Extended Warranties – We Know What We’re Doing, So You Don’t Have To

Outside of that new/gently used car smell, buying a car sucks. The hidden costs, the bad ties, the worse coffee. Not to mention the come-ons for extended warranty coverage. These days there are literally thousands of options on that front from third party providers to manufacturer backed plans – what to do? Where to compare?

First, take a deep breath.

Second, decide which level of coverage you want:

Named Coverage covers, logically, only those parts which are listed in your contract. If you overload that flux capicitor and it ain’t on the piece of paper, sorry Doc but you and Marty are gonna have to stay in 1955. Happily for the continuity of this paragraph, it’s parts just like said Flux Capacitor that tend to not be included – expensive to impossible to repair and essential to the vehicle’s operation.

Exclusion Coverage on the other hand, covers it unless it is specifically named as excluded in the contract. Since cars have thousands of parts, exclusion usually tells you more on a single piece of paper than named does.

So, you’ve read the options carefully, discovering what is covered and what is not. Again, now you’ve read the contracts CAREFULLY, finding out what is covered and what isn’t. What to do now?

Do NOT sign anything until you’ve made like Santa Claus – checked the contract once and checked the contract twice. Then, don’t sign anything.

Ensure the warranty covers breakdown as well as wear & tear. Let me ask you a question, what is breakdown? Now, what is wear & tear? Your contract will tell you. Read it closely and look for an added clause like “or wear exceeding manufacturer’s tolerances”, THIS is a wear and tear warranty. If you shop around, you can get the added protection of W&T coverage at the same price as simple BD.

Purchase a policy backed directly by AM Best rated “A” or better insurance company. Avoid warranties backed by Risk Rentention Groups (RRG) and run away screaming from contracts that read “re-insured by”. This is important – even if the re-insurer you buy from is highly rated by Best, they may not be liable for covering all the financial obligations of the RRG should it go tits up.

Leave a Reply

Your email address will not be published. Required fields are marked *