If you are considering buying an extended warranty on a washing machine – or any white goods appliance, or you want to know if it’s worth buying one, then this article details 8 important things you should be aware of and understand before making a decision.
1: Extended warranties are actually a bet
At the end of the day it’s a simple bet. You are betting your appliance will break down enough times to leave you the winner. 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.
2: Do less reliable appliances need an extended warranty even more?
Many people buy extended warranties thinking they are an answer to expensive repairs. Appliances have been decreasing in price (in real terms) and repairability for decades. Spare parts and repair costs have increased disproportionately. So many washing machines are uneconomical to repair at increasingly younger ages.
It must be comforting to think your washing machine has an extended warranty to cover break downs and all future repairs are covered.
But think about it, if the average washing machine has become so expensive to repair that you really need protecting from the costs – would insurance companies be daft enough to take the hit for you? No.
The insurance companies are just as negatively affected by unrealistic repair prices.
So their prices, and the quality of cover is negatively affected. Generally you should be ok for the first 5 years but after that your cover may be drastically reduced.
3: 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: At time of writing you can buy a ridiculously cheap washer dryer for just £266. But the PCB (just one small part) costs £138.
With fitting costs it could be around £178 – £200 to replace. So the appliance will be scrapped.
The type of faults that are not likely to get fixed on many washing machines over 5 years old are the expensive repairs you are likely to have sought protection for. The PCB, motor, drum, tub, and drum bearings. Many washing machines can’t even be stripped down because they have 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, they’ll only pay out up to 30% of a replacement cost, which frankly won’t cover any repairs at all (£79.80). They’ll cover repairs for the first 5 years, but after that they’ll scrap it unless only a minor repair is needed, and after seven years it’s likely to just get scrapped.
However, they will still keep taking your money for the cover. As most people won’t need to claim anyway, there must be millions of people paying for a level of cover they don’t really have, but never even realise.
4: What happens when a repair exceeds these percentages?
The good news is you get a new one. The bad news is it’s often 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). It seems that appliances are now so expensive to repair it is no longer practical to insure them against breakdown once they are over five years old.
- 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
5: What repairs are covered under the extended warranty?
There will most likely be a 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!
6: 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.
7: Extremely profitable
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 their profits.
A salesman would commonly discount a product if you took out an extended warranty because they were more interested in selling the warranties than making a profit on selling the goods.
This eventually 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.
Ironically 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.
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).
8: 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?
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