If you have bought a new electric or electronic item recently you will probably have been offered an insurance policy for breakdown and accidental damage. The leading provider of this type of insurance has been rated 65 per cent ‘excellent’ and 16 per cent ‘bad’ on the review site Trust Pilot.

Broadly speaking the quality of the insurance isn’t the issue here, it’s really about value for money and most importantly our need for such a policy in the first place.

Key questions:

1. What is the retail price for the item in question?

2. How long is the manufacturer’s warranty?

3. How much are the monthly premiums?

4. What is the likelihood of a breakdown?

5. Are there any repairs/replacements excluded in the policy?

In light of the PPI scandal, retailers should not pressurise customers into buying, so don’t be hurried into signing anything on the day, simply take a note of the monthly premium and ask for a copy of the terms and conditions and any exclusions so that you can consider the facts.

Appliance breakdown insurance starts from today one, absorbing the manufacturers warranty, which is particularly important where the manufacturer provides an extended warranty.

READ MORE: Saving at the sales

ANNUAL POLICY RENEWALS

Take a minute to look at the renewal premium, multiply this by 12 and compare it with the cost of a replacement item as it’s not unknown for the annual premium to cost more than buying a replacement.

Recently a reader’s renewal notice on her aged cooker was quoted at £18.95 a month. She liked having the security of the policy but a £200-plus annual hit was more than she could justify. She contacted her provider and they cut the monthly premium to £8.35, consequently keeping her custom.

If you have any money-saving ideas I would love to hear from you!