The Ministry of Commerce has warned retailers, car dealerships, and all entities against offering "extended warranty" products without obtaining a licence from the Insurance Authority.
In a circular addressed to the Federation of Saudi Chambers, the Ministry said that directly offering the extended warranty product by retailers and car dealerships to customers is a clear violation of regulations because it is an insurance activity that requires an official licence.
The issuance of the circular followed a meeting between the ministry and the Insurance Authority on 24 September 2025, reported the newspaper Al Riyadh. At the meeting, the two parties discussed the illegal sale of the "extended warranty" product by a number of retailers and car dealerships.
The Commerce Ministry’s circular stipulated that the "extended warranty" product is an insurance product that must be offered exclusively through insurance companies licensed under the Cooperative Insurance Companies Control Law. No person in the Kingdom is permitted to practice insurance, reinsurance, or provide insurance support services unless they obtain a licence from the Authority.
Commercial consultant Dr Abdulrahman Mahmoud Beba said that an extended car warranty is usually sold as an optional contract, and it covers the costs of mechanical and electrical repairs to devices or the car, after the original manufacturer's warranty expires. Such a contract is considered an alternative to insurance.
However, an extended warranty does not cover routine maintenance, such as oil or tire changes, as these are not considered as breakdowns. Similarly, an extended warranty does not cover accidental damage, such as damage resulting from misuse or accidents, or damage to devices caused by problems, such as computer viruses.