When you’re buying a new appliance, television, laptop or mobile phone, there’s a good chance the salesperson will ask if you’d like to add an extended warranty. It’s a common sales pitch. Extended warranties are often promoted as a smart way to protect your purchase from unexpected repair costs. But before you spend the extra money, it’s worth considering if you really need the extra warranty.
Warranties and your rights
A warranty is an extra promise from a business about the quality of a product or how it will fix any problems with a product or service. But it may not be needed if you already have consumer rights.
An extended warranty - sometimes called a care package - is an optional add-on that extends the manufacturer’s warranty for an extra cost.
Extended warranty coverage can vary significantly. Some extended warranties only cover mechanical faults, while others may cover accidental damage such as drops, spills or cracked screens. The additional coverage period can range from one year to several years, depending on the product.
In some cases, an extended warranty may provide benefits beyond your existing rights. But in others, it may offer little or no additional protection.
You already have consumer rights
Before deciding whether an extended warranty is worth it, it’s important to understand the protections you already have.
Under Australian Consumer Law, products and services automatically come with consumer guarantees. This means they must:
- be of acceptable quality
- be fit for purpose
- match their description.
If a consumer guarantee isn’t met, you’re entitled to a refund, repair or replacement.
Importantly, these rights can continue even after a manufacturer’s warranty has expired. Consumer guarantees apply for a reasonable time, depending on factors such as the product’s price, quality and expected lifespan.
Consumer guarantees also apply to vehicles, and many used cars bought from licensed dealers come with a statutory warranty. Although, these rights may be excluded if buying from a private seller or at auction.
Know your rights
Businesses should clearly explain any benefits the warranty provides beyond your existing rights under consumer law.
They must not:
- pressure you to buy an extended warranty
- mislead you about protections you already have under consumer guarantees.
Understanding your rights can help you make an informed decision and avoid paying for coverage you may not need.
When an extended warranty might be worth considering
Sometimes an extended warranty can offer benefits that go beyond your automatic consumer rights.
For example, if your coffee machine breaks down, an extended warranty might provide a loan machine while yours is being repaired. Or, if you’ve purchased a new computer, it may include extra technical support to help you get the most from your device.
These types of convenience and support services may be valuable to some consumers.
If you’re considering an extended warranty, read the terms and conditions carefully. Check exactly what’s covered, what isn’t, and whether there are fees or limitations that apply when making a claim.
When an extended warranty may not be worth the cost
In many cases, consumers pay for extended warranties without ever receiving benefits that justify the price.
Take a close look at the fine print and be cautious if the warranty:
- has confusing terms and conditions
- requires a high claim fee
- has strict limits on the amount you can claim
- gives you only a short period to make a claim
- restricts the parts that can be repaired or replaced
- excludes common or expensive faults
- requires servicing more often than seems reasonable
- duplicates protections already covered by consumer guarantees or the manufacturer’s warranty
- doesn’t represent good value for money.
Taking the time to weigh up the costs, exclusions and benefits can help you decide whether the warranty offers genuine value for money.
More information
Read more about your rights with consumer guarantees and warranties and refunds and returns.
If you have difficulty making a valid claim under an extended warranty, contact Consumer and Business Services (CBS) for advice.