Auto Repair Insurance: Extended Warranties-Myths and Facts

How much insurance does one need? You have the big four: home, health, life, and car insurance. Then there’s a second category, which starts getting a little hazy with credit card insurance, purchase protection plans, fraud insurance and more. Extended warranties, also called extended service contracts, or extended service policies fall into the mist of this second category.

Extended warranties are supposed to pay (in full or in part) for specified repairs for a specific period of time after the expiration of the factory warranty. They can be a great value. They can also be a significant waste of money. It gets quite foggy in the details. What exactly is covered? How long? How much? Are there hidden charges?

There are numerous extended warranty companies and an even wider variety of warranty packages available: silver, gold, platinum, platinum-plus, and a host of other confidence-building words. What’s the best plan, and are extended service contracts worth the money?

Extended warranties, like life insurance policies, are a numbers game. They’re a gamble. You pay $2500-$4500 for a 2 year, 100,000-mile protection plan and hope that you get at least that back in warranty repairs. The provider on the other hand, hopes to pay out less than it insured.

There are three major types of plan providers: The manufacturer, the dealership/third party, and third party providers. Each one has its assets and liabilities (discussed ahead).

What exactly is covered in an extended service plan? As mentioned above, what’s covered depends on the package purchased. Some plans only cover the power train: the mechanical components of the engine, transmission, and rear-end. Others cover the power train plus some electrical components. Still others cover electrical, advanced electrical, and computer components. Some only cover what’s listed in the contract. This is called a “Stated” or “Named” contract. This means that if it’s not stated, it’s not covered. Some cover bumper-to-bumper, similar to a manufacturer warranty, except trim pieces, upholstery, exterior components, cosmetic items, and a number of other exclusions.

Never before has the adage, “The devil’s in the details,” been so applicable.

Manufacturer Extended Plans: Extended service plans from the manufacturer are the best in terms of coverage, convenience, and quality. Coverage is similar to the warranty while the vehicle was under its original factory warranty–with similar exclusions stated above. The billing is direct, meaning you don’t have to pay out-of-pocket, except for a deductible, if applicable. Quality is great too, as an extended warranty from the manufacturer will only use factory parts. They also have money, so there’s less risk of bankruptcy.

The down side of manufacturer extended service plans is that they are not cheap. These plans are generally the most expensive, require low mileage standards, and necessitate servicing your vehicle at a dealer for coverage.

Dealership/Third Party Plans: Extended warranties from a dealership are actually from a third party insurer. These providers are generally reputable, but not always. However, if there is an issue (such as the warranty provider filing chapter 11, which is quite frequent in the extended service contract business), the dealer may step in to cover any repairs that would have been covered under the defunct plan. Also, claims are easier: billing is direct because the dealership has a working relationship with the provider, and there is usually agreement on price.

Some dealers set up their own “internal extended warranty,” which is honored by the selling dealer. This is rare, and should not be confused with a manufacturer warranty.

Important: extended warranties are often passed off as “manufacturer” warranties. They’re not. This is a sales trick. Also be aware that there is a significant mark up, as the dealership is merely acting as the middle man. Lastly, extended warranty companies often go bankrupt without warning.

Third Party Plans: These plans are called third party plans because they are outside the responsibility of the manufacturer and the service center performing the repairs (unless there’s a working relationship with a repair shop as stated above).

There are hundreds of extended service contract companies. Some have good reputations, some don’t. Third party plans are frequently sold by used car dealers. You may also receive an official looking notification in the mail stating that your warranty is expiring, and directing you to call an 800 number ASAP. This is a marketing tactic by an independent warranty provider. Despite the “official” appearance of the postcard or envelope, it’s not from the manufacturer. Manufacturers do not send out reminders about warranty expiration.

Given the wide-variety of third party plans there are numerous red flags.

1) Claims: Extended warranty companies will be quick to tell you that filing claims is easy, and that the service center gets paid immediately via a credit card. Thus, there’s no out-of-pocket expense for you. However, the warranty company can’t dictate a service center’s policies. Some service centers will only accept payment from the repair customer. Thus the burden is on the repair customer to fill out the forms, contact their warranty company, and await reimbursement via check, which can take 2-8 weeks.

It is the service center’s responsibility to contact the extended warranty company to let them know what’s wrong with the vehicle and to check coverage. This process can take anywhere from 20 minutes to 20 days, sometimes more, depending on the degree of repairs and especially the amount. (See $1000 and Adjusters ahead)

Service centers and extended warranty companies frequently battle over the “fair” price of repairs. Many repair shops no longer negotiate, and just state the price, leaving the contract holder (i.e., the service customer) responsible for the difference.

2) Rentals: Rental coverage is a great benefit. However, there are fixed rates and time limits. In other words, the warranty company is not going to pay to have you drive a Mercedes-Benz, even if you drive a Benz. Rental allowances range from $25 to $35 per day. Also, rental coverage is based on the number of hours it takes to repair the vehicle, NOT the number of days your car has been at the shop.

3) $1000 and Adjusters: Repairs that approach $1000, or that require a significant amount of work, will be cause for the warranty company to call in an adjuster to confirm the diagnosis. This will delay the repairs by a minimum of 24-48 hours. It may cost you additional money when an adjuster is involved. You may be charged to have your vehicle pulled back into the shop for inspection, as well as for the time spent with the adjuster.

4) Tear-down Charges: In many cases, an extended warranty company will require that a particular component be taken apart for inspection to determine if the repair is indeed needed and covered. This puts the service customer in a very awkward position. The customer will have to authorize potentially hundreds of dollars of tear-down expense in the hopes that the repair is covered. If it’s not, the customer is out the hundreds in tear-down PLUS the actual repair. This does happen!

Common Myths About Extended Service Plans:

Extended warranties cover maintenance services and brake work.

No. Extended warranty plans do not cover maintenance or wearable items. Brake pads and rotors are wearable parts. Maintenance such as coolant, brake and transmission flushes, tune-ups, services, oil changes, bulbs, wipers, and more are not covered.

They told me it’s bumper-to-bumper, so it covers everything, right?

Wrong. Not even a factory warranty covers everything. When pitching the sale for the extended warranty, one is very often lead to believe that he or she will have nothing to worry about. This is just not true on so many levels. For example, if your bumper falls off it’s not covered.

I don’t have to pay anything, right?

Wrong. Despite the claims of 100% coverage, there are many factors involved. The labor rates, labor hours, diagnostic times, parts prices, and machine work are just a few items that often conflict with a service center’s policies. Some extended contracts only pay a maximum of $55 per hour, and only allow one half hour for diagnostic time. This is generally unacceptable to the service center, as labor rates have skyrocketed to over $100 per hour at many dealerships, and average $75 at local shops. Moreover, with the complexity of today’s vehicles, diagnostic time is at a premium. The customer pays the difference.

If I have an expensive problem, I can just purchase an extended service contract.

It’s unethical, but it’s an option many attempt. However, most service contracts have a minimum time requirement before the first claim can be filed: usually three months. Also, many contracts require that your vehicle be inspected by a service center to check for pre-existing conditions–just like life insurance.

My contract lasts up to 100,000 miles.

Only if the time limit doesn’t run out first. All extended warranty plans have a time limit. For example, a typical contract will state that the vehicle is covered for two years or 100,000 miles, which ever comes first. During the sales pitch, however, the emphasis will be on the 100,000 miles, not the time.

If my car breaks, it gets fixed like new.

Actually, depending on the contract, an extended warranty company can insist on installing remanufactured or even used parts.

Items commonly not covered by extended warranties:

  • Any component with a pre-existing condition
  • Any component related to a Technical Service Bulletin (TSB)
  • Many components that has been updated by the manufacturer
  • Extra components necessary “due to manufacturer updates” to complete the repair
  • Trim pieces: molding, cup holders, dashboard, console, body parts, glass
  • Many accessories: radios, DVD players, TVs
  • Many expensive electronics: climate control units, navigation assemblies

Extended service contract positives: Some service contracts are transferable, and may thus increase the resale value of a vehicle. Many come with trip interruption reimbursement, towing and 24-hour road side. Some plans can also be financed, or have E-Z Pay Plans. Others offer a money-back guarantee.

What should you do? You’ll get lots of advice about doing the research, comparing plans, and reading the fine print. This is all sound advice. But what about doing the math?

Let’s say a plan costs $2500 for 2 years or 100,000 miles, whichever comes first. To break even you’ll need a minimum of $1250 per year in covered repairs, excluding regular maintenance. Remember covered is the vital word here.

Another way to break it down is to anticipate having to pay $104.17 per month over the next two years in “covered” repairs. Do you want to take that bet?

What could happen? You could double your money or more in repair work. You could conceivably get a new engine and transmission (or used ones anyway). You could also easily spend $2500 for a service contract, and still have to pay another $2500 for repairs, which for a variety of reasons, were not covered under your plan. Now you’re out $5000.

Alternatively, you could keep the initial $2500. In many ways all an extended warranty does is prepay for repairs. You could stick the money in the bank and collect interest. Then you could withdraw the money for repairs as needed.

Another consideration that’s rarely discussed is the cause of the problems. Many car repairs problems are the result of wear and tear, neglected maintenance, physical damage, or acts of God–such as flood damage. None of this is covered. The gamble only covers failed components.

If the vehicle you’re driving does cost $2500 to $4500 in repairs due to outright failed components, is it a vehicle you even want to consider keeping? A vehicle that needs this kind of repair work due to mechanical, electrical, or computer failures may not be worth it. The $2500-$4500 would be better spent on an upgrade to a quality vehicle rather than insuring a lemon.

There’s no question that auto repair is expensive, and even quality cars break from time to time. But do they breakdown to the tune of $2500-$4500? That’s a hefty bet on a “possibility.”

Terence O’Hara from the Washington Post makes an excellent assessment about extended warranties in general. He writes:

…extended warranties play upon a basic human trait to avoid loss, even if it means sacrificing a possible future gain…the gain is all the other things of value that a consumer could buy with the money that was spent on a warranty

What’s the best plan? Money in your bank account!

How to Hire a Motorhome of Your Choice

Most of the motorhome hire companies in the UK focus on making motor home rental quite simple and straight forward!

People have various reasons to hire a motorhome.

• Those who are planning a business trip might need a motorhome to visit their clients’ offices, meetings, trade events, conferences as well as training classes.

• Those who are planning a holiday and they are in urgent need of a motorhome to get around viewing the points of interest available in the location they are traveling to.

Whatever the reasons to hire a motorhome, the very best rates are available when booking the motorhome upfront, and better prices may be available on the internet. The companies specialised in Motor home hire will publish special offers, special prices, promotions and any other incentives on their website. Even after booking online, it is best to call the motorhome rental company directly to make sure the rate is the best one available.

When making a decision to hire a motorhome for your touring requirements, there are many different sizes of available motorhomes, such as large, medium and small models. Some rental companies even offer full size motor homes. Motorhome hire companies often only carry a limited number of larger sized and specialised motorhomes, therefore the quicker the reservation is made, the better it will help the company to ensure the motorhome will be available during the rental period.

Sometimes it is good to hire a motorhome which is a luxury model because this enables the individual or family to enjoy the comforts of a luxury motorhome that they might not usually be able to drive. motorhome rental companies may possibly offer the option to upgrade the motorhome for a small fee.There may be other additional options available for use, such as satellite navigation, free maps, directions, and other services. Some motorhome rental companies will pick you up at the airport or hotel and take you to their depots to pick up the vehicle.

Everyone knows that motorhomes are associated with holidays. The motorhomes represent feelings of independent travel experience, adventure, fun and exciting activity of taking to the open road.Most of the motorhomes are easy to choose, easy to drive and easy to enjoy – they’re simple, safe and most of all fun to drive!If you’ve never made a motorhome booking before, or if you just want to check you’ve got all your information in place before making that phone call or go online, this article will definitely help you in booking the right motorhome.

Muffler and Exhaust System Repair and Maintenance

Loud exhaust noise can come from the front or rear of your vehicle – and most of us would not welcome it as it literally distracts us while driving! To be able to fix this problem as soon as possible, the first thing that must be done is to check out the cause of all those noises. It could be that the muffler or exhaust pipe is worn out, and needs to be replaced immediately. You may have a cracked or broken exhaust manifold – and that will as well require a replacement. A loud popping or backfiring noise when you step on the gas pedal is not something you want to ignore, as the engine will not run and function well, and you could risk a fire under the hood.

The heat shield under the passenger compartment could also be the problem. If it is loose, you may hear a noise that sounds like a lot of rocks rattling around in a tin can – not pleasant at all, right? This could be a simple fix, though, if bolts in the heat shield were too tightened, after letting the car cool off so a repair technician could slide underneath your vehicle to fix it, making sure the car is not running when he crawls under it to secure the bolts in the heat shield. If the heat shield has gotten bent, and is already touching the exhaust pipe, creating that noise, it can be bent back away from the exhaust pipe. This may not be your problem, though. You may have a broken exhaust hanger, which is basically a very sturdy heavy rubber band-type loop that supports the muffler. They do wear out, though, and can leave your muffler hanging! Which of the aforementioned problems causes your vehicle to produce unnecessary and distracting noise?Do you know what possible solutions may be done to fix them? You may fix them by yourself but make sure you have enough knowledge about such matters. Or else, you may be putting yourself in danger if not properly done. Still, the best thing to do is to look for a well-trusted car service expert. They can guide you along the way and can provide the best solution for a well-functioning car engine and so as for everyone’s safety and comfort.

With the help of modern technological advances, today’s exhaust system components last years longer compared in the past.Thanks to our up to date technology! Barring road damage, you can expect your original muffler, exhaust pipes, and catalytic converter to serve you better form 8up to 10 years. This does not mean we can ignore maintenance, though. On our part, taking good care of our vehicles is highly recommended to prevent possible engine problems. You should follow the recommendations and professional advice of your manufacturer and also the emission regulations of your state or local government.

Furthermore, you have to make sure you find a reputable auto care center that can guide you through this process.

Enhance Your Driving Experience With The Best Auto Accessories

Buying auto accessories is akin to going to an old-fashioned candy store and picking out your favorite treats.

When you walk into an auto accessories store, plan to spend plenty of time there as each aisle offers something new and different you may or may not have thought of buying for your car.

Today, most of spend more time traveling back and forth to work by car than any other form of transportation. In addition, taking family trips by car has become the norm, rather than the exception.

Thus, ensuring that your car has everything it needs in case of a roadside emergency is important. So too, having accessories for auto that enhance the driving experience adds icing to the cake.

Some of the auto accessories that are essential to any new car owner are: first aid kits, clubs, blanket, exterior and interior care kits, detailing kits, covers for the seats and steering wheel, extra wiper blades, organizers, sun shades, gauges, extra interior light bulbs, adapters, cell phone holders, and some of the newest auto accessory devices such as GPS systems and cameras.

A car is more than a new toy; it is the means by which you safely arrive to point B from point A. Maintaining the car on a regular basis can ensure that you and members of your family not only enjoy the time spent together but are comfortable as well.

There is one auto accessory which, quite frankly, should be part of the new car experience – a new spare tire, instead of a donut. One of the arguments one could make is that after spending thousands of dollars on a new car, you would think that the auto industry could spring for a new spare tire.

The problem is that there is a safety concern. Surely, you have been in situations where a flat tire occurred on a highway either to or from work, on a road or business trip. Let’s face it; the donut does not in any way suffice nor does it offer any relief from the stress associated with driving on this meager tire.

Thus, when shopping for auto accessories it may be necessary to buy a spare tire so that you can alleviate any worry that you or any family member will be able to arrive at their destination safely and without undue stress.