have a 5 year parts guarantee – should I use it?

Extended warranties are actually a bet

It’s actually a bet

At the end of the day it's a gamble, a bet. You are betting your appliance will break down enough times to leave you the winner, and they, who have all the reliability statistics and repair cost data, are accepting that bet knowing the odds are well in their favour – but accepting that some punters will occasionally win.

Do less reliable appliances need an extended warranty even more?

If you buy a budget appliance, or one of the appliances feared to be less reliable such as a washer dryer, you may think it’s safer to buy an extended warranty because it’s more likely to break down. But do you really think they’d sell you a warranty without factoring that in? Many appliances (over 5 years old) covered on extended warranties are being simply scrapped by the insurers because they are "beyond economic repair" leaving people forced to buy a new one. To be fair, they will contribute towards the cost, but depending on the age you may still need to find between 50% and 70% of the replacement cost yourself. This article explores this in more detail and is worth reading – Washing machines are expensive to repair but are extended warranties the answer?

Which? research appears to commonly find that the odds are heavily in your favour of it being cheaper to pay for repairs over the first 5 years of a washing machine's life, than to buy an extended warranty. They regularly look into the pros and cons of extended warranties and have been instrumental in getting the government to investigate miss-selling and overpricing recently. They currently have a 1 month Online Trial offer of their site where you can immediately research online and receive a copy of the Which? magazine all for just £1.

Summary: If you can financially cope with unexpected bills, or even buying a new washing machine if an expensive repair occurs, then in the long run it's more likely to be cheaper to pay for any repairs as they come. But, if you aren't usually prepared to cope with unexpected bills (not a saver or just don't have the money to put aside) or you simply prefer the peace of mind, you might prefer to have the cover.

Most people won’t save any money buying an extended warranty. If they did, the extended warranty product could not exist. But some people will of course be glad they had cover at times. If concerned about repairs and how long an appliance will last you may be better spending the money on buying a better quality washing machine in the first place, or one with an extended guarantee built in.

Alternatives to extended warranties?

You could buy a washing machine that has a free (or built-in) extended guarantee. This is better as you are not buying a washing machine from one source and insuring it through a separate source. Some examples of this are –

Additional notes: One important difference between an extended warranty and a washing machine which comes with an extra guarantee is that some extended warranties can also include accidental damage cover. This could cover you for extra incidents, and even pump blockages or damage caused by objects accidentally left in pockets which can do serious damage these days. If you want accidental damage cover, either use your home contents insurance (if you have accidental damage cover) or take out an extended warranty that also includes it. If this cover is important, make sure it’s included before buying.

In these tough times, wasting money is not an option. Do some research first. Which? have a genuine no-strings trial offer. For only £1 you get the following benefits -

  • 1 month access to all the information & reviews on Which? Online
  • Access to Which? Local - a database of Which? members recommended tradesmen and reviews
  • A copy of the Which? magazine delivered to your door
  • Access to Which? Legal Services
  • Get your Which? offer | What's the catch?


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