A warranty is a guarantee or promise provided by the OEM to repair or replace it, if necessary, within a specified period of time following an electrical or mechanical breakdown. It may though normally won't provide cover for peripheral items, wear and tear, damage by computer viruses, re-grassing, normal maintenance, accidental damage or any consequential loss.

The most common forms of extended warranty are:

• Extended Auto Warranty - An extended auto warranty is a service contract between the owner of the vehicle and an auto warranty provider, the latter which may either be the original equipment manufacturer or a third party administrator. Such relationships may not have to be evidenced by insurance contracts, particularly where the extended warranty crystalizes an existing obligation. All new cars come with a warranty that cover repairs for a certain period of time and a certain number of miles, such as 3 years and 36,000 miles. At the time of sale, auto dealers may sell car buyers an extended warranty which extends the period of the warranty of an above the initial OEM period.

• Household Appliance Warranty (commonly referred to as Brown and White Warranty) - An extended Warranty on Brown and White Appliances covers repair costs following breakdown. Most coverage includes the costs of parts and labour. There is usually a maximum amount payable during the term of cover and some limits apply per claim. If the appliance cannot be repaired some coverages will replace the appliance with a new one of similar specification, or pay a cash equivalent if a similar model is no longer available. These are often called "new for old". Other coverages will make good up to the current value of the appliance after depreciation. If any appliance is replaced the coverage will usually end. Where additional coverage in the form of accidental damage or frozen food spoilage the coverage is deemed to be insurance.

• Mobile Phone/Electronic Equipment Cover - These types of cover generally extends the period for which the customer is entitled to to a repair or replacement of their electronic equipment (i.e. mobile phone, handheld device etc) and can extend cover for up to 90 days whilst the customer is abroad. Typically the electronic item must be less than 12 months old with a valid proof of purchase. The cover provides protection for repair or replacement costs if the underlying electronic equipment is damaged as a result of an accident, theft or electrical mechanical breakdown that occurs outside the manufacturer's guarantee period. The inclusion of theft will deem the coverage to be insurance.

For further information contact Mark Standen, Mocden Insurance Services:

+44 (0)1322 476 276

+1 315 359 6005

+61 3 638 77 044

Mobile +44 (0)7427 628 886 or +61 (0)490 056 472

Email: mstanden@mocden.co.uk