31 March 2026
The Insurance Authority announced that the offering or sale of the “Extended Warranty" product by car dealerships, retail companies, and all other entities without obtaining the required regulatory license from the Authority constitutes a clear violation of the Cooperative Insurance Companies Control Law.
The Insurance Authority emphasized that engaging in any insurance activity without the necessary license is considered a direct breach of regulations and exposes the violator to penalties, including a fine of up to SAR 2 million and imprisonment for a period not exceeding four years, or either of these penalties, in addition to the implementation of relevant legal procedures in accordance with applicable laws.
The Authority clarified that the “Extended Warranty" is an insurance product that is exclusively offered in the Kingdom by licensed and registered insurance companies. It pointed out that these procedures come as part of its regulatory mandate to oversee the insurance sector, enhance its stability, and ensure that insurance products are provided within approved regulatory frameworks, thereby protecting the rights of policyholders and beneficiaries and strengthening confidence in the insurance market.
The extended warranty is a product developed by insurance companies to provide additional protection for owners of vehicles, devices, equipment, and other products after the expiry of the original warranty period. It offers insurance coverage against risks that may require repair or replacement of the product, enabling consumers to continue benefiting from their purchases without concern over unexpected costs.
The Insurance Authority had previously identified violations related to the offering and sale of extended warranty product as part of its ongoing efforts, in collaboration with relevant authorities, to monitor compliance among commercial entities operating in the market with insurance regulations and instructions. It was observed that several retailers and vehicle dealers were providing this product without obtaining the required authorization from the Insurance Authority.
The Insurance Authority reaffirmed that it is working in coordination with relevant bodies to strengthen compliance with applicable regulations and to ensure that the provision of the extended warranty product is restricted to licensed insurance companies only. Companies wishing to offer this insurance product must obtain the necessary licenses from the Authority. These instructions are contributing to market regulation, increase the transparency, and enhance the protection of beneficiaries' rights.
The Authority also called on all commercial entities to comply with insurance laws and regulations and urged individuals and organizations to report any violations through its official channels.