Extended warranty

Document description

Extended Warranty insurance on home appliances was first introduced to the British market in early 1981 and is now estimated to be generating premiums of about £100m per annum. The insurance covers the cost of repairs or replacement of parts in the event of mechanical or electrical breakdown due to faulty workmanship or materials in manufacture, extending the manufacturers usual one year guarantee for a further four years. It has proved a popular cover for consumers despite early problems with the demise of the Cavalier and the collapse of Multiguarantee. Most retailers of electrical goods now offer warranty insurance to their customers and, apart from commission income, this usually ensures that future repairs will be directed to their servicing arms.