When to Repair, Replace, or Claim for Appliance Failure

Home appliances rarely fail at a convenient time. Be it a fridge, an air conditioner or a dishwasher—when a large household appliance breaks down, it’s a headache.

Worse, when an appliance suddenly stops working, you’re often at a crossroads: should you repair, replace or claim? With all of these choices, it can feel overwhelming deciding the best pathway when it comes to deciding the time it can take to repair, the trust you can place in an appliance brand, and the money you need to spend for the new appliance.

In this guide, we’ll walk you through your options to help you decide the best course of action for your broken appliance.

Repair vs Replace Calculation

So, how do you calculate whether an appliance replacement is more worthwhile than a repair? Here are three easy steps:

Step 1: Check Insurance Policy

Check your policy to see if your appliance is covered under your Home or Contents Insurance. If you find your appliance is covered by your insurer, they may choose to either repair or replace your item.

Step 2: No Insurance, Get a Repair Quote

If your insurance can’t cover your item and your warranty is out of date, we suggest getting a repair quote from a notable repairer to fix your appliance. By getting a quote, you can weigh up if this cost is suitable for you before committing.

Step 3: Check the Full Price of a New Appliance

While considering the price of the repair, it’s worth looking into the full price to completely replace your appliance, too. This way, you can weigh up both costs and what may work best for you.

How long should appliances last?^[1]

*based on price

What Is Motor Burnout Cover?

Sometimes the issue you’re facing isn’t a decision of whether to replace or repair, but the high cost stopping you from doing either. Thankfully, should the cost relate to a motor burning out in an appliance, you can save yourself from such a dilemma by including Motor Burnout Cover in your Home or Contents Insurance policy.

Motor Burnout cover is an optional extra which covers the burnout of motors caused by an electric current or power surge for motors less than 10 years old.

This covers the repair or replacement of appliances such as:

• Refrigerators
• Freezers
• Washing machines
• Dryers
• Dishwashers
• Fixed air-conditioners
• Microwaves

Do note that this policy only covers motor burnout, not general wear and tear.

If the motor burns out on your fridge or freezer, you may also be able to claim up to $500 on the additional benefit for food spoilage. Read the Contents Insurance PDS for more details.

Australian Consumer Law vs Warranties vs Insurance

Before you reach for your wallet, it’s worth understanding what you may already be entitled to under the Australian Consumer Law (ACL). You may not realise that your legal rights extend well beyond the manufacturer’s warranty periods, and these rights can be enforced at no cost without the need to claim on your insurance.

Here’s a breakdown of the key elements.

Manufacturer’s Warranty

The Manufacturer’s Warranty should be the first place you check if you have a newish appliance, as there are a number of rights under Australian Consumer Law that can help you.

Simply put, warranties are additional voluntary commitments by a business regarding a product’s quality or a promise to resolve any defects with the product or service for a certain period of time. These must be honoured, and apply on top of consumer rights to have the product repaired, replaced or refunded if there’s a problem.

When you purchase a new appliance you may also be able to pay extra to extend the warranty.

Also if you have a credit card, check the terms and conditions as some credit cards automatically offer benefits to extend the warranty if you purchase the appliance using the credit card.

Australian Consumer Law (ACL)

Consumers’ rights are protected under consumer law. These basic rights are called consumer guarantees, which is the right consumers have to expect certain things when they buy a product or service. ^[2] Some of these guarantees include that the goods will be of acceptable quality, that the manufacturer will provide repairs or spare parts for a reasonable time, and that the manufacturer will honour any warranties. ^[3]

The right to remedy your appliance is when the manufacturer must repair, replace or refund due to a “major failure” in the product that was not disclosed to the consumer.

As an example, if you bought a washing machine and the motor failed in three months, the manufacturer would be liable to replace or refund the appliance. ^[3]

Home and Contents Insurance

With combined Home and Contents Insurance or Contents Insurance only cover, your whitegoods and electrical appliances can be covered for loss or damage from insured events like storms, theft, and fire.

This cover helps you replace your belongings with new ones if they suffer loss or damage due to an insured event, under the new-for-old replacement policy.

For extra protection, you might decide to add optional Motor Burnout cover to your policy to cover motors up to 10 years old.

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Motor Burnout Cover

To provide additional protection for parts of your home building that have motors (e.g., pool pump, garage door opener or air conditioning unit) and your appliances, which are part of your contents, Budget Direct offers optional Motor Burnout Cover. This cover is designed for situations where an electric motor burns out due to an electrical current or power surge.

Should You Repair, Replace or Claim?

With all of this in mind, here’s a quick recap on the steps you can take to help you decide what to do with your affected appliance:

Option 1: Repair

If your appliance has stopped working, it may be worth looking into repair costs to fix your item. If you don’t need this item fixed immediately, having it repaired could be a suitable option.

Option 2: Replace

If the appliance is old and energy-inefficient, then you might be better off replacing the broken appliance with a new one. It’s always worth weighing up the cost of both options to repair or replace your appliance and considering what option will work best for you.

Option 3: Make a claim

You may be able to make a claim for your appliance with your insurer if it falls within your policy terms.

Step 1: Check if motor burnout is covered on your policy

Review your insurance policy details to see if you have motor burnout cover for appliance failures. If it’s listed on your policy, you may be able to make a claim and have the item repaired or replaced by your insurer.

Step 2: Confirm your appliance meets policy requirements

For your claim to be accepted, most insurers usually require the appliance to be under 10 years old and have suffered a premature failure, not gradual wear and tear.

Step 3: Check if your appliance is still under warranty

Some insurers may only cover items that are no longer under the manufacturer’s or retailer’s warranty. Before lodging a claim, it’s worth checking.

Step 4: Consider your excess amount

Check your policy excess amount and consider if claiming would be worthwhile for your situation. If your excess is lower than the possible repair cost, it could be worth lodging a claim.

Step 5: Lodge your claim

If your appliance meets all the requirements of your insurance policy and Product Disclosure Statement, claiming may be a suitable option for you. Make sure you have handy your proof of purchase and details of how and when the appliance failed before making a claim.

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