How to Shop for an Extended Car Warranty

How to Shop for an Extended Car Warranty

9 Key Questions to Ask Before Purchasing an Extended Car Warranty

Once you have chosen the right car for you, choosing the Extended Vehicle Warranty Package is the next most important task a car buyer has to complete.  The first thing to note is that not all warranty contracts are created equal, and there are important questions you need to ask before signing up.  So here goes:

1.) Where are the Terms and Conditions?  The answer to most of your questions can be found with a careful study of the Terms and Conditions.  Always get a copy of the Terms and Conditions of the warranty contract before purchasing.  If this cannot be easily obtained there is a problem.

2.) Is there at least a 30-day money-back guarantee written into the contract?  All warranty contracts have a waiting period for making claims; it is only fair there should be a money-back guarantee for the same amount of time written in as well.

3.) How much coverage do I get?  Make sure you are aware of the level of coverage you are receiving.  Many dealers and salespeople have a tendency to oversell their warranty offerings, and so it is important to really examine what level of coverage they are offering; is it a comprehensive warranty, or merely powertrain coverage?  Knowing this is important to compare one offering to the next.  Again, not all warranties are written the same, and the lowest priced warranty is not always the best.

4.)  Where can I get my car fixed under warranty?  Contracts that restrict you to taking your vehicle to “Approved Mechanics” should be looked at very carefully.  It is in the consumer’s interest to be able to take their vehicle to a mechanic of the consumers choosing.

5.)  Can I take my vehicle to the dealership for repairs?

6.) What are the maximums?  There are two maximums to look out for.

a.) The first is the maximum allowable payout per claim.  Many contracts will have set amount as their maximum “Per claim”, for example, no single claim will exceed $1000 or $2500, or $5000 per claim.  The most generous per claim maximum you will find is, “the retail value of the named vehicle at the time of the claim”.

b.) The second maximum to look out for is the maximum liability of the contract for the full term of the warranty.  This should read “the value of the vehicle at the time of registration” of the warranty contract.

**Also some warranty contracts will cap warranty claims for individual repairs; for example, engine repairs will be capped at $1500, transmission repairs will be capped at $1000 etc.

It is important to know the limits of liability for two reasons, first, to know the value of what you are paying for, and second so you are not surprised when it comes time to making claim.

7.) How are deductibles applied to my repairs?  You might think it is very easy to live with a $100 deductible, however if your contract applies the $100 deductible to every item on the repair bill there could be very little coverage at all.  Deductibles should be applied “Per Claim” or “Per Visit”, not “Per Repair”, contract language can be vague so it is important to clarify this important point.

8.) When does the warranty begin and when does it end?  This may seem like a silly question, but make sure when you are offered a 5-year warranty, you know whether the 5 year begins at the registration of the warranty, or the expiry of your manufacturer’s warranty, or is it from the original in service date of the vehicle?  Also make sure you know how much if any warranty coverage still exists on the vehicle, and the warranty you are purchasing does not overlap with that coverage.

9.) What is the warranty company’s reputation?  This is where you will have to do some digging.  The internet is the place to go.  Check reliable sources like the Better Business Bureau for consumer complaints, and Dunn & Bradstreet for the company’s financial strength.  Also, how long has the warranty company been in business?