Dixons or Currys, Coverplan or 'Whateverhappens': a few things to consider before investing
We apologise for any outdated information in this article regarding Dixon's previously branded 'Coverplan'. This was due to a tip linking to a Ciao review article dated 29/12/2008 (and obviously being a muppet on my part). Some edits have been made below in  to reflect the rebranding to 'Whateverhappens'. We also discuss further policy changes and on service plan policies in our updated article here.
There have been complaints about extended warranties on electronics, such as those purchased from the DSGi group under the name "Coverplan" [now rebranded as 'Whateverhappens']. While you may conclude that extended warranty coverage is necessary, in most cases it does not represent a good investment.
Here are five reasons why:
1. Legwork: If you buy a cover plan, you still must do all the legwork for getting your device repaired. In other words, if your widget breaks and you call them up, you still have to go through the adminstration hassle of scheduling in an appointment, potentially provide necessary evidence. [the old 'coverplan' policy required taking this to a service centre for repair also, but the new 'Whateverhappens' policy has repair personnel who can attend to this at your home]. The service centre has a contract for reimbursement. [Coverplan previously only got involved directly in two cases: (1) the repair takes longer than six weeks or (2) the item will have to be replaced. Currently the new policy has 21 days.]
In the event of replacement, you will be provided with a "comparable" item, which may be a refurbished model and not what you would buy if you were to replace the item yourself.
2. 'Loopholes': There are enough holes in the coverage (but no more than any normal policy) that you could use it to strain tonight's spaghetti bolognese. For example, the terms under which the service plan will replace your stolen mobile phone are narrow enough, and the exceptions brad enough, partly to protect these companies that provide such policies with eventuality, particularly when it comes to mobile phone theft.
For example, theft coverage is suspended if:
-You have not done all you reasonably can to prevent your product from being stolen;
-You have given your product to someone else to look after;
-Your product is stolen while it is out of your view or control unless:
- it is stolen from a motor vehicle where you or someone with your authority was with the vehicle; or
- you had hidden it from view in your vehicle (for example, in a locked glove compartment or boot), locked your vehicle, with all windows, sunroofs or roofs closed and used all available security systems; or
- you had locked your product in your home, office or room with all windows closed and used all available security systems
The coverplan does not cover the following with regards to mobile phone extended warranties:
- Batteries, bulbs, cables and other consumable items (items which are regularly replaced).
- SIM/MMS cards.
- Damage or breakdown that is due to wind or other severe weather conditions.
- The cost of repairing or replacing a product which fails because anyone neglects, abuses or misuses the product.
(There are many more, but these are most broad exceptions to general policies.)
More importantly, the parts in bold are designed to be interpreted broadly legally. Imagine if your 2-year-old niece grabs your phone and proceeds to drool all over it to the point where it stops working. Is that neglect, abuse, or misuse? There's a good chance that the sales representative at the POS (point-of-sale) will say "No, they'll cover it," while the additional coverage representative will say "Yes, it's misuse."
3. Profit Margins: The profit margin on extended warranties for consumer electronics is in the neighbourhood of 40 to 80%. That's why they try to upsell it so hard to you in stores. This is also why people are likely to pay much more for these, than they are likely to recover.
4. Warranty overlaps: The term of coverage may overlap with the manufacturer's warranty. If you buy a two-year extended warranty and the first year runs concurrently with the manufacturer's warranty, you're essentially throwing away half the cost of the extended warranty, because in that first year you'll use the manufacturer's warranty for repair or replacement.
5. Service plan vs warranty: Extended warranties are not insurance, and are not really even warranties. Extended warranties are "service plans". A service plan is a promise to perform or pay for certain repairs or services. Besides, if you bought it with your credit card, the card may tack on an extra year to the manufacturer's warranty. Check with your card issuer. The card's protection may have holes, too, but at least they don't cost you anything extra.
Have you got any personal experience with coverplan[or whateverhappens], accidental insurance, and repair coverage - good or bad? Please share them in the comments below!