People are always asking me if an extended warranty is worth buying, to which I respond, "Sure, providing you follow these tips."
Make sure you know who is offering the warranty. Is it the car manufacturer or a reputable after-market company? Make sure you know who it is that's underwriting your policy. After your first mechanical breakdown is not the time to find out who your underwriter is!
Know what is covered and for how long. This is always the most misinterpreted area of any warranty. If you are not clear on the definition of terms such as power-train, drive-train, or any electrical components covered, then get with someone who is and get educated. Also, remember that mileage and time conditions of the warranty may vary for different systems of your vehicle.
Know what your responsibilities are in the warranty agreement and follow them. Remember that a warranty is an agreement, not an entitlement. There are certain things you must do! For example, make sure you know what systems require service and follow the manufacturer's recommended mileage intervals. Keep complete records of your service work (this is especially important when it comes time for a claim).
Find out the amount of the deductible in the event you have to file a claim. Also, how is the payment made to the repair facility? Some warranty companies have the insured pay the repair facility, then they reimburse the insured. Other companies pay the repair facility directly.
Make sure you understand what is wearable (maintenance items), because your extended warranty will not cover such items. Some examples are brake shoes/pads, oil or air filters, tires, shock absorbers or struts, belts and hoses, just to mention a few.
The extended warranty industry has come a long way in the last twenty years. Many horror stories have been told about unsuspecting customers buying warranty plans that did absolutely nothing for them when it came time to file a claim. Not only did they have to pay for the repair, but they also were out the money they had paid for the "warranty". However, there have been many positive changes in the warranty industry. There are warranty companies today that offer extended coverage even on private sales! This was unheard of previously! Giants in the industry such as AIG (American International Group), with offices in over 130 countries and jurisdictions around the world, have stepped into this arena and filled a need that had been ignored.
In summary, if you plan to keep your vehicle for a long period of time (beyond 36 months), and you want that peace of mind of a warranty beyond the factory coverage, then follow these tips and enjoy the benefits of an extended warranty.
'Til next time ... keep rollin'
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