Before Getting an Extended Auto Warranty/Vehicle Service Contract - Better Take Your Car for a Checkup
 Sometimes called an "extended warranty", a service contract is a promise to perform (or pay for) certain repairs or services. Although technically not a “warranty” as defined by federal law, service contracts may be arranged at any time and always costs extra. Warranties, on the other hand, ONLY come with a new car and are included in the original price. Vehicle service contracts are popularly referred to as "extended auto warranties" or "extended warranties". Use of the term "extended warranty" or "warranty" on this site is intended to refer to vehicle service contracts and not manufacturer's warranties.
Extended auto warranties (aka vehicle service contracts) are intended to be used for future repairs. They are not meant to be used for problems that already affect the vehicle. Before enrolling in an extended warranty/vehicle service contract, it's a good idea to ensure that your car is mechanically sound.
Preexisting conditions are not covered by any car warranty/vehicle service contract provider, whether the customer knew about the problem or not. Without that exclusion, folks would be paying as little as $200 for a car warranty/ vehicle service contract to get a $3000 repair fixed. Then what happens to the auto warranty/ vehicle service contract provider if the customer fails to make the remainder of his or her payments? Because of the risk of future nonpayment, and to avoid abuse of the system, auto warranty/ vehicle service contract providers exclude preexisting conditions from coverage.
Every reputable car warranty/vehicle service contract company includes a validation period in their contracts, which are related to the exclusion of preexisting conditions. The validation period is a time and mileage interval before which claims cannot be submitted. The typical terms are 30 days and 1000 miles after enrollment, but that can vary. Claims that are submitted within that period, naturally, are considered preexisting conditions and are therefore not covered. Moreover, if a claim is submitted during the validation period and denied as preexisting, it cannot be resubmitted later and approved. Once a condition is revealed to be preexisting, it is always deemed so. In order to qualify for future coverage, the particular part must had undergone a documented repair.
Preexisting problems are identified by the amount of wear that appears on a part. If a part shows a great deal of wear, then the mechanic can tell about how much time has passed before the problem started. At least, it's easy to tell that the problem is not only a few days or weeks old. Preexisting conditions are obvious. To label a problem as such is not an arbitrary decision, but one founded on easily-recognized facts.
A customer who submits a $4000 transmission claim two days or 50 miles past the validation period is probably knowingly attempting to claim a preexisting condition, which is a form of insurance fraud. However, most claims for preexisting conditions come from customers who didn't know that their vehicle had problems when they got their extended warranty/vehicle service contract. However, preexisting conditions are excluded from coverage whether a customer was aware of the problem or not.
Before a customer enrolls in a car warranty/vehicle service contract, it's a good idea to have the vehicle inspected. That way, preexisting conditions can be indentified and repaired before they become bigger problems. Further, the inspection report provided by the mechanic can be used to show that the vehicle had no problems at the time of enrollment, should the issue of preexisting conditions arise.
Brokers of auto warranties such as AA Auto Protection consult with customers about the details of available plans, and can help customers find the right one, and to understand it's terms, so that it works as it should.
To get the most out of an extended warranty/vehicle service contract, make sure your vehicle is well-maintained, and it great working order at the time of enrollment. That way, when there's a breakdown, your auto warranty/vehicle service contract will give you the peace of mind you'll need.
10/26/2010 1:50:43 PM
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