Being Out of Warranty Could Mean Being Out of Luck
 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.
Consumers who have a major repair just after the expiration of their factory car warranty may think that the manufacturer will “help them out” by paying for the repair. That may have happened in the past, but those days are over.
Alison Belli always drove the same make vehicle. She did not believe that customer loyalty should be a thing of the past. “I’ve gotten the same car, from the same dealer, in the same town, since my dad got me my first car when I was 16,” said Belli, now 35. “I've always had a good experience, except till my transmission crashed,” she lamented.
Belli’s vehicle came with a bumper-to-bumper auto warranty for 5 years and 60,000 miles. At 61,149 miles, her ECM, or central computer, failed. The repair cost, $1355. Belli hoped that, since her factory car warranty just expired, that the manufacture would be flexible and fix her car under warranty. “I figured that I spent $25,000 on this car, and bought 5 cars from them, so the least they could do was fix my car under the warranty. I mean, if my computer failed a thousand miles earlier, it wouldn’t have been a problem.”
Belli’s dealer called his factory representative for auto warranty claims. The answer: Sorry, she’s out of warranty. According to Belli, she was forced to use a credit card to pay her repair costs, and because of the high interest, is burdened by the payments. “I could have used the money in interest I’m paying to make payments on an extended warranty.”
Consumers who enroll in extended warranties for their automobiles just prior to the expiration of their factory plans, can ensure that Belli’s situation will not become theirs. Belli’s conclusion about her troubles was simple, “I thought they would help me. I guess I was wrong.”
Top Ten Hints to Getting a Quality Extended Car Warranty:
1) For vehicles under 5 years old, the car warranty should include wear and tear coverage.
2) The plan should pay for parts, labor, and taxes.
3) The plan should be backed by an A.M. Best-rated insurance company.
4) Claims should be paid directly over the phone by credit card by the administrator.
5) There should be a validation period of at least 30 days and 1000 miles after enrollment.
6) The plan should be sold through a company that is at least five years old.
7) The auto warranty agent or broker should have plans available for review prior to enrollment
8) The agent or broker should be a member of the Vehicle Protection Association, a professional regulatory organization of car warranty administrators and sellers.
9) The agent or broker should offer a 30-day money back guarantee as part of enrollment.
10) Sales experience should be no-pressure, no hype.
7/11/2010 12:35:44 PM
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