BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific

BBC News World Edition
 You are in: Programmes: Moneybox  
News Front Page
Middle East
South Asia
Talking Point
Country Profiles
In Depth
BBC Sport
BBC Weather
Moneybox Saturday, 26 October, 2002, 11:44 GMT 12:44 UK
OFT appeal to consumers
Electrical goods
The OFT has urged shoppers to think carefully

The Office of Fair Trading is appealing to shoppers to think carefully before taking out extended warranties on goods they buy.

Also known as service agreements, extended warranties will pay out for repairs, replacements and sometimes damage to electrical appliances such as cookers, washing machines or television sets.

Typically they offer cover to customers for four years after the manufacturer's one year guarantee has expired and they have become big business for high street retailers, generating around 800 million last year alone.

Taking out an extended warranty may seem like the sensible option, but recent research conducted by the OFT has shown extended warranties can cost up to half the purchase price of some appliances.

Concerned that customers could be getting a raw deal, the OFT is distributing leaflets in shopping centres around the country urging people to think carefully about whether the warranty on offer is good value for money.

OFT Deputy Director General Penny Boys told Money Box there was a high degree of reliability amongst products and there are alternatives to extended warranties, so customers should make an informed decision before they buy.

Free protection

Almost all appliances come with a one year guarantee from the manufacturer and you can get extra free protection depending on how you pay for the goods.

Some credit cards and bank accounts will give you a second year of automatic cover as long as you pay for and register your purchases with them.

Barclaycard offers its customers exactly this service, but there are some exclusions including personal computers and cameras.

If it is just theft or accidental damage you are concerned with - check the details of your household insurance policy. You may find that you are already covered.

Alternative cover

If you do want to take out additional protection for your goods, you can opt for a multi appliance policy.

This lets you insure more than one item on the same policy.

Several companies offer these deals. With Norwich Union Direct you can pay a fixed fee of 8.99 per month and get unlimited insurance for all your household appliances.

With another insurer - Warranty Direct - pay 7.55 per month and cover any three household appliances of your choice for up to 10 years.

There are some exclusions on both these offers including plasma televisions and personal computers.

Do I need cover in the first place?

A recent Which survey on product reliability reported that 81% of washing machines did not break down at all in the first six years.

Although keen to attract customers, Warranty Direct Operations Director Duncan McClure-Fisher told Money Box that "Most items do not fail in the first three or four years so we would tell customers to come to us at that point."

Of course protecting your goods will give you peace of mind. But think first about whether you need it, what kind of cover you want and what you are prepared to pay for.

Listen to Money Box
Money Box phone-in
Guides & calculators
Meet the team
Contact us


From BBC Business News
The Markets: 9:29 UK
FTSE 100 5760.40 -151.7
Dow Jones 11380.99 -119.7
Nasdaq 2243.78 -28.9
FTSE delayed by 15 mins, Dow and Nasdaq by 20 mins
Launch marketwatch
View market data
See also:

25 Oct 02 | Moneybox
25 Oct 02 | Moneybox
25 Oct 02 | Moneybox
Links to more Moneybox stories are at the foot of the page.

E-mail this story to a friend

Links to more Moneybox stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |