Buying an extended or used car warranty?

What should you know before making the decision to purchase an extended auto warranty for your vehicle? This is an important question to ask yourself if you are considering purchasing an extended vehicle protection plan. There are a lot of companies offering extended auto warranty plans, so do your research first.  This article will help you identify the key differences in coverage plans.

First: What is an extended car warranty? An extended car warranty is a vehicle protection plan that you purchase to cover repairs after the dealer warranty expires. Although the dealer can offer an extended car warranty when you buy the car (particularly if you are buying a used car) extended car warranties are typically purchased from a third-party. Be wary, though; not all extended car warranties are created equally, so it’s best to thoroughly investigate a warranty thoroughly before purchasing. Make sure that you look for the following before purchasing an extended car warranty:

The Company

Some third-party companies are scams that lie about the amount of coverage you get and often go bankrupt during the term of your warranty, both of which leave you without coverage. While this isn’t the case with all companies, it happens so much that the Federal Trade Commission (FTC) has placed a consumer alert on third-party vendors, meaning that it recommends you use extreme caution when buying an extended car warranty.  Before you commit to a purchase, investigate the company’s history with Better Business Bureau or Consumer Affairs; if the company has an inordinate amount of complaints, it’s best to seek out a different vendor.

What the Extended Car Warranty Covers

Most extended car warranties don’t cover you bumper-to-bumper, meaning that you are still responsible for the cost of repairing certain parts. This can often include large and expensive components, such as the transmission or even parts of the engine. In addition, certain issues such as overheating may not be covered; meaning that if parts break due to a faulty fan or radiator, you are responsible. Third-party extended car warranties usually don’t cover maintenance, so make sure to take this expense into account. Rather than focus on what the warranty covers, request a list of repairs, it doesn’t cover; if a company refuses to provide you with such a list, move on.

Where can you go?

Some extended car warranties only let you use certain repair shops or dealers, meaning that if you move, it can become difficult if not impossible to use a designated shop. Make sure that you can go to any repair shop before purchasing an extended car warranty.  A reputable company will allow you to chose where you bring your vehicle to get your repairs done, as long as the repair center is an ASE licensed repair center.

How Does the Deductible Work?

Extended car warranties operate under one of two deductible plans: per visit or per repair. A per visit warranty means that no matter how many repairs your car needs, you only pay the deductible once per trip to the repair shop. Per repair warranties, however, force you to pay for each component you need to be repaired; for example, if you visit the repair shop and need two components repaired, you need to pay the warranty twice. If you are having multiple issues, paying this deductible can get expensive.

It’s also important to find out how you pay for your repairs; some deductibles require that you pay for the whole repair and wait for reimbursement. This could involve paying thousands of dollars up front, and if you don’t have enough money to cover the repair initially you can’t use your warranty. In addition, it can take a lot of time to get reimbursed-meaning that you don’t have access to the money you spent on the repair.

How is the Repair Bill Paid?

Some companies that offer extended auto warranties only offer a reimbursement policy, when your vehicle has a failure and needs to be repaired, they will only offer you a reimbursement for what their Claims department deems “approved”.  When a company operates this way, you have no way of knowing how much money you will receive after the repairs are done and you have already paid for the repairs, or when they send their reimbursement check.  This could be one of the most important details to ask when shopping for your extended auto warranty plan.

Protect My Car does not operate like this, when your vehicle fails, our roadside assistance department will have your vehicle towed to the repair center of your choice.  Just inform the Service Manager that you have coverage with our company, ask them to contact our claims department before any repairs are authorized.   Once the work order has been faxed over to our claims department, it will be reviewed by one of our experienced claims advisers.  Our Claims Adviser will call you to explain the problems with your vehicle, what repairs are covered by the level of coverage you purchased and what repairs are not.

Once that has been determined, the Claims Adviser will call the repair center, approve the repairs that your protection plan covered, and when the repairs are done, we will make the payment for the work over the telephone with a corporate credit card.  Your only responsibility will be your deductible, our standard deductible is $100 per occurrence, regardless of the number of repairs being performed. When you call Protect My Car for your no-obligation quote for extended warranty coverage on your vehicle, don’t forget to ask what the cost is for the $0 deductible.