An extended warranty is when you choose to pay extra for a warranty which extends for a set period beyond the end of the manufacturer’s warranty.

When a store offers you an extended warranty they should explain clearly what it provides, over and above the rights you already have (such as the right to a refund or replacement if the product is faulty).

Extended warranties are generally provided by an external company (third party) and not by the manufacturer.

Before you agree to pay for an extended warranty, check that it provides you with benefits greater than you already have under the Australia Consumer Law.

Example:

• Sean buys a new DVD player. The store says he can pay an extra $20 to cover the purchase for an additional two years after the manufacturer’s warranty expires. This is an extended warranty.

Things you should check:

• Does the extended period become void after you make a claim, especially under the manufacturer's warranty?

The ABC program, The Checkout, have also made a simple and funny video to help explain your rights. 

Do you need an extended warranty?  Choice review

Choice, the Australian consumer advocate organisation, have reviewed extended warranties and produced a list of questions to ask a sales person before you buy one:

• How long does the extended warranty last and how much does it cost?
• When does it start? From the date of purchase or after the manufacturer’s warranty expires?
• Are there any special requirements to keep the extended warranty valid? For example is there a special cleaning regimen that must be followed?
• What exactly is covered by the extended warranty? For example, does it cover labour and parts?
• Are there important exclusions and restrictions? For example, is the customer responsible for freight costs?
• If the extended warranty promises to replace your product or give you a refund, is there a depreciation clause?
• How difficult is it to make a claim and who do you claim through? Are there fees involved?
• Is the cost of the extended warranty worth it compared with the cost of the product and its likely life expectancy?
• Will the extended warranty give you more protection than you already have with automatic consumer guarantees?

Go to the Choice website Extended warranties review