Warranty Products Can Drive Revenue for Your Clients and Your Agency

When speaking with companies that manufacture and sell durable goods such as equipment, vehicles, and electronics, most insurance conversations focus on how to mitigate risk. From Product Liability to Product Recall and Professional E&O, these are core coverages agents place to address a client's exposures.

But there's a critical piece of the conversation that many brokers are not addressing. As a result, you may be missing opportunities already present within your clients' businesses — specifically, a warranty program, which is an insurance-backed guarantee program.

"Most insurance conversations start with 'what could go wrong?'," explains Dillon Behr, Senior VP, Executive Lines at RPS. "Warranty is the rare opportunity to start with 'how can this product win more business and generate margin after the sale?' That's a different, and more strategic, conversation for both the client and the broker."

The Conversation You're Not in but Should Be

Your clients are already thinking about the warranty. It comes up in sales cycles, RFPs and customer negotiations. They are deciding how to structure it, how to price it and how to use it to win business.

Most brokers, unfortunately, are not part of that conversation. They get calls about warranties, but most don't know what to do with those calls. As a result, those opportunities often go elsewhere or, worse, are handled without your involvement.

What Warranty Really Is, and What It Isn't

A warranty complements the coverages you already provide, but it serves a different purpose.

• Product Liability: Protects against third-party injury or property damage caused by a product defect
• Product Recall: Covers the cost of addressing widespread product issues, including repairs, replacements and customer notifications
• Professional/E&O Liability: Responds to a manufacturer's errors in design, installation or technical services that result in financial loss or operational disruption
• Limited Warranty: Reinforces customer trust by promising to cover individual product repairs or defects for a defined period
• Extended Warranty: Drives revenue by offering additional repair coverage and ongoing product support beyond the standard warranty period

Product Liability, Product Recall and Professional/E&O Liability are designed to respond when something goes wrong. A warranty, however, is built into the product experience itself, shaping how it's sold, supported and valued by the customer. That distinction matters. While traditional insurance products are designed to transfer risk, warranty programs can be structured to create revenue, strengthen customer relationships, and differentiate the product in the market.

Turning Products into Revenue Streams

For manufacturers and distributors, a warranty is not just protection; it's a business strategy. Extended warranties are often where the real margin exists.

"In many industries, an effective extended warranty offer can unlock meaningful incremental net profit — sometimes as much as 50% — because it monetizes the service and support that customers already value," says Behr.

In highly competitive markets where products are price-sensitive, companies make money on the services that surround the product — not just the product itself. They compete on price but generate profit through service offerings such as extended warranties.

Think about consumer examples — electronics, appliances, vehicles. The same model applies across commercial industries, from data center equipment and healthcare devices to heavy machinery and energy systems. In many cases, warranty programs can:

• Create a new revenue stream through after-sales service
• Improve product adoption by reducing buyer hesitation
• Differentiate offerings in competitive bids
• Strengthen long-term customer relationships

And importantly, warranty programs can offset rising insurance costs. For example, if a client sees a 15% increase in insurance costs but has made $800,000 from their warranty program, that's a very different conversation to have.

Where Warranty Fits into Your Client Portfolio

The key is understanding where a warranty makes sense and where it doesn't. Good warranty opportunities typically share a few characteristics:

• The client sells a finished product, not just a component.
• They have a direct relationship with the end user.
• The product requires maintenance, service or ongoing support.
• There is a clear opportunity to add value beyond the initial sale.

For example, a company selling heavy equipment, backup generators, or data center infrastructure can bundle service and maintenance into a warranty offering. That not only creates recurring revenue but also deepens the customer relationship.

On the other hand, warranty coverage is less effective for raw materials or components that are not sold directly to the end user.

Scale also matters. Typically, clients with $20 million or more in product sales are strong candidates for structured, insurance-backed warranty programs. That said, high-growth companies and startups can also be strong fits, particularly when warranties play a role in market differentiation.

A More Strategic Role for the Broker

One of the biggest advantages of bringing a warranty into the conversation is timing. Traditional insurance discussions often happen at renewal. Warranty discussions happen earlier — during product development, go-to-market planning and sales strategy.

That timing gives brokers a chance to move upstream. Instead of reacting to risk, you're helping clients design programs that support revenue growth; align sales, operations and risk management; and build more competitive product offerings.

The most effective programs are built when sales identifies how warranty drives differentiation and revenue, operations understands the cost and complexity of delivering the service and risk management ensures compliance and determines when to transfer liability.

You Don't Have to Be the Expert

Partnership is critical in the warranty world. One of the reasons brokers avoid warranties is simple: they're not familiar with them. And that's understandable.

A warranty isn't something most brokers are trained on, but that shouldn't stop you from raising it with a client or prospect. The key is recognizing when warranty exposure may exist and knowing you have a team behind you that can help evaluate the opportunity, determine whether there's a fit and work through the structure.

"You don't need to be a warranty specialist to introduce the idea," says Behr. "Your value is spotting the opportunity and bringing the right partners to the table, the same way you would with any complex risk or program structure."

A Complement, Not a Replacement

It's important to be clear: a warranty is not a replacement for traditional insurance. It's an extension of it. Product Liability, Product Recall, and E&O will always play a critical role in protecting against major losses. Warranty fills a different need, covering performance, enhancing customer experience and creating new economic value. Together, they form a more complete strategy.

For your clients, it's a way to turn products into service-driven revenue streams. For you, it's a way to expand your role, differentiate your offering and participate in conversations that many brokers are currently missing out on.