A replacement warranty is usually an extension of a manufacturers warranty. Almost all manufacturers come with some type of warranty to secure the buyer against defects. If a problem happens with the item during the coverage term, the manufacturer will arrange to repair or replace the item. A replacement warranty covers problems that happen after a manufacturers warranty expires and is different than a standard repair warranty.
Under a repair warranty, an item with a problem that a manufacturer warranty would normally provide coverage for would be arranged to be repaired if there was an issue.
A replacement warranty could include the same coverage as a repair warranty with the difference of it NOT requiring it to be fixed, but straight out replaced. Under this coverage, the customer would not have to go through the delays to get it repaired, but rather have it replaced with a new or like item or issued a credit for the amount originally paid.
Replacement warranties usually cap out at $1,000 and are more expensive with options up to one to three years of additional coverage and can include items such as appliances, electronics, tools, TV and other electronic devices.
For lower priced goods, replacement warranties make great sense and not only offer security from defects, but also convenience in case issues arise..