The warranty did not work that way for mine, we had to turn in the old saw (at least we did, I doubt the wife asked about keeping it, but will next (if there is a next) time). Could just be a local store policy.
The other thing I did not understand when I bought my warranty that was a "3 year" warranty was that they will replace that one, and then your warranty was done, if you wanted the next tool to be warrantied, you had to buy another warranty. Not quite what I had expected, but probably doom on me for not reading enough.
Anyway, it has made me rethink the warranty deal. I am not buying them now.
My opinion is very different from Dargo's, as I feel that many HF tools offer a good dollar value.
There is a 30 day no question return policy, I just figure I will run the tool enough in that 30 days to see if it has any basic faults or not, then run the risk that I have to replace it if it breaks (or repair it) at my own dime.