Money: Electrical goods cover may be unwarranted

EXTENDED warranties for electrical goods like washing machines are generally an expensive waste of money, according to a report in this month's Which? magazine.

While they may mean you don't have to worry about unexpected repair bills, the cost of warranties sold through shops (and sometimes described as breakdown insurance or service contracts) normally amounts to much more than you are likely to pay in repairs. Average individual repair bills for electrical appliances are pounds 50 or less, according to Which?, although appliances are getting more reliable so many will need no repairs in the first five years - a typical term for an extended warranty. But warranties for the same period can cost over pounds 200 in some cases.

Which? cites the example of washing machines, where you could pay as much as pounds 220 for a five-year warranty on a machine costing pounds 350. Even with washer-driers, the least reliable appliance looked at, the cheapest warranty costs three times more than the average person spends on repairs over the first five years.

Such costs look particularly high given that, unlike, say, car or house insurance where you could face potentially enormous losses, the most you will have to pay if electrical goods break down is the cost of a new appliance.

For people who remain worried about the cost of repairs, Which? prefers multi-appliance policies sold by, for example, Norwich Union Direct and TSB, the bank.

The magazine, which is published by the Consumers' Association, notes that new appliances are normally automatically covered by a manufacturer's warranty for their first year, and even after that you might still be able to get an appliance repaired for free under the Sale of Goods regulations by going back to the shop where it was bought.

Shops have long been criticised for overselling warranties. Shoppers should remember that even if they do want cover, there is generally no burning need to buy the warranty when they buy the appliance - any time before the manufacturer's own one-year cover runs out is normally fine, which if nothing else gives time to shop around.

Which? says fixed-cost multi-appliance policies - which cover a known range of appliances for a flat fee - often offer much better value than buying individual extended warranties. For example, a household with a cooker, dishwasher, fridge-freezer, microwave, tumble drier, TV, video and washing machine might be charged at least pounds 595 for five-year individual warranties. Norwich Union Direct's multi-appliance policy would cost just pounds 332 for the same cover.