1) Read the Contract Carefully Before Buying
Reputable companies make it a point to show you the contract before you buy, make sure you read carefully and thoroughly and be sure to ask clarifying questions. If the company does not allow this, that is a warning flag and you should walk away and seek out another company.
2) Know How to Pay Your Claims
Many major warranty companies work in a similar manner as insurance agencies, they pay directly to repair shops when work on your car is being done. Other companies will have you pay for the repair first before reimbursing the claim you submitted. Either way you should always check which process you company does.
3) Know the Deductible and How it’s Applied
Again, like insurance, you should know how much the deductible (the amount you pay while the agency covers the rest) is. You should also know if the deductible a per-visit or a per-repair. The difference is that a per-repair will cost more out of pocket if there are multiple problems found when in for a repair whereas others are “per-visit” in other words you only pay a single deductible no matter how many components need repair or how many parts are needed.
4) Know Where Repairs Can Be Done
An extended warranty is all about having a safety net concerning your vehicle’s working condition. Many extended warranty companies allow you to repair your vehicle at any facility so it helps to know where those are and which one you would prefer just in case. Some extended warranties however, do restrict you to only their repair shops or their dealerships and some may find that inconvenient. So again be sure about these details when choosing the company and contract that best suits your needs.
5) Know Your Cancellation Policy
Some warranty policies can be canceled, others cannot. Be sure that cancellation is an option when purchasing a contract and know the exact details involving cancelling as well. It is typical for companies to allow 30 to 60 days to cancel a policy for up to a full refund. After the stated initial period you may receive a refund dependent the number of many miles and/or months you were covered and/or if you filed any claims. Companies that do allow you to cancel may have a cancellation fee that is deducted from your refund.
6) Know How the Expiration Mileage is Calculated
There are warranties that have a clause of “when your odometer reaches.” Some may expire “in addition” to your odometer miles when you purchase the coverage. Generally speaking, bumper-to-bumper policies expire when your odometer reaches the policy mileage, and stated component and powertrain policies expire in addition to the miles already on your odometer when you purchase the policy.
7) Is the policy Transferable?
Some warranties are transferable and actually increase the resale value of your vehicle. Companies typically charge a small fee in order to transfer the warranty.
8) Get An Inspection
Prior to finalizing your purchase of a warranty, you should have your vehicle inspected by a certified mechanic for them to put in writing. This usually costs less than $100 and could prevent any questions or denials by the warranty company claiming a possible “pre-existing condition” regarding your vehicle.
9) Keep a Copy of the Policy in Your Car
Warranty companies have roadside assistance and are available to you when you need them after experiencing a breakdown. Just like with insurance, you should keep a copy of your policy in your vehicle (we recommend it stashed in the glove box) complete with the warranty company’s phone number or roadside assistance number with them.
10) Perform Your Routine Maintenance
Your vehicle manufacturer’s routine maintenance as recommended should be followed since it both minimizes the chance of problems occurring in your car, it also helps avoid a claims denial.