Clean up on your washer warranty
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Your support makes all the difference.A Washing machine that doesn't? A video that scrambles? You may be covered under a warranty you took out when buying an electrical appliance. But insurers claim warranties sold by shops such as Comet and Dixons are expensive, and are launching their own policies to cover a range of electrical goods against breakdown.
The retailers have a stranglehold on this market, selling warranties to buyers of TVs, washing machines and the like at a cost of up to a third of the item's purchase price. But the Consumers' Association says many of these are poor value and the Office of Fair Trading has already criticised shops for failing to give customers adequate information about what they are buying.
Norwich Union Direct and the TSB have launched their own warranties and Barclays Bank says it will test a policy in August.
Unlike the extended warranties that retailers sell for individual items, Norwich Union's policy will, unusually, cover most of the electrical goods in your home for just pounds 7.95 a month. Ultimate Appliance Breakdown Cover insures a range of 15 larger electrical items, from colour televisions and videos to fridges and washing machines, providing they are less than eight years old. The policy stands to work out far cheaper than separately insuring a whole series of items as you buy them (see box).
Norwich Union Direct managing director Patrick Smith says: "Currently the market is in a mess with people having to buy their cover in little bits here and there. With us they can have one policy with one insurer and pay one monthly premium. We don't even need to know when a customer buys something new, it's automatically included."
Norwich Union says that in the two weeks since the launch of its policy, it received 10,000 calls from interested customers.
TSB's policy is being piloted in South-west England, South Wales and east Scotland, and will be launched nationally in the autumn. Customers insure each item individually on the one policy, which offers cover for appliances up to seven years old. The older the item, the higher the cost. For a standard range of household electrical goods it works out at about pounds 10 a month, TSB says.
As with most warranties, the insurance companies arrange repairs if an appliance breaks down, paying in full for parts and labour. The customer simply calls a helpline number. Norwich Union Direct replaces items under five years old if they are beyond repair and TSB will do the same for items less than three years old. For items older than this you get a proportion of the replacement cost.
The policies do not cover items against accidental damage, unlike many manufacturers' and retailers' warranties. But Norwich Union says this is because most householders are already covered for accidental damage and theft under their household insurance, and the cover would be duplicated.
Some retailers are sceptical about the insurers' policies and doubt that their lower premiums can be maintained in the long run. The prices of the premiums are guaranteed for just 12 months, after which they can rise. With traditional warranties, you pay the full cost up front.
There are wide variations in the prices of extended warranties between different retailers and great savings can be made by shopping around. Shop sales assistants make healthy commissions from selling warranties and have been accused of putting undue pressure on shoppers to buy them when they purchase electrical goods.
The way in which retailers sell extended warranties has been under investigation by watchdogs, who have slammed high-street chains for their high-priced policies. Some retailers make up to a third of their total profits from selling the warranties. Last week Dixons shares fell on news of a call by specialist magazine Marketing Week that the Department of Trade and Industry should take action to require greater transparency in the sale of warranties by retailers.
The OFT has already recommended that stores display the prices of their warranties so customers can make comparisons between them. Later this summer it is expected to call for measures to force retailers to display the prices of their warranties and those offered by manufacturers, which customers often only find out about after signing up with the retailer.
The cost of five-year warranties
Washer/ Dishwasher Video Colour TV
Dryer
Norwich Union Direct
pounds 477* covers a range of 15 appliances
TSB (for products less than one year old)
pounds 165* pounds 105* pounds 135* pounds 75*
Dixons/ pounds 230 pounds 105 pounds 135 pounds 95
Currys
John Lewis pounds 145 pounds 65 pounds 86 FREE
Comet pounds 220 pounds 105 pounds 135 pounds 95
Powerhouse pounds 220 pounds 105 pounds 168 pounds 95
*Assumes premiums do not change
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