What is a extended warranty?

Extended warranty insurance is taken out by consumers as protection against the failure of - or damage to - particular items, after the manufacturer's usual guarantee has expired. It is usually bought at the same time as the item in question. It may be a renewable annual contract or a policy for a fixed length of time. There are many types of item that can be covered by extended warranty insurance, including:

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• Stairlift / Mobility Scooter

• Electrical goods

• Boilers

• Conservatories

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What type of cover does extended warranty insurance provide?

The type of cover provided by an extended warranty insurance policy depends on the type of item that the policy relates to. Extended warranties are unlikely to cover risks such as fire or theft (although some do cover accidental damage). Instead, they are more likely to cover structural or mechanical defects. Some extended warranty insurance policies may include maintenance contracts - for example, boiler warranties. But they are not maintenance contracts in themselves - and as with most insurance policies, they rarely cover "wear and tear".

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What complaints do we see?

Consumers most frequently complain that:

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• The policy was mis-sold by high pressure sales;

• The policy wording was misleading;

• The company wrongly refused to pay the claim because it applied an exclusion or a limitation that should not have been applied; and

• The company did not adequately put things right to settle the claim.

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We see a lot of complaints for major stairlift companies such as Acorn, Stannah & Brooks. Customers often feel heavily pressurised by constant phone calls and letters offering them extended covers, often these high pressure techniques are used whilst the customer is still within the standard manufacturers guarantee which completely devalues the product sold. If the company does not have faith in their own product then why are they charging such a high price in the first place? We have a fantastic success rate for mis-sold extended stairlift warranty / service contracts as when we request the data in relation to the calls / letters sent to the customer from the date of purchase we find this an incredibly high number which all points to high pressure selling and therefore against the CCA 2015.

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Was the policy mis-sold?

This issue is often included as part of a complaint about other aspects of warranty insurance policies. However, we are not able to look into all complaints about mis-sale of these kinds of policies. If a consumer is unhappy with the way their warranty insurance policy was sold we will first look into whether it is something we will be able to help with. Many consumers complain that they:

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• were not aware of - or did not understand - the conditions and exclusions in the policy; and

• were told at the point of sale that the policy would cover "any eventuality" - rather than only the specific insured risks that were actually covered.

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Because extended warranties are generally sold in retail stores or over the telephone there is often no record of how the sale took place - and the only evidence available from the consumer may be their account of what happened at the time. We will take this into account when we consider the case. We will also examine any documentation provided at the point of sale. The insurer will usually have generated - or approved the use of - any marketing materials or brochures. This means the insurer has responsibility for any representations made in those documents.

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If we decide that the documentation or sales conversation did not make clear what was covered by the policy - or did not highlight any unusual limitations or exclusions or if it was a high pressure sales tactic - we will usually say that the policy was mis-sold. In cases where the limitations and exclusions included in the policy reduced the cover, to the extent that a reasonable consumer would have questioned its value - and this was not clear in the sales process - we are likely to find that the policy was mis-sold. Some extended warranty insurance policies do not cover structural or mechanical defects - and only cover accidental damage which may already be covered by another policy that the consumer holds (for example, contents insurance). When the type of damage covered could have been covered by another type of policy, we will examine whether this was made clear to the consumer. If not, we may decide that the policy was mis-sold.

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Was the policy wording misleading?

Extended warranty insurance policies often contain a complete list of the insured risks covered. For example, motor warranties usually list every part of the car that is intended to be covered under the policy. However, we continue to see cases where the consumer complains that the policy wording was misleading or ambiguous - and led them to misunderstand what was covered by the policy.

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Given the quick and simple sales process that applies in the case of many extended warranty insurance policies - and the fact that consumers often have a limited opportunity to understand the policy - we generally expect insurers to honour the reasonable expectations that were created in terms of the cover and the specific terms of the policy. If the presentation of the policy was confusing or its terms are ambiguous, we assess what we believe a reasonable consumer with limited knowledge of insurance would understand was - and was not - covered by the policy. Where the terms are ambiguous, we usually decide that - as the insurer imposed the ambiguous terms - they should be given the meaning most favourable to the consumer.