Extended Auto Warranty Fine Print: What to Look Out For
Published: June 23rd, 2023
When factory warranties or manufacturer's warranties are about to expire, it's time to look into an extended auto warranty. If you're considering purchasing an extended auto warranty, you’re going to want to read this. While car warranty contracts can provide peace of mind and protect you from unexpected costs and expensive repairs, they also come with a lot of fine print. As a savvy consumer, you need to understand the terms and conditions of the warranty and make sure it's a good fit for your vehicle and budget.
In this article, we'll dive into the world of extended car warranties and uncover what you need to know about the fine print. From coverage limits and deductibles to exclusions and cancellation policies, we'll break down the most important aspects of these contracts so you can make an informed decision. So whether you're a first-time car owner or a seasoned pro, buckle up and get ready to learn about extended auto warranties.
What Is Covered by an Extended Car Warranty & What Is Not?
Depending on the plan you choose, it can cover a range of repairs and services, including mechanical and electrical repairs, part replacements, and labor costs. Some plans also offer additional perks, such as roadside assistance, towing services, and rental car reimbursement.
While an extended auto warranty can provide valuable coverage for your vehicle, it's important to understand what is not covered. Most plans have specific exclusions and limitations, so you need to read the fine print carefully. Some common exclusions include pre-existing conditions, wear and tear items (e.g., brake pads), accidents and misuse, routine maintenance (e.g., oil changes and tire rotations), or aftermarket modifications.
Understanding the Extended Auto Warranty Fine Print
When it comes to extended warranties, the devil is in the details. These contracts can be complex and full of fine print, so it's important to read them carefully and understand what you're getting into. Some of the key terms and conditions you should be aware of include:
Coverage limits are the maximum amount of money an auto warranty will pay for car repairs or replacement parts. Coverage limits can vary depending on the type of warranty, the make and model of the car, and the provider. Keep in mind that coverage limits can be different for new and used cars. New cars typically have higher coverage limits than used cars.
Coverage limits can also be different for different parts of the car. For example, the coverage limit for the engine may be higher than the coverage limit for the tires. Lastly, coverage limits can be different for different types of coverage. For example, the coverage limit for comprehensive coverage may be higher than the coverage limit for collision coverage.
A deductible is an amount of money that you have to pay out of pocket at the repair shop before your extended warranty company will cover the rest of the cost of repairs. So, for example, if you have a 500 dollar deductible on your auto warranty and your car breaks down and needs 1,000 dollars in repairs, you will pay 500 dollars out of pocket, and the warranty provider will pay the remaining 500 dollars.
The higher your deductible, the lower your monthly premium will be. However, you will have to pay more out of pocket if your car needs repairs. It is important to weigh the pros and cons of different deductibles when choosing an auto warranty. Make sure you also understand the deductible and how it applies to each repair.
Deductibles can vary depending on the type of warranty, the make and model of the car, and the provider. Keep in mind that, like the coverage limit, deductibles can be different for new and used cars. New cars typically have higher deductibles than used cars. Deductibles can also be different for different parts of the car. For example, the deductible for the engine may be higher than the deductible for the tires. Deductibles are different for different types of coverage as well. For example, the deductible for comprehensive coverage may be higher than the deductible for collision coverage.
The deductible can affect the total cost of the warranty, so make sure you understand how it works and how it affects the pricing.
As we mentioned earlier, most plans have specific exclusions for certain repairs and services. Make sure you understand what is not covered by your plan. They are typically listed in the fine print of the car warranty contract. So read it very carefully!
If you decide to cancel your extended auto warranty, there may be penalties or fees involved. Make sure you understand the cancellation policy before you sign up. Here are some things to look for in the cancellation policy:
- How much notice do you need to give? Some contracts require you to give a certain amount of notice before you can cancel. For example, you may need to give 30 days' notice
- What fees may you be charged? Some contracts may charge a fee if you cancel early. The fee may be a percentage of the total cost of the contract, or it may be a flat fee
- What happens if you don't give enough notice? If you don't give enough notice, you may be charged a late fee. In some cases, you may not be able to cancel the contract at all
If you sell your vehicle before your vehicle warranty expires, you may be able to transfer the warranty to the new owner. Make sure you understand the transferability policy and any fees involved.
Most auto warranties are transferable, but there are some exceptions. For example, some warranties may not be transferable if the car has been in an accident or if it has been modified. If you are considering buying a used car with an existing warranty, it is important to check the terms of the warranty to see if it is transferable. If the warranty is transferable, you will need to contact the warranty provider to initiate the transfer process.
The process will vary depending on the warranty provider, but you will typically need to provide the warranty provider with the VIN of the car, the name of the new owner, and the new owner's contact information.
Filing a claim
The auto warranty fine print can tell you a lot about filing a claim. Here are some of the things you can expect to find:
- The deadline for filing a claim: Most warranties have a deadline for filing a claim. If you file your claim after the deadline, it may be denied
- The documentation you need to provide: The warranty provider will need certain documentation to process your claim. This may include your warranty contract, repair estimates, and receipts for any parts or labor that have already been paid for
- The process for filing a claim: The warranty provider will have a specific process for filing a claim. This may involve filling out a form, providing documentation, and paying a fee
- The criteria for approval: The warranty provider will have specific criteria for approving claims. This may include the age of the car, the mileage on the car, and the nature of the problem
By reading the car warranty fine print carefully, you can make sure that you understand the process for filing a claim and the criteria for approval. This will help you increase your chances of having your claim approved. Here are some additional things to keep in mind when filing a claim:
- Be organized: Gather all the necessary documentation and keep it in a safe place
- Be patient: The claims process can take some time, so try to bear with it
- Be persistent: If your claim is denied, don't give up. Contact your warranty provider and ask them to reconsider
By following these tips, you can increase your chances of having your claim approved, and by understanding the fine print of your extended auto warranty, you can avoid any surprises and make sure you're getting the coverage you need.
How to Compare Extended Auto Warranty Options
With so many extended auto warranty options available, it can be overwhelming to choose the right one for your vehicle and budget, especially for first-time car owners. Here are some tips for comparing your options:
Don't settle for the first extended auto warranty you come across. Shop around and compare multiple options to find the one that best fits your needs. Get quotes from several providers to compare prices and coverage options. To get more information, you can also use a comparison website, such as ours. It can help you compare extended auto warranty options from different providers.
A good idea would also be to ask your friends and family for recommendations. If you know anyone who has purchased an extended auto warranty, ask them for their recommendations. Lastly, read the reviews. Read online reviews of different extended auto warranty providers to get an idea of their reputation and customer service. Their BBB rating, the rating given to them by the Better Business Bureau, is a good indicator.
Read the fine print
We keep repeating this point because we can’t stress it enough; it's extremely important to read the fine print and understand the terms and conditions of each plan.
Check the coverage
Make sure the plan you choose covers the repairs and services that are most likely to occur on your vehicle.
For example, if you have a 2023 Toyota Camry with 10,000 miles on it, some of the most likely repairs and services that you may need include:
- Engine repairs
- Transmission repairs
- Suspension repairs
- Brake repairs
- Tire repairs
- Powertrain repairs
- Electronics repairs
When you are comparing extended auto warranty plans, make sure to look for plans that cover these repair costs and services. You may also want to consider plans that offer roadside assistance, as this can be helpful if you ever experience a breakdown. Here are some of the most common types of auto warranty coverage plans:
- Bumper-to-bumper coverage: This type of coverage covers all parts of your vehicle, except for those that are considered to be wear and tear items
- Powertrain coverage: This type of coverage covers the engine, transmission, and other major components of your vehicle
- Comprehensive coverage: This type of coverage covers damage to your vehicle caused by events such as theft, vandalism, and natural disasters
- Collision coverage: This type of coverage covers damage to your vehicle caused by accidents
Compare the deductibles
The deductible can vary between plans, so make sure you compare them to find the one that fits your budget. Keep in mind that deductibles for extended auto warranties can range from $0 to $500 or more.
There are two main types of deductibles for extended auto warranties: flat deductibles and percentage deductibles. Flat deductibles are a set amount that you must pay out of pocket before the warranty covers any repairs. Percentage deductibles are a percentage of the repair cost that you must pay out of pocket before the warranty will cover any repairs. So the higher the deductible, the lower the warranty cost. However, you will have to pay more out of pocket if you have a claim.
It is important to choose a deductible that fits your budget and your risk tolerance. If you are concerned about having to pay a lot of money out of pocket if you have a claim, you may want to choose a higher deductible. However, if you are on a tight budget, you may want to choose a lower deductible.
What is the duration of the warranty? Make sure you know how long the plan lasts. Some warranties are only for a year, while others may be for five years or more. Extended auto warranties usually expire after certain mileage as well. The exact mileage limit will vary depending on the warranty provider and the type of coverage. For example, some warranties may expire after 100,000 miles, while others may expire after 150,000 miles. If you exceed the mileage limit, you may not be covered for repairs or replacements under the warranty.
Look for additional perks
Some plans offer extra perks such as roadside assistance, trip interruption benefits, or rental car reimbursement. Consider these extra benefits when comparing your options.
There are also a number of extended auto warranty companies that offer discounts on warranties or offer special programs to veterans and households with multiple cars. For example, some companies offer free roadside assistance to veterans, and some companies offer discounts on rental cars if your car is in the shop for repairs.
By taking the time to compare your options and understand the fine print, you can choose an extended auto warranty that gives you the protection and peace of mind you need.
A Few Tips Before Purchasing an Extended Auto Warranty
If you do decide to purchase an extended auto warranty, here are some tips:
- Negotiate the price: Don't be afraid to negotiate the price of the warranty. You may be able to get a better deal by bargaining with the provider
- Look for discounts: Some providers offer discounts for things like paying the full amount up front or bundling the warranty with other services
- Read the contract carefully: Make sure you read the contract carefully and understand the terms and conditions before you sign up, again, especially the fine print
- Ask questions: If you don't understand something, ask the person who is selling you the contract to explain it to you
- Get it in writing: Once you have agreed to the terms of the contract, get it in writing. This will help you if there is ever a dispute, and it is the best way to rest assured
With the help of these tips, you can get the best deal possible.
Why Do I Keep Getting Mail About My Car Warranty?
Either your warranty is about to expire or the company is trying to sell you an extended warranty. These mailings are often sent out in bulk. If you are unsure whether a particular mailing is legitimate or a scam, read online reviews or contact your car manufacturer or dealership to inquire.
Conclusion & Final Thoughts
An extended auto warranty can provide valuable coverage and peace of mind for vehicle owners. However, it's important to understand the fine print and make sure the plan you choose fits your needs and budget and that you're happy with your extended warranty providers. By reading the contract carefully, comparing your options, and negotiating the cost, you can choose the right extended auto warranty for your vehicle.
So if you're in the market for an extended auto warranty, remember to do your research and choose wisely. While there are many car warranty companies out there, some of the most popular are Carchex, Endurance, and Carshield. For a more comprehensive list, check out our page, best & worst auto warranty companies.