Extended warranties

Are you being served or served up when offered an extended warranty?
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  • Updated:12 Nov 2008

04.Questions to ask

Before you purchase an extended warranty, insist on all the terms and conditions in writing. Once you have the fine details in print, look out for the following points.

  • What are the terms and conditions?
  • How long is the extended warranty?
  • Who is providing the warranty?
  • Is it the retailer or a third party?
  • Is there a cooling-off period?
  • What do you have to do if you want to cancel?
  • Does the warranty cover a replacement if needed or does it only cover repairs?
  • Is the number of repairs or the cost of repairs limited?
  • Do you have to deal with the repairer?
  • Do you have a choice of repairer?
  • What about depreciation?
  • Will you get full replacement value?
  • Is freight covered if your item needs to be sent away to be repaired? If it is, is there a weight limit?

CHOICE verdict

More than a third of those in our survey who bought an extended warranty reported feeling some pressure to buy it, while our shadow shopper reported poor information from sales staff, accompanied by factually incorrect statements about extended warranties. The confusion surrounding statutory warranties has allowed retailers to step in and exploit poor consumer understanding of the issue.

Consumers shouldn’t be pressured into buying an extended warranty. We think that retailers need to work with Governement to provide better information and protection for consumers purchasing an extended warranty. Consumers should also be given the opportunity to purchase extended warranties within 30 days of purchasing the goods, as well as adequate termination rights on extended warranties that are purchased.

Don’t be tempted to rely on the advice of the salesperson. Our research revealed that sales assistants often give incorrect and at times completely misleading information. Keep in mind that an extended warranty is not actually an extension of the manufacturer’s warranty, as the terms and conditions are different. Better information about statutory warranties is needed at the point of sale to ensure that consumers have all the information they need to make an informed purchase without pressure.


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