Darling, you really, really shouldn’t have...

Buying presents and all the other accoutrements that make up Christmas requires nerves of steel.

Chances are that if you’re at the till buying an iPod, digital camera or any other electrical item likely to prove popular under the tree this year, you will be subjected to a hard sell to buy an extended warranty.

Some stores are pushing extended warranties that cost up to 86 per cent of the product price. A three-year extended warranty (just two years’ additional cover on top of the manufacturer’s standard one-year guarantee) can cost a lot of money. On a no-frills £79.99 Goodmans 20 inch colour television from Comet for example, it will cost you £34.99. That’s an extra 44 per cent on top of the original price.

Once you take into account that every product already comes with at least 12 months’ cover from the manufacturer, these deals look pretty shaky. If you buy an extended warranty at the same time, these will overlap and you will be paying for at least one year’s cover you won’t need.

When you buy a product it should come with a registration card which you should fill in and send to the maker (or if it’s a gift make sure it’s included with your present). A year later you will be asked if you want to extend the warranty. If you have bought the item as a gift and want to buy extended cover you should still wait until the end of the first year before doing so.

After complaints about the way warranties were being sold, the Department for Trade and Industry said in April last year that warranties could not be sold unless their prices were clearly displayed and they allowed customers to cancel the policy with a full refund within 45 days. However insurers Warranty Direct say that recent legislation has failed to protect consumers.

Duncan McClure, managing director, says people often end up purchasing extended warranties as a result of pressure selling. “For many items it’s not necessary,” he says.

“For most hi-fi equipment, things like iPods, dvd players and so on that you might buy as a present, you don’t really need to buy it. It’s most useful for items such as washing machines, dishwashers, colour TVs and fridge-freezers.” Even for these items it is worth remembering that the chances of something going wrong are pretty small – around 5 per cent for a fridge and 2.5 per cent for a hi fi or satellite receiver.

A new product that launched on December 1 could offer a viable alternative to standard extended warranties. The Warranty Club is an organisation which offers cutprice insurance from underwriters Axa for a £10 annual fee. The founder, Brendan Dorian, says this can save shoppers 20 per cent off the price of an extended warranty.

Some premium bank accounts such as Royalties Premier of RBS Royalties Gold, offer two years’ additional warranties on electrical appliances. In order to claim you must give the bank details of purchases you make.

If your household contents insurance provides accidental damage cover then your need for an extended warranty is further decreased.

Making sure your home contents insurance is sufficient is particularly crucial at this time of year as burglaries tend to increase over the holiday period. Research by insurer More Than states that burglaries are 13 per cent more common around Christmas than at any other time of year.

Statistics such as those from the British Retail Consortium go some way to showing why this might be. It estimates that this year the UK will spend £11bn on Christmas presents, decorations and food, up 10 per cent on last year.

If you are buying an expensive individual item, check your cover as some insurers require large items, such as expensive jewellery or antiques, to be listed separately.

Moneysupermarket.com, the financial advisory website, points out that some insurers also automatically raise their cover limits for home contents insurance around Christmas. Churchill, Tesco and esure all increase cover by 10 per cent from December 1 to January 15, free of charge.

Endsleigh, which does not increase cover on most policies, says that it is looking into extending policy cover to include this. However spokesperson Tim Larden says that the real benefit of thinking about the cover on items you buy around Christmas time is making sure you are adequately covered in general.

There are other ways to make sure your Christmas shopping is as safe as possible. It has been estimated that 4.5 per cent of all Christmas spending will be done online this year, so it’s worth ensuring this is done securely.

Barclaycard estimates that one in 10 online shoppers will make basic mistakes when buying online, such as buying from a site without a secure website, or keeping passwords in an unprotected area on the computer. It recommends installing and regularly updating anti-virus, anti-spyware software on your home computer and using this rather than a computer others have access to such as at an internet café. It is also a good idea to save all record of trans-actions made online in case something goes wrong.

One further point worth noting is that if you pay for presents using your credit card you always have section 75 of the consumer credit act to fall back on. If you have a problem with an item on which you spent more than £100 you can gain compensation from your credit card supplier rather than the product supplier. If your claim is successful you can simply deduct the amount from the next payment you make on your credit card, which would certainly help with those inevitable January bank account blues.

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