Guarantees

9 Months Ended

Sep. 30, 2020

Guarantees and Product Warranties [Abstract]

Guarantees

Guarantees

The Company provides service and warranty on its products beyond normal service and warranty policies. The changes in the carrying amount of service and product guarantees for the nine months ended September 30, 2020 and 2019 are as follows:

(dollars in millions)	2020		2019
Balance as of January 1	$	27	$	47
Warranties	8		7
Settlements made	(10)		(16)
Other	(1)		(11)
Balance as of September 30	$	24	$	27

The Company provides certain financial guarantees to third parties. As of September 30, 2020, Otis has stand-by letters of credit with maximum potential payment totaling $142 million. We accrue costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued. In accordance with the FASB ASC Topic 460: Guarantees, we record these liabilities at fair value. As of September 30, 2020, Otis has determined there are no estimated costs probable under these guarantees.