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Extended Warranty, a Service Plan or an Insurance Product?

Author::Zhan Hao Chuankai浏览次数: March 30,2016

Authored by Dr. Zhan Hao (Partner  at AnJie Law Firm) and Wei Chuankai

An extended warranty is a prolonged warranty offered to customers in addition to the standard warranty on a new item. It is provided for various products, such as automobile, electronic and electrical appliance in household and similar. It has been a popular dispute that whether an extended warranty is an insurance product for a long time.

According to Article 2 of the Insurance Law of the People’s Republic of China, “Insurance” is defined as: “The commercial insurance activities where an insurance applicant pays an insurance premium to an insurer under an insurance contract and the insurer undertakes to pay the insurance proceeds to compensate for the property loss caused by the occurrence of a potential incident specified in the insurance contract or pay the insurance proceeds when the insured dies, becomes disabled or sick or reaches a specified age, time limit or any other condition specified in the contract. ”

China Insurance Regulatory Commission (hereinafter referred to as “CIRC”) did not give more explanation on detailed elements of “Insurance”, but issued other regulations on the implied factors of “Insurance”, which indicates clues on distinction between extended warranty and insurance product. The distinctions between an extended warranty and an insurance product are as follows:

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