Extended Auto Warranty Frequently Asked Questions 

• What is an extended auto warranty?
• Why do I need an extended auto warranty?
• Can repairs be performed at any repair shop?
• Why should I purchase an extended auto warranty now if my vehicle is still covered by the manufacturer?
• What about the deductible?
• Who is behind the extended auto warranty that you’re considering?
• Is the warranty transferable?
• What type of warranty am I buying?
• Does an extended auto warranty cover “parts and labor”?
• If my vehicle’s manufacturer’s warranty has expired, can I still obtain coverage?
• What if I decide to trade my vehicle in several years, do I get any refund?
• What if I decide to sell my vehicle privately?

 Coverage

• What exactly is covered?
• Is a cash layout required for repairs?
• Is “wear and tear” covered?
• Can I get an extended auto warranty on a salvaged car or one with a reconditioned title?
• Does the repair facility have to use new replacement parts, or can it use reconditioned, or even worse, used parts?  What about the engine?

Making a claim
 

• How does the claims process work?
• How is the deductible applied?  Per item, per repair visit, etc.? 

General  Answers : 

What is an extended auto warranty?

An extended warranty is an agreement between the car owner and warranty company, obligating the warranty company to pay for repairs covered by the contract for a specific period of time. With an extended warranty you are protecting yourself from the unexpected cost of mechanical breakdowns. One major repair often ends up costing as much, or even more than the entire cost of the warranty. As a consumer, you can only accurately understand the coverage if you learn the terminology and standard industry requirements. The levels of coverage offered differ considerably from company to company.

Why do I need an extended auto warranty?  

Since common mechanical repairs can cost into the thousands, protecting your automotive investment should not be taken lightly.

Whether you own a newer or older make/model, an extended auto warranty will provide you with peace-of-mind protection regarding costly mechanical repairs that can happen at any time during the life of your vehicle.

Buying an extended auto warranty today will allow you to avoid paying higher rates later due to price increases and required surcharges. You'll be able to immediately take advantage of your plan's benefits: towing, lost key/lockout, and car rental discounts.

Can repairs be performed at any repair shop?

Some warranties stipulate that repairs must be performed at the dealership from which the warranty was purchased; this can prove limiting and inconvenient. It's best to opt for a warranty that, at the very least, gives you more than one service facility from which to choose. You'll appreciate this should the vehicle ever need service while you're on a road trip, miles away from home.

Why should I purchase an extended auto warranty now if my vehicle is still covered by the manufacturer?
       

As your vehicle accrues age and miles, the price for an extended auto warranty will rise as do the repair costs that you would experience for an older, out-of-warranty vehicle. Capitalizing now on your vehicle’s newness and low mileage is the most logical approach as you plan for inevitable future repair costs. An extended auto warranty will provide you with peace-of-mind protection regarding such expenses.

What about the deductible?
     

Fully investigate a policy's deductible before signing on the dotted line. Consider not only its amount, but also whether it's per visit or per repair. With a per-visit deductible, each visit to the shop will run you a fixed amount, regardless of how many parts are repaired; a per-repair deductible applies to each serviced part.

What sounds like a minor difference may, under certain circumstances, have a major impact on your wallet. If, for example, you've got a $100 per-repair deductible and you take your car in to get the air conditioner, fuel pump and alternator serviced, you'll be out $300; had you opted for a per visit deductible, those repairs would only have cost you $100. There are still $0 deductible policies. You will have to pay extra for this, but if your circumstances become such that you have to take your car in frequently, you'll find that this policy more than pays for itself.

Who is behind the extended auto warranty that you're considering?
        

An extended warranty may be backed by a third-party warranty company or by the vehicle's manufacturer. Knowing who will be administering your policy can give you insight into the strengths and weaknesses of the contract you're considering. Administrators act as claims adjusters, authorizing the payment of claims to the service repair facility under the contract. Manufacturer-backed warranties score very highly when it comes to ease of use. However, third-party warranties are often less expensive and offer broader coverage. If you decide to purchase a third-party warranty, make sure they have the financial resources to meet their obligations under your contract. After all, the ultimate measure of a warranty company is ensuring that your claims are paid quickly and easily.

If you opt to purchase an aftermarket warranty, take a look at how the company's financial strength has been rated by A.M. Best and/or Standard & Poor's; this will give you an indication as to its ability to pay your claim. Your safest bet is to choose a company that has a minimum "A" rating with Standard & Poor's, and/or a minimum "A" or "A-" rating with A.M. Best. 

Is the warranty transferable?

Some warranties end when the person who bought the warranty sells the car. A warranty that allows you to transfer it to a new buyer is preferable.

What type of warranty am I buying?
        

Power train Warranty Covers the engine, transmission, and other parts of the drive train only, which is defined as the 29 parts of the vehicle through which oil flows. These are the parts least likely to fail. The average vehicle contains over 1,300 parts. As it does not cover the majority of the components of a vehicle, the power train warranty is not an extended warranty.

Bumper-to-Bumper Warranty Covers nearly all of the mechanical systems of the vehicle, from front bumper to back bumper; except for those on the "exclusion list", listing the parts that are NOT covered by the contract. It is much easier for a consumer to see a short list of items that are not covered and know that everything else is. Consumable items, such as brake pads or windshield wipers, are usually not covered. Roadside assistance plans are typically offered as part of the warranty package, and even while the basic warranty is still in effect. Some even offer free lodging and meals if your vehicle breaks down on a trip.

Named Component Warranty Covers the major mechanical systems of the vehicle from the mechanical breakdown and mechanical failure. If the part is not listed, it's not covered by the contract.

These usually include the following: Engine , Front and rear suspension, Fuel delivery, Interior/Exterior components, Front and rear drive axles, Cooling system, Brakes (including ABS), Transfer unit (4 X 4's), Seals and Gaskets, Electrical system, Transmission, Air conditioning, Turbo charge/super chargers, Electronic systems, Steering system  

Does an extended auto warranty cover “parts and labor?”

Extended auto warranties often cover all covered auto components, applicable fluids, and labor charges including taxes. This coverage, of course, is less the stated deductible.

If my vehicle's manufacturer's warranty has expired, can I still obtain coverage?

Many consumers do not realize that even after the manufacturer's warranty has expired, their vehicle is still eligible for extended coverage. We can offer coverage on vehicles that are less than 10 years old and have less than 100,000 miles on the odometer. A vehicle out of its original warranty is more apt to have mechanical failure compared to a newer vehicle.

What if I decide to trade my vehicle in several years, do I get any refund?  

In the future, should you decide to trade your vehicle, you should receive a pro-rated refund on the unused time or mileage. This refund can be used to obtain coverage on your new acquired vehicle. This varies by plan.

What if I decide to sell my vehicle privately?

Car buyers today, especially Internet shoppers are shopping for a good value. They understand that they do not know the full history of a pre-owned vehicle. They do not know how the prior owner maintained the vehicle, and are very interested in protecting their newly acquired automobile. An extended service plan enhances the value of any automobile; therefore it is a great feature for anyone who is going to sell their vehicle. The extended warranty is transferable in most plans to the new owner of your vehicle. It will give the buyer peace of mind knowing that should something go wrong with the vehicle that they will be protected. Additionally, it makes the selling process easier, because with the cost of repairs increasing, the buyer of your vehicle will realize the value of the coverage.

Coverage

What exactly is covered? 

Know what's covered -- and what's not covered -- by the warranty you're considering. Does the contract cover breakdown as well as wear and tear? Under a "breakdown" warranty, coverage is extended only to parts that break. Such a policy can prove less inclusive than is desirable, since not all parts fail due to breakage. Some need to be replaced because they've worn down over a period of time; a "wear-and-tear" warranty extends coverage to worn-down parts in need of replacement. Additionally, some "entry level" contracts don't cover ABS brakes, so if your vehicle has this feature, you should consider upgrading to this level. And overheating -- regardless of its cause -- isn't covered in many warranties. Thus, if overheating occurred due to problems with an expensive part such as your radiator, you'd be stuck with a hefty repair bill. Before committing to a warranty, take the time to fully explore the ins and outs of its coverage implications. The distinctions between the various plans might seem slight, but they can prove quite important.

Is a cash layout required for repairs? 

Some warranties require that you pay the bill, then send the receipt in and wait for reimbursement; in many cases, months elapse before you get your money back. Ideally, you'll want a warranty that pays the dealership directly with a credit card.

*** NOTE:If you decide to purchase your extended warranty through a dealership - and the contract is backed by a third-party administrator, make sure the dealer forwards your payment and gives you written confirmation. Some consumers have discovered too late, that the dealer failed to forward their payment, leaving them with no coverage months after signing the contract.

Is "wear and tear" covered?    

It is important for the consumer to understand what is meant by "wear and tear". When a part or component has failed because it can no longer perform the function for which it was designed solely because of its condition. When the part has worn beyond the manufacturer's tolerances allowed for that particular vehicle at the mileage when the problem occurs, if it has received manufacturer's recommended maintenance. It is very important to understand the difference between "wear and tear" items, and parts that are considered normal maintenance that can wear out. Components that cannot perform the function for which they were designed for, regardless if they wear out or break are covered. Normal maintenance items that usually wear out are typically not covered under an extended warranty program. Some examples of parts that wear out that are not covered are brake pads and rotors, brake shoes and drums, and manual clutches.

Can I get an extended auto warranty on a salvaged car or one with a reconditioned title?

Unfortunately, almost no extended auto warranty company will offer coverage for vehicles with salvaged titles, grey market vehicles, certain high performance vehicles, commercial vehicles, fire/police/emergency vehicles and vehicles with twin turbo chargers. Also, for now, electric/gas hybrid vehicles are also almost never eligible for coverage.

Does the repair facility have to use new replacement parts, or can it use reconditioned, or even worse, used parts? What about the engine?

This is a policy of the repair facility, so you must ask in advance of the work being performed.

A limited dealership warranty will usually only be honored by the dealer's shop, where you have no ability to walk away. If you walk away, they win.

Most  extended auto warranties give you the ability to shop around and find the repair facility that meets your needs. You have to ask when getting the estimate, but if one tells you that they are going to replace your blown engine with a used one, go to another shop.

Making a claim

How does the claims process work?  

Many warranty companies work like this: If your vehicle breaks down or is in need of a repair, take it or have it towed to any licensed repair facility and present your service agreement to the Service Department. After they diagnose the problem with the vehicle, they will call the claims administrator toll-free and receive repair authorization for all your covered repairs less a deductible where applicable. All claims are usually paid directly to the repair facility of your choice with a corporate credit card, therefore, you do not have to pay for your repair and wait to get reimbursed. It is that simple.

How is the deductible applied? Per item, per repair visit, etc.? 

With your deductible most are applied per repair visit. This means that regardless of the number of items that need repair, you will only pay your deductible once per repair visit. You may also select a higher deductible option if you would like additional savings when you purchase your service agreement. Stay away from the per item deductible since it will always be less expensive.