Last week, we hosted a webinar for retailers on understanding and communicating the value of warranties to your customers. Because there is a lot of confusion and misunderstanding about what warranties are and what they are meant to do, we wanted to demystify the term. Here are the highlights from the webinar.

What are warranties?

A warranty is a guarantee that a product will function as described and intended. Consumer products are not required by law to have warranties, but if one is given, it must comply with the Magnuson-Moss Warranty Act and be clear, fair, and enforceable.

What is the difference between a limited warranty, an extended warranty, and an accident protection plan?

A limited warranty, also known as a manufacturer’s warranty, is a guarantee from the manufacturer of the product that the product will work as intended. There is no additional cost to the consumer. Federal law in the United States requires that limited warranties be available for you to read before you buy a product. Coverage terms for limited warranties vary, but it’s typical to see a one year limited warranty.

An extended warranty is an optional extension of the term length of the limited warranty. Extended warranties may be purchased by the consumer for an additional cost, and they are offered and backed by a third party. Extended warranties cover everything included in the manufacturer’s warranty plus power surges and wear and tear.

It is important to note that not all warranties include accident protection. So if your three-year-old decides to pour juice all over your new computer, a repair or replacement might not be covered. An accident protection plan will ensure that you are covered for drops, spills, and crashes—not simply manufacturer defects.

Does every product come with a warranty, or do you need to pay an additional fee?

For the most part, all products come with a limited warranty. However, if you want to purchase coverage for a longer term and/or would like accident protection, you’ll have to purchase an extended warranty.

Who holds the risk and is responsible for honoring each type of warranty?

Under a limited warranty, the manufacturer is responsible for guaranteeing the warranty. Under an extended warranty, the third party you have purchased the warranty from is responsible.

How does each type of warranty function alongside each other?

This is an interesting one. An extended warranty’s term begins once the manufacturer’s warranty ends. However, extended warranties that include accident protection commence at the same time as the manufacturer’s warranty. 

Here’s an example:


Why do warranties get a bad rap? Is this a mischaracterization?

Historically, warranties have gotten a bad rap for a few reasons—high fees and deductibles, confusing terms and conditions, and frequent claim denials.

However, extended warranty terms today are much more transparent and consumer friendly. Retailers today are focusing on putting their customers first and offering extended warranties with clear terms and conditions and competitive premiums.

It is important to keep in mind that a typical manufacturer’s warranty does not cover accidental damage to a product. Purchasing accident coverage gives customers peace of mind for situations that are often outside of their control.

Clyde’s Mission

Clyde’s mission is to create beautiful, intuitive software that empowers retailers to offer their customers peace of mind with extended warranties and accident protection. By educating retailers about the product protection industry, we hope to give you tools to provide your customers with the same level of transparency.