Are extended warranties worth paying for or a useless, expensive add-on?
Whether you’re buying online or in-store, it’s a common experience to be offered a warranty on new, expensive purchases.
From watches to laptops, sellers are often keen to upsell you on the best protection package that money can buy.
Some of these warranties and protections can be worth hundreds of pounds. Indeed, as of August 2022, taking out AppleCare+ on a new MacBook Air would set you back £219 for three years of technical support and accidental damage protection – and that’s on top of the £1,200 price tag of the laptop itself.
Of course, the real question here is whether warranties represent true value for money – in other words, is it worth what you pay, regardless of whether you ever use it or not?
At a time when many people are looking to cut the fat off their budgets by finding and eliminating unnecessary spending, warranties may be the first place you’re looking to reduce your outgoings.
So, find out whether warranties are a valuable addition to a purchase, or just an expensive gimmick designed to make you part with more of your money.
1 in 5 people buy warranties – but 50% of those individuals had trouble claiming
Research by Which? is a great place to start to assess the value of warranties.
The consumer group surveyed 2,000 people who had purchased a tech product or appliance from some of the UK’s largest retailers, including Amazon, AO, Currys, and John Lewis.
The survey revealed that:
- 1 in 5 people purchased a warranty
- An average extended warranty is taken out for just over two years at a cost of £84.80 a year
- 50% of those who had a warranty said they had a problem when making a claim on a product.
This high cost, in combination with the real and present danger that the retailer won’t sort the repair, may make an extended warranty simply not worth it for you.
It may be cheaper to pay for the costs of one-off repairs
Rather than paying for a warranty, it may actually be more cost-effective to pay for a one-off repair instead.
Using the example of a laptop, Which? found the average cost of a repair was typically between £68 and £78. For more serious faults, such as a hard disk or SSD failure, this figure rose to around £104.
But issues like this are unlikely to happen every year. Indeed, even if you paid for one minor and one major repair on a laptop across two years, that would be between £172 and £182 on average – and that’s the worst-case scenario where a brand-new laptop breaks down severely twice in two years.
That’s a sliver above the £169.60 price of two years of an average warranty. Meanwhile, it’s well below the price of the most expensive laptop cover from Argos, charging more than £225 across the same period.
From that perspective, it may be cheaper and more convenient to arrange one-off repairs yourself in the event that something does go wrong.
Your items might be covered already
One big reason that an extended warranty may be no use to you is that your new purchase may be covered by other mechanisms anyway.
Firstly, items are protected by law under the Consumer Rights Act 2015, requiring that sellers provide goods of satisfactory quality.
You’re entitled to a full refund, repair, or replacement within 30 days of purchase if the item fails to do what it’s supposed to in this period.
In fact, you’re technically covered and allowed to return an item within six months if it breaks, and it will be up to the retailer to prove that it wasn’t faulty when you bought it.
Meanwhile, the manufacturer may also offer a warranty on its products. For example, Apple offers a one-year hardware warranty on its goods, including iPhones and MacBooks.
Additionally, if you have contents insurance for your home, your items might be covered for theft or accidental damage – although bear in mind that electrical and mechanical failures typically aren’t covered, and you may have to pay an excess if you make a claim.
It may be worth considering the other options you have for cover before you spend the money on an extended warranty.
It comes down to individual perception
The reality is that the value of warranties will come down to your personal experience and needs.
If you constantly find yourself paying for repairs on your items because you have a tendency to break things, or you prefer the safety net of knowing you’re covered if you do ever need it, then warranties can be worthwhile.
But, if you typically don’t need them and you’re happy to pay for the cost of repair otherwise, then they may not be worth it for you after all.