In most Canadian provinces, an extended warranty is now considered an insurance policy. How many insurance policies in Canada provide a full refund if not used?
The answer is none — not home insurance, not auto insurance, not life insurance, not business insurance. Why is this the case? If everyone who didn’t make a claim got a refund, the insurance industry would go bankrupt. As is often said of insurance, “the losses of the few are shared among the many.”
Some extended warranty providers advertise a money-back refund. However, the chances of getting this back are extremely slim. Here’s why:
- If you have any claim, no matter how small, it will cancel the ability to get a refund.
- Extended warranties expire 5, 6 or 7 years down the road, and you have to remember to call to get your refund within 30 days or less of the expiration. Even for the most organized people, remembering this deadline is quite a stretch.
- There will be a list of conditions that have to be upheld in order to get the refund, and typically only a very short window of time to do this.
- Read the fine print very carefully — if it was intended to be refunded they would voluntarily send you a cheque!
Having the ability to offer a refund contradicts the concept of insurance. So, why it is even possible?
- It’s a reason to over-inflate the prices of an extended warranty, which the dealers have already overpriced, and the lure of a refund increases sales of extended warranty.
- It prevents you from putting through claims because you don’t want to lose your refund. They bank on you not meeting all of the requirements for the refund, including forgetting when you have to get refunded. This means that you didn’t put your claim through and you didn’t get your refund, whereas they are winning big-time.
In summary, yes, you can get a refund. Is it likely that you will get it? Not really.
What you should be focusing on instead is paying a fair price without excessive dealer markup, while still getting good coverage and the freedom to cancel or transfer at any form of sale.