Similar to automotive insurance which provides vehicle coverage and protection in the event of an accident, an extended warranty can cover your assets when it comes to mechanical breakdowns. One of the great uncertainties with a vehicle that is no longer covered by a manufacturer's warranty is “How much will it cost to fix this and get it back on the road quickly and safely?”. Shielding you from potentially large repair bills is the job of a good extended warranty, but how to tell the good companies from the outright scammers is a difficult thing. Read on.
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There are two types of extended warranties - one provided by the vehicle manufacturer and one that is third party or aftermarket. The one provided by the manufacturer is usually known as Certified Pre-Owned and is backed by the manufacturer and completed at a branded new-vehicle dealership (of the same manufacturer). Third party is exactly that, one provided by a company that is not the manufacturer and where repairs are completed at the repair center of your choosing. Third party warranties can also be more tailored to your needs.
There are two opposing thoughts in approaching how to cover mechanical breakdown coverage on your vehicle.
The inclusionary policy lists all of the components that are specifically covered by the policy. Keep in mind that the modern vehicle today is composed of approximately 30,000 parts, not every car uses the same parts or are built the same and different companies will even call the same part a different name. Case in point: A common failure item is a PCV valve - short Positive Crankcase Ventilation. That same or very similar component can also be called a Crankcase Vent Valve or even Air Oil Separator. At times, some functions are combined into one component and even if only one of the functions fail, the entire part is no longer usable and must be replaced. Because all of the components of an inclusionary policy must be specifically listed, it will be lengthy and may be complex.
An exclusionary policy lists the components that are NOT covered by a policy and will likely appear to be simple in comparison. So long as whatever component that failed or does not function as intended is not on the exclusionary policy list, it is a covered component.
“We’ve been trying to reach you about your car's extended warranty.” If there is one robocall that everyone has received, it’s this one and is probably the reason why aliens will not communicate with us since this was the first message they’ve received from Earth. Do your research to find the most comprehensive for the greatest value from a reputable company. Every single aspect of the repair process and invoice can be called into question and categorically denied by a bad warranty company. To help you find a good one and avoid scams, we’ve prepared a full guide on how to find a reputable car warranty company.
You’ve got a valid and in-force warranty for your vehicle and you have a problem that you need solved. What to do first? Make a call to your preferred repair facility, whether it be the dealer or local independent shop and ask if they accept your warranty provider (many will accept most third party warranties while only a new car dealership can process the manufacturer's extended warranty). Once it has been established that they do, take the vehicle in and have it evaluated or diagnosed. Many times, you will have to provide the authorization for the diagnosis and associated charges and you may or may not be reimbursed for those charges. From there, the repair center service advisor will call the warranty company and start a claim on your behalf. The warranty company will ask many questions (some very technical) that will be best answered by the service advisor. Negotiations will take place concerning diagnostic charges, what repairs and parts are covered, shop labor rate, the amount of billable labor time, the part selection as well as pricing, warranty on the work provided, tow bills, car rental bills, shop supply charges and taxes.
Once all of those details are hashed out over an excruciatingly long and arduous phone call, the authorization number and total payable amount are provided (minus the deductible) and the work can begin. If there are supplemental repairs that need to be made once the work is underway, another impossibly long phone call will need to be made to try and gain authorization from the warranty company to cover those repairs. Many times, only the problems and concerns as noted by the customer will be covered - problems uncovered by the repair facility but not an original concern of the customer are not covered. When everything is done and quality control has been completed by the shop, a FAX is made (yes, they’re still in use today) to submit the customer signed, finalized invoice with all labor operations and part numbers to the warranty company such that a credit card can be FAXed back for payment - hopefully the same day.
With such a process, there are many areas where a skillful and experienced negotiator will get more covered on your vehicle such that you come out of pocket less.
There are many different providers of an aftermarket extended warranty (for mechanical breakdowns). Popular warranty providers include MaxCare (only if you purchased your vehicle through CarMax), Endurance, CARCHEX, autopom! and Ally. There are many more, but you will be best served (and less frustrated) if you were to start out with these - check out our curated list for even more providers.
