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No one can argue with the benefits of peace of mind. When something goes wrong with your car whether from heavy use or simply time, it can be comforting to know that a warranty stands between you and a huge service bill. But does an extended warranty really provide peace of mind and save you from hefty repair bills? The short answer is yes, and no.
To get the most from your extended warranty you must read the fine print and ask questions until you understand what you are getting, and what you can expect in the event of a claim. Some of these questions include:
1. Cost and timelines
How much is your extended warranty plan? What will it cover and for how long? Be sure that you know if there are mileage limits (such 50,000 or 100,000) so that you don’t take your car in at 110,000 miles only to learn it is no longer covered. The same applies with time limits. You don’t want to go in for service in the 13th month if your warranty expires in the sixth or twelfth month.
2. Coverage
What will your extended warranty cover? If there are limits you should be aware of these in advance so that you can adjust your plans accordingly. For example, some may opt against extended warranty plans that do not cover the vehicle against mechanical failure or moving parts such as ball joints.
3. Flexibility
What options are available to you in terms of service locations? What happens if you no longer need or want the warranty?
4. Claim expense
What happens if you need to use your warranty? Will you need to incur any out of pocket costs, and if so, how much? Some warranties allow for payment to be made to the vendor providing the service, which means you pay only your deductible. Others will reimburse you for allowable expenses; be sure to get some idea on the time within which you can expect to be reimbursed. In this instance it is important that you have a handle on your budget. Consider starting a repair fund to be used in the event that car service costs exceed your ready cash supply.
5. Deductible expense
How much will your deductible be, and what will be covered in that cost?
6. Restrictions
Under what conditions is the warranty invalidated. Many extended warranty plans carry a provision that voids the plan if your car is serviced by anyone other than an authorized provider.
7. Reliability
Who are you relying on to be there for you in the event that your car needs service? Choose carefully to be sure that your warranty is with a reputable business that is financially solvent. A warranty will serve no purpose if the provider is unable to pay your claims. Check with Standard & Poor’s and the Better Business Bureau to be sure that you are relying on an agency that is, in fact, reliable. Also, the provider should also be accessible. It can be frustrating to find yourself on the receiving end of voice mail and recorded messages when you need a live person who can help with your claim.
8. Labor
Are allowable costs for labor consistent with actual labor involved? For example, if the job typically takes two hours will your warranty cover you for two hours or for a lesser amount?
Extended warranties can be a wise investment when chosen carefully. Without adequate thought to your extended warranty plan you may find that the policy has so many holes that you have no coverage at all.