Extended warranties: know your rights Your rights

When you buy goods such as a washing machine, computer or TV, the shop might try to sell you an extended warranty (sometimes called a service agreement or support service).

What makes warranties 'extended'

When you buy a product, it's usually guaranteed by the manufacturer for a period, often a year. An extended warranty will normally cover goods for longer, perhaps three or five years. 

Check that the warranty starts after the guarantee has run out and that the first year doesn't run alongside the manufacturers guarantee.

An extended warranty may also cover other things, such as accidental damage and annual check-ups.

So you might think of taking that offer of an extended warranty for peace of mind in case the product breaks down.

Do you need an extended warranty?

Not all extended warranties offer the same sort of cover or protection and we believe they're often not worth the money. Which? tests show that most modern appliances are unlikely to break down in the first few years.

Even if the product does break down, you may have a legal right to a repair or replacement. If you have to pay for a repair, you might find it's cheaper than the initial cost of paying for the warranty.

An extended warranty is a legal contract

Pay attention to what is excluded from the terms of the warranty. For example, you might not be covered for certain types of damage or breakdown.

Extended warranties for electrical appliances

The most common extended warranties are for domestic electrical appliances. With these, there are laws to protect you from being pressured into buying an extended warranty without having the chance to consider it properly, or shop around for the best deal.

Regulations for selling domestic appliance warranties

The Supply of Extended Warranties on Domestic Electrical Goods Order 2005 is enforced by the Office of Fair Trading. It says that electrical retailers must:

• Advertise the price of a warranty next to the electrical goods, in store, online or in catalogues. If the seller has sold less than £10,000 worth of extended warranties in the previous business year they also have to put this information in any advertisement for the goods).
• Tell you that you have rights to buy a warranty elsewhere (for example, from a manufacturer or an insurance company), and that the electrical appliance you are buying may already be covered by your household contents insurance policy.
• Give you a written price for a warranty if you ask for one, which retailers must honour if you go back to buy it within 30 days of buying the product it covers.
• Give you information about your consumer rights and your rights to cancel the warranty.
• Give you details of the warranty, including whether the warranty is protected if the company providing it goes bust, and whether the warranty ends if you claim on it.
• Give you the right to cancel a warranty. If you cancel within 45 days of taking out the warranty, and you have not made a claim on it, you must be given a full refund. If you've made a claim or it is beyond 45 days, you must be given a pro-rata (partial) refund.
• That the warranty does not have to be purchased at the same time as the electrical item itself is purchased.
• whether or not the warranty will come to an end if a claim is made.

Warranties over £20

If the warranty is offered in store and costs over £20 (including VAT) you should be given a written quote for the warranty which should include the following information:

• price and length of the warranty
• that the warranty is available at that price for 30 days
• that the warranty doesn't have to be bought at the same time as the item
• any cancellation rights.

Warranties over one year

If the warranty lasts more than a year then the retailer should: 

• give you the right to cancel - if you cancel within 45 days and you have not made a claim on it, you must be given a full refund
• if you've made a claim or it is beyond 45 days, you must be given a pro-rata (partial) refund
• unless the warranty cost less than £20 (including VAT) the retailer must write to you at least 20 days before your cancellation period ends informing you of your right to cancel.

These cancellation rights do not apply to a warranty that is bought at a distance - such as online - as the Financial Services (Distance Marketing) Regulations 2004 already provided a 14 day cancellation right in these circumstances.

Extended warranties for cars

The sale of extended warranties for cars is covered by a code of practice that is regulated by the Financial Services Authority (FSA). It says that you must be given clear information about:

• what the warranty covers
• what to do if things go wrong
• how to make a complaint if, for example, you think a claim has been unfairly rejected.

Extended warranties for other products

The sale of extended warranties for other products (furniture, say) is not regulated, so you must take extra care to read the terms and conditions before signing up for one.

However, as with any contract, you have protection from unfair terms in a contract – ones that are biased in favour of the company and disadvantage the consumer, or ones that try and take away your legal rights.

Your rights if something you buy is faulty

If something you have bought is faulty, you could be legally entitled to a refund (usually only if the fault develops soon after purchase and you act quickly) or a free repair or replacement from the retailer you bought it from. These two remedies may well still be available even after the manufacturer's guarantee has run out.

The Sale of Goods Act says that goods should be of 'satisfactory quality', and in practice, they should last a reasonable amount of time before developing a problem. If something develops a fault, the retailer is legally responsible if the product could not have reasonably been expected to develop that fault at the time it did.

So, for example, if the LED display on a £20 DVD player breaks after two years you probably won't have a claim. But if a £200 DVD player breaks down completely after two years, you may be able to claim against the retailer.