Also because many products are sadly crap, these days, our 700 Euro Grundig fridge conked out badly a few months after the warranty ended.
The next one,(not Grundig) has a 5 year warranty for 20 Euros,i think that's acceptable.,i'm not happy about the necessity but it's acceptable.
Actually, probably not.
Assuming a washing machine costs £500, and the chance of it breaking down in 5 years is 2%. That means that for every 50 extended warranties sold the maker will have to cough for one new machine.
If they sell those 50 warranties at £10 they’ve covered the RETAIL cost of the machine. If they’re charging you £20 you can bet they’re making a fat profit on the insurance, which is why every till jockey in Curry’s etc is pushing extended warranty to every punter.
They wouldn’t offer extended warranty if it cost them money.