What is an extended warranty and do I need to buy one?
An extended warranty is an additional warranty you can buy, to give you extra protection in addition to the normal protections you have when you buy goods and services.
If the goods or services you buy are covered under the Consumer Guarantees Act then those goods are covered by some core protections, including that goods have to be of acceptable quality, last for a reasonable time and be fit for their particular purpose. There is no time limit to these guarantees.
You should only consider buying an extended warranty if you know what additional protection it provides you, such as protection against accidental damage. Extended warranties purchased on or after 17 June 2014 must clearly explain what additional protections the extended warranty provides.
Make sure you read the extended warranty agreement carefully so that you know exactly what it covers and how long it will last.
An extended warranty is probably most useful for goods that you buy for commercial purposes (e.g. a vacuum cleaner for your business premises) – less so for goods which you are likely to replace before the extended warranty runs out.
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What are my rights regarding extended warranties?
Extended warranties agreed to on or after 17 June are covered by the Fair Trading Act, even for consumer goods purchased by a business.
For extended warranty agreements entered into on or after 17 June 2014, the warrantor (with whom you have the agreement) must give you a written copy of the agreement at the time you agree to purchase the warranty. The agreement must be clear and in plain language – and must contain the following information:
- A summary of your rights and remedies under the Consumer Guarantees Act (CGA)
- A comparison of your rights and remedies under the CGA and those under the extended warranty
- A summary of your rights to cancel under the Fair Trading Act
- The warrantor’s name, address, phone number and email address
- The date of the agreement
If the warrantor is in your presence or on the phone with you, they must also verbally tell you that you have the right to cancel the agreement within five working days of receiving a copy of the agreement, and how to cancel.
They must also be sure to tell you about the terms and conditions of the extended warranty, including how long it lasts, when it expires and the total price payable.
If the warrantor does not provide you with the information described above, you have the right to cancel the agreement at any time.
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When can I cancel my extended warranty agreement?
If your extended warranty was a condition of a consumer credit contract, then your right to cancel is covered by the Credit Contracts and Consumer Finance Act 2003. In this situation, you may not be able to cancel your extended warranty unless you are also cancelling your credit contract.
For other situations, if you entered into the agreement on or after 17 June 2014 you can cancel your agreement within the five day cooling off period, or because the warrantor did not fulfil their disclosure obligations. However you can’t cancel on the grounds that they did not fulfil all of their disclosure obligations if the breach was minor (e.g. they accidentally omitted their email address).
You need to clearly tell the warrantor, either written or verbally that you wish to cancel the agreement. You can use the contact details that are provided in the agreement or any other method which both parties have agreed on.
Once the agreement has been cancelled, the warrantor should refund the full amount you paid for the extended warranty.
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What can I do if I believe a trader has misled me about my rights regarding an extended warranty I bought?
If this occurred on or after 17 June 2014 then you are entitled to cancel your extended warranty on the grounds that the trader did not fulfil their disclosure obligations (see the previous question).
You can also complain to the Commerce Commission if you think the trader has not given you accurate and honest information about the extended warranty. Although the Commerce Commission cannot act on your behalf, they do investigate if a number of complaints are made about a business in breach of the Fair Trading Act, the Commerce Act or the Credit Contracts and Consumer Finance Act.
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I’ve got an extended warranty, but the retailer says I’ve got to go to the manufacturer first is that right?
You should check the terms and conditions of your extended warranty to see who is responsible for dealing with your claim, in most cases this will be the retailer or their warrantor partner.
It’s worth noting that even if you have an extended warranty you still have all the protections of the Consumer Guarantees Act (CGA). This means that if the item turns out to be faulty and you exercise your rights under the CGA, the retailer is responsible for resolving the problem. They have to sort it out with the manufacturer, not you.
If you bought the item for commercial use, then you aren’t covered by the CGA. This means that whether you can take your complaint to the retailer or will have to contact the manufacturer, will depend on what’s in the extended warranty agreement.
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I made a claim under my extended warranty, and now I’ve had another problem, but they’ve told me that I was only able to make one claim!
This will depend on the wording of your extended warranty agreement, which is why it’s really important to ask lots of questions about the warranty before you buy one. From 17 June 2014 the retailer will have to provide you with comprehensive information about the extended warranty when they offer to sell it to you.
If the item is a consumer good, then you might well be covered by the Consumer Guarantees Act anyway, which entitles you to request a repair, replacement or refund if the product is not of an acceptable quality and fit for purpose.