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Why outsource OEM Warranties?

Mitigate risk and control costs with Insurance and underwriting for OEMs insurance and underwriting for manufacturers. Existing and emerging global OEMs can opt to reinsure warranty expenses through insurance carriers and brokers. Working with insurance companies and brokers, warranty companies like manufacturers can offload their warranty reserves, allowing warranty companies like OEMs to transfer the risk to an insurance company and achieve balance sheet relief through a fixed price insurance policy. Doing so negates the need to hold a claims reserve beyond the acquisition of the policy.

What Additional Value can OEMs Outsourcing Insurance and Underwriting Gain?

Extending warranty coverage on new products can be a huge differentiator for manufacturers.

By providing additional product warranty coverage, beyond your traditional parts and labor coverage enables your organization to differentiate your product with a longer standard warranty or the ability to support subscription-based programs which generate long-term recurring revenue.

Consider two use cases.

Original Equipment Manufacturers

By extending the OEM warranty on products, OEMs can provided additional value for specific sales channels. For instance, in the commercial space, for lighting or kitchen equipment, a longer warranty may be preferred by customers in order to support extended life of the product or in support of business ceasing events such as ovens that breakdown during a lunch rush.

OEMs can also choose to extend the warranty on products sold to rental, rent to own or scratch and dent resellers, facilitating the sales of B goods, while providing a high level of warranty support.

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Original Device Manufacturer

ODMs can benefit greatly from insuring warranties on products. Historically, ODMs produced components or products for warranty companies like OEMs or even retailers which offer house branded electronics and computers. By insuring the warranty ODMs can provide warranty support on products which make them more valuable to their channel partners and end-customers.

OnPoint helps manage your warranty costs through outsourced reinsurance, stabilizing your financials while strengthening your brand image through strong, financially stable underwriter backing.

What is Balance Sheet Relief related to Warranties?

A warranty is a guarantee or promise made by a product manufacturer that a company must repair or make good a defective item sold to a customer during a period from the sale date. A warranty reserve is calculated using the expected failure rates and costs to repair or replace products. It must be accounted for in the accounting period in which a product is sold and a liability must be created for the same amount. The reserve is reduced over time as warranty service is performed.

Using a fixed costs insurance policy eliminates the need to continuously reserve funds outside the cost of the reinsurance policy, stabilizing your financials while strengthening your brand image through strong, financially stable underwriter backing.

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Frequently Asked Questions

How does warranty insurance work?

Using a fixed costs insurance policy eliminates the need to continuously reserve funds outside the cost of the reinsurance policy, stabilizing your financials while strengthening your brand image through strong, financially stable underwriter backing.

What is accidental damage coverage?

Accidental damage coverage provides for protection from accidental damage from handling and is a common addition feature of service contracts particularly on mobile handsets.

What is a warranty company?

A warranty company provides warranty services such as repair, maintenance or ADH on warranty plans such as service contracts and extended warranties. They may also deliver service guaranteed under a manufacturer's warranty.

What is a warranty plan?

A warranty plan is an extended warranty or service contract which offers extended repairs or additional features and benefits not covered by the OEM warranty.

What is an Obligor?

An obligor is responsible for funding obligations under warranty plans, extended warranty or service contracts.

What is an administrator?

An administrator is responsible for executing service obligations under warranty plans, extended warranty or service contracts.

What is an underwriter?

Underwriters are often obligors on warranty plans. They provide insurance which back the financial obligations of a warranty plan, extended warranty or service contract.

What is a warranty product?

A warranty product can be described as an extended warranty or service contract which offers extended repairs or additional features and benefits not covered by the OEM warranty.

What is an OEM?

OEM is an acronym for an original equipment manufacturer and is another term used for manufacturers.

What is an OEM or manufacturer's warranty?

Extended warranties and service contracts provide extended break fix repair service for products sold by OEMs, retailers, and service providers. They often provide additional coverages not offered by the OEM.

What is ADH?

ADH stands for accidental damage from handling and is a common addition feature of service contracts particularly on mobile handsets.

What is Theft Loss?

Theft loss is also is a common addition feature of service contracts particularly on mobile handsets that covers the loss of a device. This warranty product often includes a deductible.

Are service contracts insurance?

In some states and in Canada, service contracts can be considered insurance for a variety of reasons.

What does underwriting mean related to OEM warranties and service contracts?

OEMs must set aside a reserve or fund to cover the costs of anticipated or estimated warranty repair costs. An insurance company can step in and enable the OEM to offload this expense through insurance policies, impacting the balance sheet.

What is an ODM?

ODMs are manufacturers whom build components, parts or entire products for other entities, which in some cases are branded by an OEM or retailer. Warranties and extended warranties and service contracts are valuable for ODMs because they enable ODMs to provide additional value to their customer and downstream consumers through enhanced service options.

What is service fulfillment?

Service Fulfillment is the act of provide warranty services, including repair, maintenance, delivery and installation of products.

Find out more about OnPoint Warranty Solutions' core values below!

Find out more about OnPoint Warranty

OnPoint offers underwriting, warranty plans, extended warranties and service contract administration, service fulfillment, service technology and logistics.

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