Purchase an electrical product and more often than not you'll be offered an extended warranty to give you extra 'peace of mind'. However, while sales assistants often put forward a good case for their cause (most are rewarded with commission on these sales), the extra money these policies cost is often better kept in your pocket.

What is an extended warranty?

Extended warranties differ hugely in the level of cover they provide depending on the manufacturer, retailer and product. However, most offer some kind of protection against the price of repairs for a pre-specified number of years (usually 2 or 3) beyond the manufacturers original guarantee. Some may also cover accidental damage although this is by no means standard practice.

Is it worth the cost?

Generally, extended warranties load an extra 10% - 30% on to the cost of the product you're buying if not more, making them an expensive addition to any purchase. For this reason you have to make sure they're worth your while before you pay out.

It's always important to consider the value of the product you're buying. The price of electrical goods are coming down all the time so it may be that the cost of replacing the item in a few years time would be comparable to that of taking out the warranty.

Ultimately if you're in doubt that the product you are buying is going to last without breaking then it's probably a good idea to reconsider your purchase. Going for goods that will last the distance will be more cost effective in the long run.

Do I need the protection?

Before you even consider taking out an extended warranty on a purchase it's a good idea to find out what other protection you have in place. Things to consider include:

Manufacturers guarantee

Most electrical products come with some sort of manufacturers guarantee, usually protecting your purchase against faults for up to 12 months at no extra cost. This means that if there is a fault during this time the manufacturer will be the one footing the repair bill irrespective of any warranty you have in place. The length and quality of cover varies from manufacturer to manufacturer so it's a good idea that you're aware of the terms just in case.

Sales of Goods Act 1979

This states that any goods sold must be "as described, of satisfactory quality and fit for purpose" and provides you with protection against any inherent faults in a product. Should your product stop working because of a manufacturing fault that was present at the time of purchase, you should be entitled to free repair or refund courtesy of the retailer. Read our guide Your Refund Rights Explained for more on your refund rights.

Home insurance

If you have accidental damage cover included as part of your home insurance policy it is possible that any breakdowns will already be covered. For this reason it's important to familiarise yourself with the terms of your contents cover before you even consider taking out an extended warranty. If you don't have accidental damage cover, it could be worth adding it to your policy to give you extra peace of mind against all of your belongings, not just your new purchase.

Credit card

A number of credit cards on the market offer extended warranties as part of their benefits package. So, by using one to make your purchase you get the benefit of added reassurance without the extra cost.

In conclusion....

It's never worth paying out for something that you already have protected under existing cover. For this reason taking out an extended warranty at the checkout is rarely a good idea.

By all means ask the retailer for details if it's something you feel would be beneficial to you but then remember to shop around. A number of insurance providers offer independent extended warranties and these can sometimes be a cheaper alternative to those bought in store so it's worth taking a look. As with any other type of protection compare the cost and the level of cover provided so that you can be sure you're getting the best deal possible.

Finally, if you do have an existing extended warranty in place remember to dig it out and use it if there is a problem with the product it covers.