Since 2011 Michael Hill Jeweller has been selling "Professional Care Plans" to customers to help maintain jewellery bought at its stores.

There are two main questions for consumers: what benefit do these plans give? And are they worth the money you pay?

Costs

Professional Care Plans (PCPs) come in two sizes: three years, or lifetime. Their cost depends on the price you paid for your jewellery.

Costs range from $9.90 for a three-year plan on an item worth up to $49.99, to $1999.90 for a life-time guarantee for items worth $30,000 to $999,999.99. (Without the Plan, selected products have a Lifetime Diamond Guarantee, Michael Hill Jeweller (MHJ) watches have a three-year guarantee and other jewellery has a 12-month guarantee.) It lasts for its stated period or until the value of repairs or services received equals the purchase price of the product.

Cover

In exchange for your money you receive cover for "parts and labour costs ... resulting from a mechanical, structural or physical failure of the product caused by defects in workmanship and/or materials, including those resulting from normal wear and tear". However, except for wear and tear, much of what is described here is already covered under the [Consumer Guarantees Act](/articles/consumer-guarantees-act/ (CGA).

Under the CGA, retailers guarantee their goods will be of acceptable quality and fit for purpose. If the item they have sold you has a mechanical, structural or physical problem, they are obligated under the CGA to fix it, replace it or refund your money.

The company also provides a long list of "what is not covered" which includes the same things not covered under the CGA including damage from accidents and tampering, cosmetic damage, the elements or acts of God.

Some things we can see included in the PCP that could be worth paying for are ring re-sizings (priced by MHJ at $150), cleaning, and rhodium re-plating for items made of white gold ($60), re-tipping ($70-$120 per claw), earring repair and post breaks (up to $100). Re-sizings are not needed often in the lifetime of a ring (although the plan allows for one re-sizing a year).

Jewellers and Watchmakers of New Zealand recommends jewellery should be cleaned annually – but it is possible to do this yourself with household cleaners. Re-plating rhodium on white gold is also recommended as an annual job for items worn constantly.

We conducted a mystery shop of jewellery chain stores to see if any others were offering similar "plans" or warranties – none were.

Revenue

Professional Care Plans generate considerable revenue for Michael Hill. In its 2011 annual report it acknowledged increased revenue for the year was partially "due to the cash flow created from the company introducing a Professional Care Plan for customers”. It's itemised in the half-year report for 2012 as bringing in $14.4 million

MHJ says PCPs were introduced in 2010 after research in the North American market where customer service protection was higher than elsewhere and PCPs were valued, and widely accepted. It says it is misleading to say they generate a lot of revenue as there are a range of services and obligations MHJ will need to honour in future.

We say

  • Clearly Professional Care Plans are good for Michael Hill Jeweller. But unless you're buying an expensive piece of rhodium-plated white gold jewellery, we don't think they offer a lot to the consumer.

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