Defective Products

Extended Warranty

In retail trade, an extended warranty is a promise that a product will maintain its reliability when subjected to normal usage conditions. The warranty is referred to as "extended" because it protects the consumer's investment against defects that may occur after the original date of purchase. If the product fails within a given time period following the sale, the manufacturer or distributor is normally bound by contract to offer the customer a repair, replacement, or refund.

These warranties typically do not cover acts of nature (e.g., natural disasters), owner mistreatment, malicious destruction, commercial use, or anything else excluding mechanical breakdown under ordinary use. The majority of warranties do not include parts that deteriorate over time and supplies that require periodic replenishment when they run out (e.g., tires or motor oil for a car). An extended warranty can be factored into the original sale price or tacked on for an extra fee. There also may be a vague timeline for which this extended warranty lasts, and it usually never continues for the duration of the buyer's lifespan. A manufacturer or distributor may be mandated to set aside funds designated for coverage of potential services or reimbursements for products still protected under warranty.

There are also third-party providers that sell voluntary extended warranty contracts for various items; these essentially double as insurance contracts for those products. Third-party providers include everyone from large commercial chains such as Wal-Mart and Best Buy to independent contractors such as Access Warranty. Similar to other insurance carriers, these companies hope that the products will not malfunction, that the customer will ignore the fact that they paid for a warranty, or that all claims can be dealt with at minimal cost.

Most people are unaware that extended warranties are not always available through the manufacturer. However, in certain situations it could work in the customer's favor. For example, when a vehicle warranty is granted through a dealership by the manufacturer, repair costs are refunded at a reduced rate. Beware that some mechanics may stall on the repair until the warranty has expired so that they can charge full price. A third-party warranty, which is usually pricier, is often the better value because it will provide coverage of regularly priced hourly rates too. It also may give the customer the option to choose a mechanic who is not affiliated with the dealership.