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Auto Warranties Explained

Extended Auto Warranty Plans Explained

Among all the different extended auto warranty companies there are generally several levels of auto warranty coverages available under many different plan names. However, they follow approximately the same breakdown:

Powertrain Warranties and Product Warranties.

This includes engine, transmission, transfer case and drive axles. The actual extent of coverage (number of items within each component) may vary from company to company. This is usually the least expensive coverage and the most important because it is the most costly to repair.

Powertrain Plus / "Freedom Type" / Silver Coverage

This includes all the Powertrain components plus up to 10 additional components such as: Steering, Electrical, Air Conditioning, Cooling System, Fuel System and the Braking System. This coverage is generally designed for vehicles with higher mileage. We offer this extended auto warranty coverage all the way up to 150,000 miles.

Full Coverage / Gold Coverage

This is usually the best coverage where all the covered components are listed. In "Full" coverage the covered Components include all the Powertrain Plus components plus items such as Hi-Tech Electrical. These are all the sophisticated and often complex items such as "remote keyless entry module", "cruise control", "antenna motors", "rear wiper motors" etc. Additionally, all of the components covered in the full coverage may have more individual items listed than in the "lower coverage". For example: in the Powertrain Plus coverage under "Air Conditioning", the compressor, clutch, coil, pulley, orifice tube, condenser and evaporator are covered, whereas under Full Coverage the Air Conditioning system may include: all the previous items plus Expansion tank, dryer tank, accumulator, POA valve, pressure cut-off switch, ducts and outlet hoses and the automatic temperature control programmer. So you can see that the coverage builds not only in the number of components but also the number of items within the component.

Bumper to Bumper (Exclusionary Coverage) Warranty "Platinum"

Also known as "Factory Coverage" which refers to the type of coverage the factory provides on a brand new vehicle. This is the best and most comprehensive coverage available and is technically known as "Exclusionary Coverage". In this type of coverage EVERYTHING IS COVERED EXCEPT THE ITEMS EXCLUDED. A list of excluded items is provided and must be read carefully. This is the distinction between "named component" coverage and "exclusionary coverage". You must not assume that just because it is called Bumper to Bumper that it is true "Exclusionary" coverage. The true "Bumper to Bumper", "Exclusionary" coverage has the following terminology: "repairs on all assemblies (components) and parts are covered with the exception of those items listed in the exclusion section of this contract."

Exclusionary coverage is often only available for very low mileage vehicles. Most insurance companies have stopped offering exclusionary coverage.

The amount of coverage available generally decreases as the mileage on your vehicle at the start of the contract increases.

Auto Warranty Terms and Conditions

All contracts have a section found in the small print called "Terms and Conditions". This section provides all the definitions of the contract and details of the conditions of the contract. It is important that you read and understand this section so that you don't have any misunderstanding as to what you are buying. Most companies have almost identical exclusions.

Important Examples of Excluded Items in Warranties

  • Most maintenance items are not covered. 
  • Failures caused by misuse or abuse including lack of normal maintenance.
  • Failures where the true mileage cannot be determined.
  • Seized or damaged engines caused by operating without oil or coolants.

Important Auto Warranty Definitions

  • Failure: Failure is deemed to have occurred when a covered part ceases to perform the function for which it was designed. Usually this includes some additional language with regards to failures due to "normal wear and tear". Some contracts include normal wear and tear, some don't and some pro-rate.
  • We, Us, Our: refers to the entity who is obligated to perform (pay) under the contract. In most cases when you are buying directly on the internet it will be the Administrator.

Important Auto Warranty Conditions

Replacement parts may be new, remanufactured, or replacement with "like, kind and quality". What this really means is that if you have a high mileage vehicle the claims department has the authority to replace a failed part with a used part. This is most likely only to occur when replacing an entire engine. However, remanufactured parts are routinely used for replacement. In fact, remanufactured parts are often the only parts available.

Limits of Liability: Maximum limit of liability per occurrence shall be the actual cash value of the vehicle at the time of the repair. Aggregate limit of liability for all claims under the service contract shall not exceed $75,000 or the actual retail price of the vehicle. Contracts vary widely in their limits of liability.
Renewal: Some companies offer continuous renewal and some offer none.

Maintenance requirements: Most companies have very strict maintenance requirements. You must maintain your vehicle according to the manufacturer's recommendations.

Talk to one of our consultants if you have any questions. Call toll free 1.800.372.0665.

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For exact coverage on the contract that you are eligible for get a quote and click "view coverage" for a printable copy. Not all coverages are available in all states or for all Vehicles. Certain restrictions apply.