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Auto, Truck, and Car Warranty Definitions
warranty, warrantee (Auto,Home,RV,Car,Truck,Motorcycle,
RV)
- Official authorization, sanction, or warrant.
- Justification or valid grounds for an act or a course of action.
- Law.
- An assurance by the seller of property that the goods or property are as
represented or will be as promised.
- The insured's guarantee that the facts are as stated in reference to an
insurance risk or that specified conditions will be fulfilled to keep the
contract effective.
- A covenant by which the seller of land binds himself or herself and his
or her heirs to defend the security of the estate conveyed.
- A judicial writ; a warrant.
- A guarantee given to the purchaser by a company stating that a product is
reliable and free from known defects and that the seller will, without charge,
repair or replace defective parts within a given time limit and under certain
conditions.
[Middle English warantie, from Old
North French, from feminine past participle of warantir, to guarantee,
from warant,
warrant.]
A type of guarantee that a manufacturer or similar party makes regarding the
condition of its product. It also refers to the terms and situations in which
repairs or exchanges will be made in the event that the product does not
function as originally described or intended.
Warranties usually have exceptions that limit
the conditions in which a manufacturer will be obligated to rectify a problem.
For example, many warranties for common household items only cover the product
for up to one year from the date of purchase and usually only if the product in
question contains problems resulting from defective parts or
workmanship.
As a result of these limited manufacturer warranties, many
vendors offer extended warranties. These extended warranties are essentially
insurance policies for products that consumers pay for up front. Coverage will
usually last for a handful of years above and beyond the manufacturer's warranty
and is often more lenient in terms of limited terms and conditions.
Extended warranty, i.e Auto, Truck, Car, RV,
Motorcycle
An extended warranty,
sometimes called a service agreement, a service contract, or a
maintenance agreement, is a prolonged warranty offered to
consumers. The extended warranty may be offered by the warranty administrator,
the retailer or the manufacturer. These warranties extend the period of the
manufacturer's standard warranty and are usually not "double coverage". For
example, a refrigerator's extended warranty covers two years past
the manufacturer's one year warranty. Extended warranties cost extra and for a
percentage of the item's retail price. In retail consumer electronics, extended
warranties cost 20% to 30% of the price, and give sales associates up to 15%
commission at some retailers.[1][2] Occasionally, some extended warranties that
are purchased for multiple years state in writing that during the first year,
the consumer must still deal with the manufacturer in the occurrence of
malfunction. What was often promoted as a 5 year extended guarantee thus becomes
only a four year guarantee.
Overview
An extended warranty is coverage for electrical or mechanical breakdown.
It does not cover peripheral items, wear and tear, damage by computer viruses,
re-gassing, normal maintenance, accidental damage, or any consequential loss.
The indemnity is to cover the cost of repair and may include replacement if
deemed uneconomic to repair. It is important for consumers to read and
understand the terms and conditions offered at the point of sale.
The value of extended warranties lies behind the organization promoting
and selling them. Most of the major retailers employ specialist administrators
to manage the claims and to ensure the product is priced on a sustainable basis.
An essential part of this is to determine the appropriate provisions on the
balance sheet to reserve for future claims. Similarly, the income must be earned
over the period of cover.[3] Companies that have been around for several
years will usually have the systems and data in place with which to do this.
Less reputable organizations may not adequately price their extended warranties
and may therefore have insufficient funds to provide for future claims
costs.
Guarantee given by a seller to a buyer that the goods or services purchased
will perform as promised, or a refund will be given, an exchange made, or a
repair done at no charge. Warranties usually become effective when the
manufacturer receives a warranty application from the buyer (not at the date of
purchase) and are effective for a limited period of time. Warranties usually
include limitations that exclude defects not caused by the manufacturer.
The warranty application form typically contains requests for demographic and
other marketing information about the buyer such as marital status, occupation,
age, income, where and when the item was purchased, and why that brand was
selected. Direct marketers maintain lists of individuals who have completed
warranty applications, and use the data for promotion list enhancement.
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