Vehicle service or repair agreements – or what's commonly referred to as extended warranties – serve as insurance above and beyond the original manufacturer's limited warranty on a car.
During good economic times the very nature of these plans, manufacturer-backed or sold through an aftermarket, seemed to stymie trust. Packaged as a protective investment for the family, the only ones who saw huge benefits were the dealership's sales force from commissions.
But if you're one of the millions of Americans buying used or holding onto your car longer, owning an extended service plan has the potential more than ever to save your vehicle – and budget – in the long run. As you reexamine your coverage options, what traits should you expect to find in a trustworthy extended auto agreement?
Stand-up kind of a company
A good trademark of a reputable company is one backed up by reputable underwriters. A quick Internet search can pull up information if the organization has an excessive number of unresolved complaints with A.M. Best or Standard & Poor's.
Plan coverage details are understandable
How long does the plan last, how many miles it is good for, the cancellation policies – a few pieces of information on the repair agreement that are communicated clearly to you, the buyer. Cars are built better today than they were in the past but have more complex technology to care for. Figure out what's covered and what isn't, paying close attention to any Wear-and-Tear, Bumper-to-Bumper, or Mechanical Breakdown language. Also, most aftermarket companies can customize the amount and type of coverage your vehicle needs and base the plan on the number of miles you drive.
Easily accessible by phone
Any vehicle service agreement worth its weight in phone calls fields its concerns through “800” numbers and a helpful customer service department. Responses to all product questions and requests should be professional, accurate and immediate.
Warranty is transferable if you sell your auto
Some contracts end when ownership changes – and yes, even that great, extended contract the dealership advised you into could have this flaw. An easily transferable agreement is simply another attractive attribute when buying or selling a car, so find one.
Cheap is as cheap does
You might pay less for an aftermarket service plan, but in turn only get as much in coverage when comparing a more comprehensive agreement better known for fixing a larger pool of car problems. This doesn't mean any type of policy isn't up for savvy negotiations – don't believe there is a one-price-fits-all when it comes to extended agreements, but a deal too good to be true usually means too cheap.