“Argument insurance”
A word of advice about extended warranties and whether you really need one.
6 December 2010
Recently, a retail assistant described an extended warranty to us as “argument insurance”. As in, it means that you don’t have to argue with a sales assistant or manager to get faulty goods repaired, refunded or replaced.
We were out mystery shopping, trying to find out the terms and conditions of these extended warranties. But to the retail assistant’s credit, he went on to tell us that they weren’t really necessary.
That’s because the Consumer Guarantees Act covers most of the things you might be worried about. You have the right to return goods that aren’t safe, don’t last, aren’t fit for the purpose they are made for, have minor defects, or aren’t acceptable in “look and finish”.
Many of the guarantees talk about what a consumer can reasonably expect. So although that doesn’t give you an exact time period, it takes into account things such as how much you paid and the type of product. If the item breaks or wears out faster than you reasonably expected then you can take it back.
It can be tempting to buy an extended guarantee so that you have an assurance that the product will last, or at least there will be a remedy if it doesn’t. But you need to decide if you really want to pay extra to get an exact time period and to have a reassuring piece of paper. And if you still want one, check if there is an overlap with your contents insurance. You don’t want to pay twice for the same protection.
We do think an extended warranty can be useful when you aren’t covered by the Consumer Guarantees Act. You aren’t covered when you buy something that would normally be used for business, like a tractor. And businesses can contract out of the Act when you are buying other things for your business, like a laptop, or even coffee mugs. But read the terms and conditions of the warranty to make sure it covers what you need.
When you need to take something back to complain make sure you have your receipt or some other way to identify your purchase, such as packaging. You can check out www.consumeraffairs.govt.nz to find out what your rights are before you go.
If a retailer wrongly tells you that you aren’t covered by the Consumer Guarantees Act, they are breaching the Fair Trading Act and you can report them to the Commerce Commission.
