What is Home Appliance Insurance?

Basically these are the extended warranties you are offered when you purchase an item like a television,fridge,ipod,washing machine etc. Typically at point of sale you will be offered an extra 3 or 5 year warranty for an extra ££££. For example looking on the Currys website a Sharp 46" television is for sale at £799.99 add the 5 year warranty and you have added another £479.40 to the bill.

Useful Facts about extended warranties on domestic electrical goods

The UK office of Fair Trading released some statistics in October 2008   68% of consumers purchase extended warranties   UK consumers spend £24.3 billion a year on domestic electrical appliances.   Only 3% of consumers knew that you have a 45 day cancellaton right on extended warranties and if cancelling in this time get a full refund.

So are extended warranties worthwhile?

On this are i am ignoring central heating repair insurance as i will cover that one in a different article.   So are extended warranties worth having? Well the truth is only you can answer that question as these extended warranty insurance policies are sold to you at a profit and only you can decide whether the piece of mind you get from having them justifies this. The price you are charged for them has been very carefully worked out based on the likely failure rate of the appliances so that both the retailer and the insurance company make a nice fat profit on them. A report by Consumer Reports in 2003 suggested that the profit margin on them could be as high as 70% and another study by them in 2000  found that only 8% of camcorders,cookers,dishwashers and refrigerators required repair in the first 3 years. Research carried out by the Office of Fair Trading in 2002 found the average repair cost for a washing machine was £51 and the average washing machine and television lasts eight years and breaks down 2 to 3 times in this period.   Taking a look at the Argos website they have a Washing Machine costing £224.99 and the 5 year warranty is £116.99 so you can do your own maths to decide.   Fortunately or unfortunately in my household my wife makes the decisions based on her piece of mind regarding the problems caused if an appliance fails so covered are Washing Machine and Dishwasher Not Covered Television, Fridge, Freezer,Cookers and smaller electrical appliances like ipods,stereos,games consoles and toasters etc. And i think that might be a good way to look at it as the inconvenience if the television fails is not too bad but if the washing machine fails the ability to have someone out the same day to repair it for me justifies the expenditure on the extended warranty insurance even if i am paying a premium for this.