On 29 January 2019, the Dutch Central Bank (De Nederlandsche Bank, DNB) published a final Q&A which provides clarification as to whether warranties typically included in purchase agreements can be considered a non-life insurance (schadeverzekering) policy.

According to DNB, a warranty in a purchase agreement in principle does not qualify as non-life insurance if the following three conditions are met.

  1. the warranty forms an subordinate part of the purchase agreement (i.e. it has no independent meaning and is as a result ‘absorbed’ by the purchase agreement);
  2. the warranty relates exclusively to the nature or shortcoming of the product that is the subject of the purchase agreement; and
  3. the warranty does not cover a period that is evidently longer than the reasonably expected lifetime of the product.

DNB further explains that a typical warranty in a purchase agreement often refers to existing properties and shortcomings of a product and, more generally, the quality that may be expected from the product. A non-life insurance instead often serves to compensate damage caused by future external factors, such as loss and theft. A warranty that relates to such (future external) factors has nothing to do with the properties of the product itself and will therefore in principle qualify as an insurance, even if it forms part of the purchase agreement.

The press release also refers to a public consultation on a Q&A addressing whether subscriptions offered to customers with regard, for example, maintenance and repair of products bought by such customers qualify as non-life insurance. The public consultation ends after 15 February 2019.

View DNB’s press release (Dutch only), 29 January 2019.