If you are considering buying an extended warranty there are several things you should be aware of first. It might not cover anywhere near as much as you thought it would. You may even find that your appliance gets scrapped after just a few years and you still have to buy a new one.
Extended warranties have slowly changed over the last decade or so. They no longer give the type of cover most people would expect. Appliances have been decreasing in price (and quality) for decades. But spare parts and repair costs have increased disproportionately. Many washing machines are uneconomical to repair at increasingly younger ages. The youngest I’ve come across that wasn’t worth repairing after a breakdown was just 13 months old.
It must be comforting to think your washing machine has an extended warranty to cover break downs. But think about it, if the average washing machine has become so expensive to repair that you really need protecting – would insurance companies be daft enough to take the hit for you? No.
Many appliances are being scrapped under Extended Warranties
Extended warranty schemes are writing off appliances all of the time these days. Once past 5 years old they don’t like to spend much money on them. So for example, if you tend to buy budget to mid priced washing machines and you have a large family, you could find yourself cyclically buying new washing machines and extended warranties far too regularly.
Many people buy these extended warranties thinking they are an answer to expensive repairs. The insurance companies however, are just as negatively affected by unrealistic repair prices. So their prices, and the quality of cover is negatively affected.
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What’s the answer?
The most obvious answer would be to increase the cost of the appliance extended warranties to reflect the higher repair prices. But that would just make the price of an extended warranty too expensive. Continued below..
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What’s the alternative?
So if you can’t increase prices you have to decrease the costs of the product. When that’s taken as far as possible you have to start decreasing the quality of the product. The reality of extending the warranty on something so cheap to buy, but so expensive to repair, is that the quality of cover is detrimentally affected. Extended warranties just would not be profitable if they kept paying out for repairs so there are very strict limits to how much they will spend on each appliance.
Extended warranties don’t guarantee to keep repairing your appliance
Insure an appliance with an extended warranty these days and when it’s past 5 years old you might find it gets scrapped if it breaks down. Many of the leading extended warranty companies will only repair it if the cost of parts and labour don’t exceed 50% of the cost of “the cheapest available replacement”. This means if you insure a washing machine that costs £250, any repair above £125 will scrap it (after 5 years). Doesn’t sound too bad? Unfortunately £125 doesn’t get lots of repairs done these days. Contrary to what you might expect, some of the cheapest washing machines have the most disproportionately expensive prices for spare parts.
Example: You can buy a ridiculously cheap washer dryer in the shops right now for just £266. But the PCP circuit board (just one small part) costs £138 as a spare part (This figure is from an email to me from a customer saying it was quoted by a repair agent over the phone). With fitting costs it could be around £178 – £200 to replace. This is way above the maximum price for a repair after 5 years old for that machine.
The type of faults that aren’t likely to get fixed on many washing machines over 5 years old are the PCB, motor, drum, tub, and depending on make and model even the drum bearings. The new Hotpoint Aqualtis washing machine can’t even be stripped down because it has a sealed tub and drum. This is becoming extremely common with many brands. It could be scrapped after 5 years simply because something’s got trapped under the drum because it can’t be stripped down to retrieve it.
Once a washing machine is over 6 years old they’ll commonly only pay up to 40% of the price of the cheapest new one available. At 7 years of age they’ll only pay out up to 30% of a replacement cost, which frankly will hardly cover any repairs at all (£79.80). The idea appears to be that they’ll cover repairs for the first 5 years but after that they’ll scrap it unless only a minor repair is needed but you will still be charged for cover.
What happens when a repair exceeds these percentages?
The good news is you get a new one. The bad news is it’s usually supplied by their suppliers, and you have to pay at least half of the cost to replace it. Your warranty is then cancelled (even if it’s only been in force a few weeks).
- If your appliance is between 5 and 6 years old you contribute 50% of the replacement price
- Between 6 and 7 years old they will contribute 40% and you need to find 60%
- At 7 years or older you just get 30% towards a new one and have to pay the remaining 70% – All plus delivery charges
What repairs are covered under the extended warranty?
There will most likely be a long list of exclusions that you need to check. Common exclusions often include “no fault found”, objects left in pockets and anything related to misuse or not using as per instructions. However, the biggest concern is things like, “claims arising as a result of normal wear and tear (e.g. belts, fuses, seals). A policy with exclusions like this will not cover many repairs!
Check the terms and conditions
If you have an extended warranty, carefully read the terms and conditions. There’s nothing you can do about it but at least it won’t be as big a shock if they scrap your washing machine. Consider putting the money towards a better quality washing machine next time.
If you are considering buying an extended warranty right now, consider whether to put the money toward buying a better quality washing machine in the first place or not. Many better quality washing machines have free guarantees of 2, 3, 5 and even 10 years (5 Tips for buying a new appliance).
Some people take comfort in having an extended warranty
Many people do like being covered, and it clearly must work out beneficial for some people, but at least be aware of the limitations of cover these days. I don’t intend to criticise these companies who are doing what they can to survive and to keep prices affordable, but while prices of new washing machines keep falling and prices of spares and repairs keep being ridiculous you may find yourself forced into replacing your washing machine quite regularly. This I believe would cost more in the long run than spending more on a high quality washing machine instead.
Finally, don’t confuse paying more for a washing machine with getting a better quality washing machine If I buy a more expensive washing machine do I get a better washing machine? | Related article Should I buy an extended warranty / guarantee?
Anonymous says
Impressive statement of the situation. Thank you. I was prepared to renew my annual insurance policy for my washing machine………..until I read your most helpful article. I’ve now decided to forego the expense of such an insurance, on the grounds that – as you cogently argue – it doesn’t seem a good idea in the long run.
Washerhelp says
Thanks. All consumer groups also say it’s a waste of money. The secret is to not look at any single incident, you have to look at the big picture.
R Grillo says
A friend of mine, in his 80s, was sold a 5 year warranty on his new Hotpoint Aquarius (WMF560).
4 years later, the bearing seal recently began to squeak and the bearings began to fail shortly after. Typical for a Merloni group machine.
In the meantime, a secondhand Miele was purchased and installed as a spare in another room, and a lovely machine it is too.
A DIY repair of the Hotpoint was contemplated, but, looking at the paperwork and out came the Inter Partner Assistance SA policy, administrated by Homeserve (and now transferred to yet another company).
Appliance Force came to have a look at the machine a week after first contact and, after a cursory look, confirmed what they were told on the phone, that the drum bearings had failed. They arranged to order a whole new tub rear, tub seal, and heating element (but no spider strangely enough). Seemed a costly way of doing the job, but seemed Hotpoint would be supplying the parts so okay. A week and a half weeks passed and we got fed up and rang Appliance Force.
JTM, whoever that was, had deemed the machine beyond economical repair and blocked the work without bothering to tell any of us.
However, my friend’s grandson rang the insurance company again and said ‘come on guys, repair or replace up to the RRP of the original machine’. So they recommended a new Hotpoint model, but he asked if he had to have that one, especially as after all this wait they already had a new machine. They said no, he could have a 60% refund or pay £26 for delivery and have a new Hotpoint (or alternative) from the Sonic Direct website.
He paid the £26.
Yesterday, a new Bosch WAE28167GB was delivered. It seems better than the Hotpoint (which we may still end up repairing as they wouldn’t remove it for us), but not as good as the Miele.
So £120 (policy) plus £26 (transport) for the new Bosch, compared with £102 + £20 petrol for the used Miele.
The Miele will still break first, it gets more use than the Bosch as it is quieter…