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online technical resource

extended warranties

In this section of the website we describe some of the complaints involving extended warranties that we see most frequently - and we set out our approach when we look at:

  • whether a policy was mis-sold;
  • whether an insurer should accept a claim;
  • whether what the insurer has done to put things right was adequate.

what is extended warranty insurance?

Extended warranty insurance is taken out by consumers as protection against the failure of - or damage to - particular items, after the manufacturer's usual guarantee has expired. It is usually bought at the same time as the item in question. It may be a renewable annual contract or a policy for a fixed length of time.

There are many types of item that can be covered by extended warranty insurance, including:

  • furniture
  • electrical goods
  • boilers
  • conservatories

what type of cover does extended warranty insurance provide?

The type of cover provided by an extended warranty insurance policy depends on the type of item that the policy relates to. Extended warranties are unlikely to cover risks such as fire or theft (although some do cover accidental damage). Instead, they are more likely to cover structural or mechanical defects.

Some extended warranty insurance policies may include maintenance contracts - for example, boiler warranties. But they are not maintenance contracts in themselves - and as with most insurance policies, they rarely cover "wear and tear".

what complaints do we see?

Consumers most frequently complain that:

was the policy mis-sold?

This issue is often included as part of a complaint about other aspects of warranty insurance policies. However, we are not able to look into all complaints about mis-sale of these kinds of policies. If a consumer is unhappy with the way their warranty insurance policy was sold we will first look into whether it is something we will be able to help with.

Many consumers complain that they:

  • were not aware of - or did not understand - the conditions and exclusions in the policy; and
  • were told at the point of sale that the policy would cover "any eventuality" - rather than only the specific insured risks that were actually covered.

Because extended warranties are generally sold in retail stores, there is often no record of how the sale took place - and the only evidence available from the consumer may be their account of what happened at the time. We will take this into account when we consider the case.

We will also examine any documentation provided at the point of sale. The insurer will usually have generated - or approved the use of - any marketing materials or brochures. This means the insurer has responsibility for any representations made in those documents.

If we decide that the documentation or sales conversation did not make clear what was covered by the policy - or did not highlight any unusual limitations or exclusions - we will usually say that the policy was mis-sold.

In cases where the limitations and exclusions included in the policy reduced the cover, to the extent that a reasonable consumer would have questioned its value - and this was not clear in the sales process - we are likely to find that the policy was mis-sold.

Some extended warranty insurance policies do not cover structural or mechanical defects - and only cover accidental damage which may already be covered by another policy that the consumer holds (for example, contents insurance).

When the type of damage covered could have been covered by another type of policy, we will examine whether this was made clear to the consumer. If not, we may decide that the policy was mis-sold.

was the policy wording misleading?

Extended warranty insurance policies often contain a complete list of the insured risks covered. For example, motor warranties usually list every part of the car that is intended to be covered under the policy.

However, we continue to see cases where the consumer complains that the policy wording was misleading or ambiguous - and led them to misunderstand what was covered by the policy.

Given the quick and simple sales process that applies in the case of many extended warranty insurance policies - and the fact that consumers often have a limited opportunity to understand the policy - we generally expect insurers to honour the reasonable expectations that were created in terms of the cover and the specific terms of the policy.

If the presentation of the policy was confusing or its terms are ambiguous, we assess what we believe a reasonable consumer with limited knowledge of insurance would understand was - and was not - covered by the policy.

Where the terms are ambiguous, we usually decide that - as the insurer imposed the ambiguous terms - they should be given the meaning most favourable to the consumer.

was an exclusion or limitation applied when it should not have been?

It is generally for the consumer to provide evidence that the insured item is damaged or malfunctioning - in a way that falls within the cover of their policy. Depending on the circumstances, this can be as simple as sending a photograph.

If we are satisfied that the item is damaged or malfunctioning, we then examine the evidence to decide whether any relevant exclusion or limitation in the policy applies and was relied on by the insurer.


Extended warranties on furniture make up a significant proportion of the cases we deal with in this area. A recurring theme is claims that have been dismissed on the basis that the damage resulted from "wear and tear".

Damage caused by " wear and tear consistent with the usage of the furniture" is often excluded under policies. We see complaints about insurers relying on this exclusion clause where there is:

wear and tear after a relatively short period of time

Many of the complaints rejected as "wear and tear" relate to furniture that was only a couple of years old - and in some cases less than 12 months old.

In these cases we examine any evidence of excessive or unusual use of the furniture by the consumer. If there is compelling evidence of this, we may decide that the insurer was entitled to reject the claim.

But if there is no sufficient evidence of excessive or unusual use, we may decide that a claim may be rejected for "wear and tear" reasons only if the damage is consistent with the expected life-span of the item.

We generally consider that if insurers expect substantial "wear and tear" to occur within the period covered by the policy, they should not sell policies for that duration. We view substantial "wear and tear" as being sufficiently serious or extensive to cause significant problems with the use or appearance of the items.

We also see cases where insurers reject claims on the basis that the damage was caused by "wear and tear consistent with the quality of the furniture". In doing this, they are essentially blaming the poor quality of the item for the damage.

We generally consider that insurers should take the quality of the item into account when agreeing to provide cover.

excessive loss of resiliency

Where furniture cushions sink or collapse, we see complaints about claims rejected on the basis that the loss of "resiliency" was not excessive - and could be attributed to "wear and tear".

Policies may define "excessive loss of resiliency" as being "a flattening beyond the manufacturer's tolerances".

We will examine any evidence of excessive or unusual use of the furniture by the consumer. If there is compelling evidence of this, we may decide that the insurer was entitled to reject the claim.

We see complaints relating to claims that have been rejected on the basis that the loss of "resiliency" was what would be expected of a particular type or brand of product. These claims are often made only one or two years into a five-year policy where "excessive loss of resiliency" is listed as an insured risk.

We generally decide that if an insurer offers a policy for a certain period of time - and agrees to provide cover for excessive loss of "resiliency" - it should meet claims for excessive loss of "resiliency" within that period. Cover should be offered for a shorter length of time if loss of "resiliency" within that period would be regarded as normal wear and tear.

separation of seams/stitching

Some policies specifically state that they will cover "separation of seams and stitching". We see claims rejected on the basis that:

  • although the fabric covering the furniture has come away at the seam, the stitching remains intact and so there is no separation of the actual seam; and
  • although the seam itself is coming apart, the stitching has not split.

We usually decide that the consumer had a legitimate expectation that - if the fabric covering the furniture came away from or at the seam - then this would involve a "separation of the seam" and so would be covered by the policy. If insurers want to exclude these types of damage, they need to make this clear in the policies.

peeling of the leather/protective coating

Where the leather or protective coating on the furniture has peeled, we see complaints about claims rejected on the basis that the peeling was "wear and tear"' - and so excluded under the policy.

In these cases we examine any evidence of excessive or unusual use of the furniture by the consumer. If there is compelling evidence of this, we may decide that the insurer was entitled to reject the claim.

Thre is more information above about our general approach to wear and tear after a relatively short period of time.

We also see complaints about claims rejected on the basis that it was the protective coating, rather than the leather, that peeled - meaning there was no structural defect - or that the damage was due to "cracking and splitting" rather than peeling, and so is not covered by the policy.

We will consider whether the consumer had a legitimate expectation that these types of damage would be covered - and if so, the insurer should deal with the claim.

colour loss or staining

We see complaints about claims that have been rejected relating to colour loss to, or staining of, the fabric of the furniture. An example of where this might occur is when an insurer provides a cleaning kit to a consumer - and then rejects a claim for colour loss or staining on the basis that the consumer did not clean the product correctly.

In these cases, we recognise that the insurer provided the cleaning kit and it would not be fair and reasonable for it to reject a claim for damage caused, or increased by, that kit (rather than by misuse of the kit).

how did the insurer put things right to settle the claim?

Extended warranty insurance policies are often based on the principle of "indemnity". This means that, in the event of a valid claim, the insurer is obliged to put the consumer in the position they were in prior to the loss or damage. Depending on the wording of the policy, this can be done:

  • by making the necessary repairs;
  • by replacing the necessary items;
  • by offering a credit note as settlement; or
  • by offering a cash settlement.

If a consumer does not believe that what the insurer has offered is sufficient to put things right, we will examine all the evidence provided - and reach a decision as to whether the insurer's approach to settling the claim is fair and reasonable in the circumstances, and whether it satisfies the principle of indemnity.

Insurers often include a clause limiting their maximum liability to the purchase price of the insured item(s) - no matter how many claims are submitted. If this clause is enforced we generally find that it is not fair and reasonable to penalise a consumer for an unsuccessful repair.

If the insurer cannot offer a repair, a replacement or a credit note that will enable the consumer to buy a replacement item, then it must offer a cash settlement equivalent to its maximum liability.


If we decide that a policy was mis-sold, we will tell the financial business either to refund the premiums paid plus interest, or to deal with the claim.

wrongful denial of claim

If we decide that an insurer wrongly denied a consumer's claim, we will usually tell it to:

  • re-assesses the claim; or
  • meet the claim in full, or on a proportional basis.

provision of inadequate remedies

If we decide that the insurer did not put things right adequately to settle the claim, we will usually tell it to amend the type of settlement offered - or to increase the offer, if it was offering cash or a credit note as settlement.

interest - and distress and inconvenience awards

If the consumer is due money as a result of our decision, we will usually tell the insurer to pay interest applied at the simple rate of 8% per year (less any tax properly due) - from the date of the damage to the date of the actual settlement.

We may also decide that the insurer should compensate the consumer for distress and inconvenience. There is more information about this in the section of our website on compensation for distress, inconvenience or other non-financial loss.

other information we publish

ombudsman news case studies and features involving extended warranties

help for businesses and consumer advisers

contact our technical advice desk on 020 7964 1400

This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.

image: stitching on leather sofa
  • The law requires us to decide each case on the basis of our existing powers and what is fair in the circumstances of that particular case.
    We take into account the law, regulators' rules and guidance, relevant codes and good industry practice at the relevant time.
    We do not have power to make rules for financial businesses.
    Our current approach may develop in the light of circumstances disclosed by further cases we receive.
    We may decide that fairness requires a different approach in a particular case.