What is an extended warranty or service plan?

An extended warranty is an agreement between the automobile owner and warranty company, obligating the warranty company to pay for repairs covered by the contract for a specific period of time and/or mileage.

With an extended auto warranty you are protecting yourself from the unexpected cost of mechanical failure or unforeseen repairs.
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 or have it explained by a business manager. The types of warranty coverage offered differ from provider to provider.

What does an extended warranty or service plan cover?

Always know what parts and labor are covered, and what's not covered, by the extended service plan you're considering. Does the guidelines cover breakdown as well as wear and tear? Under a "breakdown" warranty, coverage is extended only to parts that break. Such an extended auto warranty can prove less inclusive than is desirable, since not all parts fail due to breaking. Sometime they need to be replaced because of normal wear-and-tear.

Why do I need an extended service plan?

Since every day mechanical repairs can cost  thousands and these costs are rising daily; protecting your automotive investment should not be taken lightly.

Whether you own a new or older make/model, an extended service plan 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 service plan today will allow you to avoid paying higher rates later due to price increases and required surcharges due to the multitude of issues that develop as the vehicles flaws become public knowledge. You'll be able to immediately take advantage of your plan's benefits: towing, lost key/lockout, and car rental discounts.

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

As your automobile squires 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. You are only buying total mileage coverage, not addition of mileage to your current total.

Are there deductibles?

Always investigate a policy's deductible amounts before choosing a plan. 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 finances.

There are still $0 deductible policies. You will have to pay extra for this type of extended auto warranty, but if your circumstances become such that you have to take your car in frequently, you'll find that this policy of this type more than pays for itself.

What type of expended service plan can I will I be able to purchase?

Powertrain Warranty: Covers the engine, transmission, and other parts of the Drivetrain only, which is defined as the lubricated moving parts of the vehicle through which oil flows.

Bumper-to-Bumper Warranty: Typically mirrors factory coverage for all of the mechanical and electrical systems of the vehicle, from front bumper to back bumper. It is much easier for a consumer to see a short list of items that are not covered and know that everything else is.

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

Most vehicles are eligible for extended coverage. You can typically obtain coverage on vehicles that have less than 100,000 miles on the odometer. A vehicle out of its original warranty is more apt to have mechanical problems compared to a newer vehicle.

How does the claims process work?

The top 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 mechanic or repair facility and present your service agreement to the Service Department. After they assess the problem with the vehicle, they will call the claims administrator to receive repair authorization for all your covered repairs less a deductible where applicable.

Warranty claims are 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.