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In business, a warranty is a guarantee of the reliability of a product. Should the product malfunction within a certain amount of time (usually stipulated in the warranty) after the purchase, the manufacturer is typically required to provide the customer with a replacement or refund. Warranties usually do not cover acts of God, owner abuse, malicious destruction, or anything, for that matter, outside of a mechanical failure incurred with normal usage.
There are third party warranty providers who sell optional or extended warranties on products. These third parties range from well known store chains, such as Best Buy and Circuit City, to independent, often underwritten companies such as Warranty Direct. Many people do not realize that extended warranties are not always provided through the manufacturer, but in some circumstances, this is beneficial.
For instance, when an auto warranty is provided through a dealership from the manufacturer, repairs on the vehicle are paid for at a lower rate, as when there is a recall on a vehicle. Because of this, many mechanics will attempt to circumvent the actual repair until the warranty has expired. Because of this, third party warranties, while often more expensive, can be worth the price difference.
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