Warranty

AAA

DEFINITION of 'Warranty'

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.

INVESTOPEDIA EXPLAINS 'Warranty'

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.

RELATED TERMS
  1. Implied Warranty

    Under a sales contract, whether written or oral, there is a guarantee ...
  2. Return Protection

    A common, but little-known credit card perk allowing cardholders ...
  3. Price Protection

    A little-known, but common feature offered by most credit card ...
  4. Consumer Staples

    Essential products such as food, beverages, tobacco and household ...
  5. Premium

    1. The total cost of an option. 2. The difference between the ...
  6. Cardboard Box Index

    An index used by some investors to gauge industrial production ...
RELATED FAQS
  1. What are some examples of companies that are Value-Added Resellers?

    Among the most common value-added resellers are computer retailers and service companies, automobile dealerships and furniture ... Read Full Answer >>
Related Articles
  1. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own.
  2. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  3. Home & Auto

    Did You Buy A Lemon?

    Find out how to fix a sour deal on your car purchase.
  4. Budgeting

    Extended Warranties: Should You Take The Bait?

    Avoid shelling out for these policies and you could save hundreds of dollars.
  5. Home & Auto

    Tips For Maximizing The Value Of A Kitchen Touchup

    At a fraction of the cost of a remodel, a homeowner can make strategic updates to his or her kitchen that could transform this part of the home.
  6. Investing

    Why Are Consumers In Hesitation?

    Diverging monetary policy globally and a stronger dollar continued to be key drivers of the recent underperformance and last week’s tumble in U.S. stocks.
  7. Stock Analysis

    The Key to McDonald's? 70 Million Customers a Day

    Even when it has an underperforming year, McDonald’s is still one of the most profitable companies around.
  8. Chart Advisor

    Why Now is the Time for Food and Beverage Stocks

    As volatility rears its ugly head, it's natural to investigate stable sectors such as food and beverages. Here's an appropriately-named ETF to consider.
  9. Savings

    Why Is Deflation Bad For The Economy?

    While some inflation is good for economic growth, when prices begin to fall after an economic downturn, deflation may set in causing an even deeper crisis.
  10. Savings

    Profit From High Consumer Spending With Visa Or Mastercard

    American consumers have more money to spend thanks to falling gas prices. Investing in Visa and MasterCard may give investors more money, too.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center