Buying a new car is a big investment.  Many people consider extended warranties to protect themselves from large repair bills.  Here are some FAQs about the warranty buying process.

Is a vehicle service contract necessary? What are the costs of typical repairs?

More than one-third of all vehicles experience a failure in a given year. The average service contract holder will make 4-5 claims over the life of their agreement. Should your vehicle fail after the factory warranty expires, you have nothing to protect you from repair costs that can be in the thousands of dollars. More importantly, owners will frequently put off needed repairs until they can afford the cost of the repair. This delay often results in additional damage to the vehicle, and can create unsafe driving conditions. The risk of component failure and associated repair costs increases with your vehicle's age and mileage.

Today's vehicles are extremely complex and contain many electronics, high tech sensors and computers that frequently need to be replaced due to failure. While engines and transmissions are more reliable than ever (that's not to say we don't pay for many of those repairs), it's these other parts that frequently fail. As vehicles get more and more "high tech", associated repair costs are forecast to rise dramatically.

You can only buy an extended warranty from the dealer who sold you the car.

Car dealers are middlemen who make their highest commissions on the financing and extended warranties they sell. They are going to want you to purchase your warranty from them when you buy your car, so it can be included with your financing. Finance charges can increase the overall warranty cost by hundreds, or even thousands of dollars. You should try to buy your warranty direct from the source, if you can.

If I buy the extended warranty before the manufacturer's warranty expires, I will have double coverage on my vehicle.

Extended warranties are NOT double coverage; they simply extend the term of the warranty the manufacturer provided on the vehicle. Once the manufacturer's warranty expires, an extended warranty takes over to protect you from unexpected, costly repairs. It's important to buy it early, especially before your original factory warranty expires. This is when it will be the least expensive. Similar to purchasing life insurance, the longer you wait, the more it will cost.

A "mechanical breakdown" warranty offers the same coverage as a "wear and tear" warranty.

If "wear and tear" is not covered in the contract, then you are probably being offered a "mechanical breakdown" warranty. There are many components in your vehicle such as piston rings and CV joints, that usually wear out instead of breaking, in which case, they would not be covered under a "mechanical breakdown" warranty. A "mechanical breakdown" warranty is less expensive and less coverage. The only way to tell what kind of warranty you are buying is to read the definitions section of the contract.

Warranty Contract Watch List 

1. Preview the contract - if a company will not let you view the actual contract before you buy, run!
2. If you see the term, "gradual reduction in operating performance" is not covered - you are not buying full coverage and will find many common repairs are not covered.
3. Whose coverage are you really buying? - Find out who pays the claims. Research that company as well as the seller of the coverage. Look up their Better Business Bureau report, which provides the best barometer of how a company takes care of its customers, at http://search.bbb.org/search.html
4. Are you really buying full coverage (commonly called bumper-to-bumper)? If you are, the contract will state that ALL parts of the vehicle are covered except those items listed in the exclusions section. Read the exclusions carefully. If the contract provides a list of the parts covered, it is NOT full coverage.
5. What are your responsibilities under the contract? Check the requirements for maintenance. many Internet only companies will require you follow the severe recommendations of your manufacturer regardless of your driving habits. This can double your maintenance costs and cause claims to be denied

How will a Technical Service Bulletin effect my coverage?

A Technical Service Bulletin (TSB) or Factory Service Bulletin is a notification by the manufacturer that a condition may exist on your vehicle. Sometimes there is a problem requiring immediate attention; often they are issued to facilitate a quicker diagnosis or repair procedures from your repair facility. It is common for a vehicle to have dozens of TSBs issued. Most companies will deny any claim related to a TSB. This is a huge coverage loophole. 

 

Click the banner above or this link to learn more about the Warranty Direct services.  Below are some advantages of using the Warranty Direct services taken from their website and from customer evaluations.

Another Warranty Direct Difference...

A Technical Service Bulletin will not effect your Warranty Direct coverage unless the manufacturer has announced its responsibility to repair it. How many TSBs have been issued for your vehicle? What is your risk of repairs?

Warranty Direct is the company you can trust. Their coverages are the same ones sold by over 2,200 car dealers, banks and credit unions. Warranty Direct is the consumer division of Interstate National Dealer Services, the 5th largest independent automobile warranty provider in the US. They are a 25 year old company with the experience of nearly 2 million contracts sold. 

The Warranty Direct Story

Reliability
Dun and Bradstreet listed
A Forbes Magazine Top 200 Company -  three times.
Member in excellent standing of Better Business Bureau
Over 18,000 dealers and repair facilities do business with Warranty Direct.
Over 2,200 car dealers, banks and credit unions choose to sell our coverage.
The only company online licensed and approved to do business in all 50 states.

Experience
25 years of experience.
Nearly 2 million contracts sold.
Over $400 million in claims paid, $40 million in 2004.
Over 7,000 claims handled every month.
Over $160 million in assets, mostly in insured claims reserve accounts.

Customer Service
ZERO Better Business Bureau complaints in the past 12 months.
Over 80 independently verified customer testimonials at WebAssured.com.
Over 50 automotive professionals to handle your claims.
Claims authorized in an average of 6 minutes.

Coverage
Most comprehensive coverages with the fewest exclusions.
Available Emissions System coverage.
Wear and tear failures covered on ALL plans.
A Technical Service Bulletin will NOT cause your claim to be denied

We welcome Warrantydirect.com as one of our new sponsors.  Click the banner above or this link to learn more about the Warranty Direct services.