Do I need to purchase an extended warranty?

Do I need to purchase an extended warranty?

It’s no secret that vigilance is essential when it comes to warranties. And this is even truer when the extended warranty is involved. Is it essential? What are the pitfalls of extended warranties? In this article, you’ll find everything you need to know on the subject: from the different types of warranty to the hazards of extended warranties.

What is the extended warranty?

Extended warranties provide additional protection for purchases made and help ensure the durability and reliability of the appliance purchased from the consumer. Once you’ve taken out a policy, you’ll generally have 14 days to cancel it if you feel it’s no longer helpful.

The credit card extended warranty.

You can be insured against theft and breakage, for example, thanks to certain credit cards for purchases. Be sure to check the terms and conditions of your credit card before making any purchase or subscription to avoid having to pay for one.

Extended automobile warranty

When you buy a car, you can cover repair and maintenance costs. A seller can offer you an extended auto warranty.

Extended manufacturer’s warranty

A builder may offer this type of extension in his contract.

Extended warranty insurance

Their purpose is to extend the duration of coverage and increase the protection of the product purchased.

The different types of warranty

There are different types of warranties for your purchases. Specifically: the manufacturer, extended and legal warranty. Understanding each of them will help you better understand how the extended warranty works.

Manufacturer’s warranty

The manufacturer’s warranty is the basic warranty. Also known as the « implied » warranty, it applies to your items regardless of their nature. And you don’t have to do a thing to benefit. In general, the manufacturer’s warranty lasts for one year. Most of the time, the contract can be found on the item’s packaging or label. Sometimes, it’s activated only after you confirm it (by e-mail, for example). However, the law states that you do not have to comply with any requirements to benefit from the manufacturer’s warranty.

Extended warranty

Most of the time, it’s offered at the time of purchase. Whether you’re buying a telephone, a refrigerator, a sofa, garden furniture or anything else, the extended warranty will be presented to you as a must. Unlike the manufacturer’s warranty, it comes with a price tag. We’re talking about a value ranging from 20 to 25% of the value of the product you’ve just purchased. Understandably, the latter is a significant source of income for a retailer. For now, keep two crucial points in mind.

• Extended warranty insurance is not mandatory.
• By law, the person offering you extended coverage must inform you of the legal warranty before doing anything else.

Legal warranty

In Quebec, we have the Consumer Protection Act, which provides us with a legal warranty. It’s free of charge and activated as soon as you pay at a retailer. In practice, it stipulates that the goods you buy must function as intended for a « reasonable lifetime. » However, there is no law governing how it is determined. Instead, it is assessed on a case-by-case basis, according to criteria such as use, price paid, nature of the product and more. Let’s illustrate this with an example. You’ve just bought a new washing machine for $2,000. Unfortunately, it suddenly stopped working after 15 months (3 months after the manufacturer’s warranty expired). A new washer at this price should logically last more than 15 months, so you contact the manufacturer without success. The warranty has expired. Unable to get a refund or repair. This is where the legal warranty can help. If you have used your washer according to the manufacturer’s recommendations, you have an excellent chance of receiving compensation equivalent to the value of your washer.

Extended warranty: necessary or not?

When you understand the scope of the legal warranty, it’s legitimate to question the relevance of the extended warranty. The truth is, it can be helpful in a variety of situations. You decide to buy a new tent for your family camping trip. You have a few precise selection criteria. Most important of all: waterproofing. You make your choice based on this. However, on your tent’s packaging, the fabric’s waterproofing is only guaranteed by the manufacturer for two years – which is hardly appealing to you, considering the price of your new tent. However, you are offered various extended warranties, such as the 10-year waterproofing guarantee worth $100. Every year, during this period, the manufacturer sends you an aerosol product to protect you against rain and humidity. This is a perfect example of an extended warranty that offers real added value. But be careful. This is not the case for all extended warranties. To determine whether they are really necessary, there are a number of pitfalls to be avoided.

Is an extended warranty transferable?

Some extended warranties are transferable to a new owner if the item (e.g. car, appliance, etc.) is sold, while others are not. Generally, if there is an option to transfer the warranty, there may be administrative fees associated with the transfer procedure. In addition, the guarantee company may request that the transfer be carried out within a certain period after the sale. Check the terms and conditions of the extended warranty.

The pitfalls of extended warranties

First of all, it’s important to remember that the seller must inform you of the legal warranty. When that’s done, they’ll try to sell you extended warranties. To help you decide whether they’re worth the price, listen carefully and, above all, be on the lookout for pitfalls such as..:

Aggressive sales tactics

Yes, some sellers use aggressive sales tactics to get you to sign up for an extended warranty. « It’s a question of protecting your investment, » « all our customers take the extended warranty, » and « you don’t want to regret it in a few months »… These are just a few of the phrases that will certainly make you doubt your refusal. You have the right to say « no » and demand adequate service notwithstanding this choice.

Contract exclusions

Manufacturers are cunning. They offer you an extended warranty, which they stuff with exceptions. Before accepting any form of warranty, read the exclusions carefully (which are usually hard to find in an extended warranty contract).

Why not take out an extended warranty?

It’s a personal decision that will depend on the situation and the product, but here are the most common reasons why someone might decide not to take out an extended warranty:

• Cost: Extended warranties can be expensive and may not be worth the extra cost.
• Probability of repairs: Some products have a low chance of breaking down during the extended warranty period.
• Original warranty coverage: Many products come with a manufacturer’s warranty that may cover repairs or replacements required during a given period. An extended warranty may not add much value to this existing warranty.
• Quality of warranty service: Not all extended warranty providers offer the same level of service.

The extended warranty offered by credit cards

Some credit cards offer an extended warranty as a cardholder benefit. This feature is often available with premium or high-level credit cards, although it can also be found on some standard cards. Here’s how it usually works:

• Extended manufacturer’s warranty: Credit cards with this feature typically extend the original manufacturer’s warranty by an additional year or perhaps even two in some cases. This generally applies to items that you have paid for in full with that credit card.
• Limitations: There is usually a limit on the amount the credit card company will cover for repairs or replacements. In addition, certain types of items may not be eligible for the extended warranty.
• Claims process: If you need to make a claim, you’ll usually need to provide proof of purchase, a copy of the original manufacturer’s warranty, and a repair estimate. The process may vary from one credit card issuer to another.

It’s important to note that not all credit card issuers offer this feature, and even those that do may have different terms and conditions.

How do you enforce guarantees?

First, to benefit from any form of warranty, you must have proof of purchase. Always make a habit of keeping a copy for your files, and with it in hand you can take the necessary steps to ensure compliance:

The manufacturer’s warranty

In many cases, the merchant can take care of the formalities for you. This may depend on what you are asking for and the nature of the product. For example, if you return to the store with a broken zipper on your coat, the retailer can send your garment to the manufacturer. If you would like a refund on an item such as a kitchen utensil, we will offer you alternatives on the spot.

The extended warranty

Your methods of recourse to the extended warranty vary significantly from one contract to another. In the contract, you’ll find the procedure for enforcing it.

Legal warranty

To enforce the legal warrantyIf you have a claim, you’ll need several supporting documents. Your first step? Request the manufacturer (which will most likely be refused). The second step is to issue a formal demand. Some manufacturers assume liability; others do not. In this case, since the warranty is a legal recourse, you’ll have to file a claim in Small Claims Court. Although this step may seem cumbersome, it’s still the most cost-effective strategy for you. Let’s take the example of our washing machine. The manufacturer has washed his hands of it, leaving you with an out-of-order washer that needs to be replaced immediately. So you buy a new one – another brand – for $2,000. You send your formal notice. No response. You send your claim to Small Claims: your court date is in 8 months. It’s not as fast as you’d like, but we’re still talking about $2,000 that you could be reimbursed at the cost of a morning in court. Note here: most customers get their money back. For most of us, that’s more than worth the wait and the morning without pay. It’s enough to make you think about the original question: « Should we take out an extended warranty on our purchases?