Are extended warranties worth the money?

You’ve just bought yourself a new washing machine with so many different spin cycles, you could choose a different one for every day of the month. Or maybe it’s a fancy new TV, with a 4K display, an AI assistant and a screen that covers half your sittingroom wall.

The shop assistant scans your item and next comes the inevitable question. “Would you like to buy another three years of cover for your new [insert product]?”

The washing machine has just set you back €650 and the TV a cool €1,399. The money you’ve spent should ensure both are still in decent working condition several years later.

But what if something were to go wrong? Perhaps the extra couple of hundred euro for enhanced insurance would be worth the investment given the outlay?

The nightmare scenario of the washing machine or TV going kaput a week after the warranty expires flashes through your mind.

But what would you really be paying for, and how much better is it than the protection you already have under consumer law?

The first thing to know is that you have very robust rights as a consumer in Ireland, and indeed throughout the EU.

If there’s a fault with a product within 30 days of buying or receiving it, you are entitled to cancel your purchase. Under your “short-term right to terminate a sales contract”, you can opt for a repair or replacement if you prefer.

Your legal position is particularly strong during the first year of ownership, but your rights in relation to faulty goods can extend for up to six years if the product – like a washing machine or TV – could reasonably be expected to last that long.

It is important to note that your contract is with the retailer, not the manufacturer, and it is the retailer’s responsibility to remedy faulty products.

Consumer law does not, however, cover ordinary wear and tear, or products that were misused or accidentally damaged.

Serious problems, if they arise, still have to be dealt with. For the first year, the law is generally on your side and assumes the fault was already there when you bought the product.

After that, the onus shifts to you to show the problem was inherent in the product rather than caused by wear and tear, misuse or accidental damage.

And this is where extended warranties or appliance insurance might begin to offer something extra.

There are, broadly speaking, two types of cover you’re likely to be offered.

Extended warranties usually offer additional repair or replacement cover, sometimes extending beyond the manufacturer’s guarantee.

Insurance policies, on the other hand, offer wider protection and that can include things like accidental damage. Naturally, this can be more expensive, and protections can vary hugely so pay close attention to the details.

For something more robust like a washing machine, you might decide breakdown cover is enough if accidental damage is less of a concern.

Our €1,399 4K TV, though, can easily be knocked from its stand, or the screen could get a whack from a sweeping brush or two kids playing catch. This is where an insurance policy might be an option.

Retailer Currys offers “tech insurance” for TVs in different price categories, ranging from €200 up to more than €3,000.

For our €1,399 TV – the cost would be €180 for a three-year package, and €280 for five years. Monthly payment plans are also on offer if you prefer to spread the cost.

For that, Currys promises to fix the TV within 14 working days and if they don’t meet that deadline, or they’re unable to repair the item, they’ll offer a replacement.

Their website says there is no limit to repairs and if the TV suffers repeated problems, you can seek a new one.

Similar plans are in place for laptops, tablets, cameras, home-cinema set-ups and satellite equipment.

Harvey Norman’s Product Care offers similar cover in two-, three- and four-year plans. It includes things like “food spoilage cover” which pays for up to €500 worth of food if a fridge or freezer fails.

Similarly, it offers cover of up to €150 for laundry expenses if your washer or dryer is out of service for more than 10 days after you notify it of the fault.

Are these plans worth it? That’s probably a question only you can answer.

Like any type of insurance, some people are risk-averse and will draw comfort from knowing an unexpected fault or accident will be dealt with. Others might decide they are better off keeping the money in their pocket and taking on the risk themselves.

The price of the appliance matters, but so too does your ability to absorb the loss if forced to buy a new item.

Replacing a TV that cost less than €500 might be irritating but manageable, particularly with second-hand options available. Having to find €1,399 – or north of €2,000 for a super high-spec telly – is a completely different story.

You might also want to consider your own track record.

Are you very careful, or are you living in a busy household with children and pets where accidents are more likely to happen?

And before buying any extra protection, make sure to check what it covers.

Currys’ policy, for example, covers sudden accidental damage and mechanical or electrical breakdown. It does not, understandably, extend to cosmetic damage, misuse, neglect or damage during severe weather.

Ultimately, the decision whether to buy or not will be a combination of your risk appetite, how much the product cost, and whether your household budget could absorb the sudden shock of a full replacement.

You can contact us at OnTheMoney@irishtimes.com with personal finance questions you would like to see us address. If you missed last week’s newsletter, you can read it here.