How are Extended Auto Warranty Claims Handled?
When your car needs to be repaired or serviced, you may be able to choose among several service shops or authorized repair centers. You may also be required to return the vehicle to the selling car dealer for service. That could be inconvenient if you bought the car from a dealership in another town. A first rate car warranty company will allow you to have your vehicle repaired at a shop of your choice.
Find out if your car will be covered if it breaks down while you're traveling. Some extended auto warranty companies and car dealers offer service only in specific geographical areas.
Find out if you need prior authorization from the car warranty provider for any repair work or towing services. Be sure to ask:
How long it takes to get authorization.
Whether you can get authorization outside of normal business hours.
Whether the company has a toll-free number for authorization. Test the toll-free number before you buy the contract to see if you can get through easily.
You may have to pay for covered repairs and then wait for the warranty company to reimburse you. If the extended auto warranty doesn't specify how long reimbursement usually takes, ask. Find out who settles claims in case you have a dispute with the service contract provider and need to use a dispute resolution program.
Are New, Reconditioned or Used Parts Authorized for Use in Covered Repairs?
If this concerns you, ask. Some consumers are disappointed when they find out reconditioned or used parts are being used as replacement parts under some car warranty contracts. Read the fine print carefully.
What Are Your Responsibilities?
Under the extended auto warranty contract you may have to follow all the manufacturer's recommendations for routine maintenance, such as oil and spark plug changes. Failure to do so could void the contract. To prove you have maintained the car properly, keep detailed records, including receipts.
Find out if the car warranty prohibits you from taking the car to an independent repair facility for routine maintenance, or from performing the work yourself. The warranty may specify that the selling dealer is the only authorized facility for servicing the car.
What is the Length of the Extended Auto Warranty Contract?
If the extended auto warranty lasts longer than you expect to own the car, find out if it can be transferred when you sell the car, whether there's a fee, or if a shorter contract is available.
Additional Extended Warranty Tips . . .
If you're told you must purchase an extended auto warranty to qualify for financing, contact the lender yourself to find out if this is true. In most cases this is an illegal ploy to get you to buy an extended warranty.
If you decide to buy an extended warranty through a car dealership - and the contract is backed by an administrator and/or a third party - make sure the car dealer forwards your payment to the warranty company and gives you written confirmation.
Some consumers have discovered too late that the car dealer failed to forward their payment, leaving them with no coverage months after they signed a warranty contract. Contact your local or state consumer protection office if you have reason to believe that your warranty wasn't put into effect as agreed.
In some states, extended warranty providers are subject to insurance regulations. Find out if this is true in your state. Insurance regulations generally require companies to:
Maintain an adequate financial reserve to pay claims.
Base their warranty fees on expected claims. Some car waranty providers have been known to make huge profits, because the cost of their contracts far exceeds the cost of repairs or services they provide.
Seek approval from the state insurance office for premiums or contract fees.