What is the main idea of the passage?

A warranty shifts specified failure risk to a seller and may signal confidence, but its coverage and costs have limits. (The passage explains risk transfer, signaling, pooled cost, exclusions, and careful comparison.)

Why might a confident company offer a warranty?

It expects covered failures to be uncommon enough to manage. (A low expected failure rate makes the promised repairs more affordable for the seller.)

What does “pools” mean in the third paragraph?

spreads a shared risk or cost across many purchases (Money from many sales supports the smaller number of claims, so the risk is spread.)

What might a warranty require from a buyer?

proof of purchase (The second paragraph names proof of purchase as one possible condition.)

The Promise Behind a Warranty: Level 2 Reading Comprehension Questions

A toaster comes with a one-year warranty. If a covered part fails, the seller promises repair or replacement. The buyer pays the purchase price, but the seller accepts some failure risk.

That promise can signal confidence. A company expecting few failures can offer protection at a manageable cost. A long warranty may also make buyers more willing to choose an unfamiliar brand. However, the promise has limits. It may exclude damage caused by misuse, require proof of purchase, or cover parts but not shipping.

A warranty is not free in an economic sense. Expected repair costs can be included in the product's price. Buyers who never make a claim help fund claims from those whose products fail. The arrangement pools one kind of risk across many sales.

Before comparing warranties, a buyer must read what is actually promised. A bold “ten years” matters less if coverage is narrow or the claim process is costly. The valuable part is not the number alone, but which risk moves from buyer to seller.

Comprehension questions