What is required for extended warranties to ensure their viability?

For extended warranties to ensure their viability, it is essential that they are backed by a financial guarantee. This financial backing provides assurance to the consumer that in the event of a claim, the company has the necessary resources to fulfill the warranty obligations. This protects consumers from the risk of the warranty provider going bankrupt or being unable to pay for repairs or replacements covered by the warranty.

Having a financial guarantee is important because it instills confidence in consumers about the reliability and durability of the warranty, allowing them to make informed decisions when purchasing extended coverage on their vehicles. It also helps ensure that the warranty provider operates within the regulations and standards set forth by governing bodies, adding an extra layer of consumer protection.