Extended warranty on electrical goods
Extended warranty – are they still being sold?
The electrical goods industry received a smack from the Office of Fair Trading. Every time you bought a toaster or a television you were pushed to buy an extended warranty. You were being sold insurance as part of the purchase. You have your credit or debit card ready to go, so just as you are ready to spend the retailer pops what looks like a good idea under your nose. Many people did what you did and bought the warranty.
In the world of sales this is called “up selling.” Just like the chocolate next to the pay desk. If you are like me you will pick up a Twix.
These extended warranty policies were too expensive and too many were bought under high pressure sales techniques.
The sale of extended warranties is now governed by rules set by the Office of Fair Trading.
The rules in a nutshell say you must be properly advised about what you are being offered, be told you do not have to buy now, that there are alternative products available, and if the policy costs more than £20 you have the right to cancel.
Satisfying the Supply of Extended Warranties on Domestic Electrical Goods Order 2005 is a painful process for the retailer, so many have stopped selling extended warranties.
It is a very clever insurance product as you are often getting no more protection than you already have.
You already have protection under the Sale of Goods legislation which says goods must be of satisfactory quality, and you can argue the point up to six years after purchase. The difficulty is that you have to enforce your contractual right, but it is not surprising that when you show you understand your rights and are not going to be fobbed off many retailers will treat the customer fairly. A useful article can be found by clicking here. The Government guidance is worth a look.
The second reason why I think extended warranties are unfair to you is that manufacturers of consumer goods must give you a warranty of at least two years. A European Directive (Directive 1999/44/EC) set this rule in 1999. So you have a two year warranty, but were you told that when offered a policy to extend your warrant? Manufacturers often advertise a 12 month warranty, but as you see you already have 24 months.
A good insurance policy, from the seller’s point of view, is one that seems useful, is priced so it looks good value against the item it is sold with, and is rarely claimed against. That combination means the insurer can pay a high commission to the outfit selling its policies.
Rather like payment protection insurance problems have to crop up before the sale of unnecessary and expensive insurance policies comes to light and is stopped. Maybe electrical retailers will turn to selling over-priced connection leads.