A warranty can be defined as a guarantee, claim or assurance that a manufacturer, retailer or a similar party makes to a customer about their product or services. The warranty is a document that also states the situation or occurrence that will results in the repair, maintenance and the replacement of the product by the company to the customer. The warranty activates in a situation when the product provided by the company does not performs or works in the same manner as desired by the customer or claimed by the company.

Not all the warranties fulfill all the claims made by the customers in accordance to the performance of the products as warranties may has exceptions that limit or bounds the situation in which the company is responsible for the rectification of the problem regarding the product as claimed by the customer. For example there are a number of warranties that are valid up to one year from the date the customer has purchased the product. Such warranties are only useful and applicable if the problems occur due to defective parts or defective workmanship.

The solution of these limited warranties is the extended warranties as a number of vendors offer extended warranties to their customers. These extended warranties are actually the insurance policies regarding the performance of the products for which the customers has paid up front. The coverage of extended warranties last for a handful of years as compared to the limited coverage of the warranty provided by the manufacturers.

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