What is extended warranty insurance?
You can buy extended warranty insurance to cover your items against failure or damage after the manufacturer's guarantee has expired. Most people buy an extended warranty as an annual contract or a policy for a fixed length of time.
You can buy extended warranty insurance for things like:
- electrical goods
What type of cover does extended warranty insurance give you?
Extended warranties cover structural or mechanical problems, and some cover accidental damage. Some policies may include maintenance contracts like boiler warranties. These aren’t maintenance contracts in themselves and rarely cover wear and tear.
Policies don’t usually cover fire damage or theft.
Types of complaints we see
Customers often complain to us that the:
- policy was mis-sold
- policy wording was misleading
- insurer wrongly refused to pay the claim because it applied an exclusion or a limitation that shouldn’t have been applied
- insurer didn’t do enough to put things right to settle the claim
What we look at
If you think your policy was mis-sold to you
You might complain to us that you:
- weren’t aware of – or didn’t understand – the conditions and exclusions in your policy
- were told at the point of sale that your policy would cover any eventuality – rather than the specific insured risks that were actually covered
Because extended warranties are usually sold in retail stores, there’s often a quick sales process, and no record of how the sale took place. We’ll take into account your record of the sale, and examine any documents that you were given. We might say that the policy was mis-sold if your documentation or sales conversation didn’t:
- make clear what was covered by the policy
- highlight any unusual limitations or exclusions that would reduce the cover
- make clear that the type of damage included could have been covered by another policy you have (like contents insurance)
If you think the wording in your policy was misleading
You might have had a limited opportunity to understand the policy when you bought it. So we’d expect that your insurer would honour any reasonable expectation you had about the terms and conditions of the cover. As part of this we’ll consider whether the information given was clear, fair and not misleading.
If you think an exclusion or limitation was applied to your claim when it shouldn’t have been
You’ll need to give us evidence that your insured item is damaged or not working. You can usually do this by sending a photograph to us. If you’ve had someone from the insurance company to examine the item – we’ll consider what the report says.
If we’re satisfied that your item is damaged or not working properly, then we’ll look at the policy to decide whether your insurer has been fair in relying on any relevant exclusion or limitation.
Extended warranties on furniture
Your insurer may reject your claim on the basis that the damage was down to wear and tear.
Policies often exclude damage caused by ‘wear and tear consistent with the usage of the furniture’. We see complaints about insurers relying on this exclusion even when there’s:
- wear and tear after a relatively short period of time
- excessive loss of resiliency
- separation of seams/stitching
- peeling of the leather/protective coating
- colour loss or staining
Wear and tear after a relatively short period of time
We see a lot of complaints that are rejected as wear and tear, and relate to furniture that is less than two years old.
In these cases, we’d look for evidence of excessive or unusual use of the furniture. If there’s no evidence, we may decide that your insurer can only reject your claim for wear and tear reasons if the damage is consistent with the expected life-span of the item.
Excessive loss of resiliency
Where furniture cushions sink or collapse, we see complaints about claims rejected on the basis that this loss of resiliency wasn’t excessive – and is down to wear and tear.
Policies may define excessive loss of resiliency as being ‘a flattening beyond the manufacturer's tolerances’.
We’ll examine any evidence of excessive or unusual use of the furniture. If we do find evidence of this, we may decide that your insurer was entitled to reject your claim.
If you’ve got a policy for a certain period of time – which includes cover for excessive loss of resiliency – then your insurer should meet claims for excessive loss of resiliency within that period.
Separation of seams/stitching
Some policies specifically state that they’ll cover separation of seams and stitching. Sometimes we see complaints about claims rejected because:
- the fabric covering the furniture has come away at the seam, but the stitching remains intact – so there’s no separation of the actual seam
- the stitching hasn’t split, although the seam itself is coming apart
We’ll usually say that it’s fair for you to expect that if the fabric covering the furniture comes away from, or at the seam, this shows a separation of the seam which is covered by your policy.
Peeling of the leather/protective coating
Where the leather or protective coating on furniture has peeled, we see complaints about claims rejected on the basis that the peeling is down to wear and tear – and is excluded under the policy.
In these cases we examine any evidence of excessive or unusual use of the furniture. If we do find evidence of this, we may decide that it’s fair for your insurer to reject the claim.
We also see complaints about claims rejected because:
- it was the protective coating, rather than the leather, that peeled – meaning there was no structural defect
- the damage was due to cracking and splitting rather than peeling – and so isn’t covered by the policy
If we think it was fair for you to expect that these types of damage would be covered – we’ll expect your insurer to deal with the claim.
Colour loss or staining
Some claims are rejected because of colour loss to, or staining of, the fabric of the furniture. If this has happened after you’ve used a cleaning kit provided to you by the insurer, then we’d usually say it wasn’t fair and reasonable for them to then reject your claim.
How to complain
Talk to your insurance company first. They need to have the chance to put things right. They have to give you their final response within eight weeks for most types of complaint.
If you’re unhappy with their response, or if they don’t respond, let us know. We’ll check your complaint is something we can deal with, and if it is, we’ll investigate to understand what happened and what went wrong.
Find out more about how to complain.
Putting things right
When your insurer didn't do enough to settle your claim
Extended warranty insurance policies are often based on the principle of indemnity. This means that your insurer needs to put you in the position you were in before the loss or damage happened. Depending on the wording of the policy, your insurer could do this by:
- making the necessary repairs
- replacing the necessary items
- offering a credit note as settlement
- offering a cash settlement
If you don’t believe that what you’ve been offered is enough to put things right, we’ll examine the evidence and decide whether your insurer’s approach to settling the claim:
- is fair and reasonable in the circumstances
- satisfies the principle of indemnity
If we decide that your policy was mis-sold to you, we’ll tell your insurer to either deal with the claim or to refund the premiums you’ve paid – with interest.
Wrongful denial of claim
If we decide that your insurer has wrongly denied your claim, we’ll usually tell them to either re-assess your claim, or meet the claim in full.
We may ask your insurer to give you a cash settlement. In these cases, we’ll also usually ask them to pay you interest at 8% from the date of the damage – to the date of the actual settlement.
Compensation for trouble and upset
We'll also look at the emotional impact the insurer's mistake has had on you. In some cases, we may decide that your insurer should compensate you for trouble and upset.