Need to Know: Insurance for Appliances

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When you buy an appliance for your home, whether it is a large “white good” such as a freezer or washing machine, or a smaller, but just as important domestic appliance, such as an iron or kettle, undoubtedly you will be offered an extended warranty.

An extended warranty is a plan that comes in to force when the manufacturer’s warranty runs out and typically may cover some or all of the costs associated with repairing the appliance if it breaks down.


Is an extended warranty suitable for you?

But how do you know whether the warranty is suitable for you?

This is something that KAPUT – a standalone provider of appliance warranty insurance – asked when they commissioned an independent study* in February this year.

Their study found that has shown that nearly 70% of British households already have – or have considered buying – home appliance warranty insurance that they do not understand.

This means that if you buy an extended warranty product, potentially you could lose out financially in two immediate areas – firstly, by purchasing a product that does not suit your needs, meaning it may not do the job it is meant to in the event of a claim. And, secondly, leaving you having to pay for repair or replacement costs if an appliance stops working.

One of the major areas of confusion for people buying an extended warranty is the difference between warranty insurance and a warranty service plan, with 64% not knowing the difference.

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Warranty insurance vs. warranty service plan

The major difference between warranty insurance and a warranty service plan is the protection that you, as a consumer ultimately has, should you make a claim under the agreement which the warranty provider then does not honour.

Appliance warranty insurance is an insurance policy. This means you have the security of being covered under the Financial Services Compensation Scheme (FSCS) should the worst happen and the insurance provider fails to meet their obligations under the agreement.

Warranty service plan agreements do not offer consumer protection under the FSCS as it is not a regulated product. This means that if a service plan provider goes out of business or does not fulfil their obligations, you will have no recourse or entitlement to claim for their losses.


When to buy the cover?

Another consideration when looking for warranty insurance is where and when to buy it.

You are typically not obliged to buy the cover offered to you at the time you purchase your domestic appliance – your product may typically come with some form of manufacturer’s warranty that will last 12 months or so, so there is no urgency.

You may wish, instead, to shop around for your cover. That way you can compare product features and benefits, as well as the cost.

Things to check across the different types of cover include:

  • is the product provider regulated by the FSCS?
  • is there an excess to pay when making a claim for repair?
  • if a product replacement service is offered, how much of the value will you get towards the replacement? (This tends to drop as the product gets older)
  • can you cover second hand items (such as if you move in to a new home).

With 41% of those questioned also suffering from the breakdown of a domestic appliance in the last 3 years, it is imperative that you choose the most cost-effective and appropriate warranty cover so that you don’t lose out financially.


* Carried out by of 100 people aged 25-65+, February 2016


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