Understanding Extended Warranties
Besides your home, your vehicle is often the most expensive item you own. And in today's budget-conscious economy, more and more people are keeping their cars for longer periods of time.
New cars come with warranty coverage, but once that coverage runs out you're left to finance any repairs out of your own pocket. That's why many car owners are turning to extended warranty programs to provide additional years of protection against future repairs.
"We're continually hearing from our members that they're keeping their cars longer," says Jennifer Husler, Manager Automotive Services Marketing and Vehicle Programs. "By purchasing an extended warranty, drivers can offset the rising costs of automotive repairs by literally buying the parts for tomorrow at today's cost."
Before purchasing an extended warranty*, it's important to do your homework. Extended warranties can be bought during the initial purchase of new and used vehicles, or one may be added after owning the vehicle for a number of years. And the type of warranty you choose will depend on the amount of miles on your vehicle and how long you expect to own it.
How to choose the coverage that's right for you
Whether it covers basic repairs or more extensive breakdowns, an extended warranty is designed to protect you against future costs. The right warranty offers more than case of repairs; it offers peace of mind.
How do I choose a warranty company? In today's competitive market, there are hundreds of fly-by-night companies that inundate consumers with mass mailings and phone calls, promising too-good-to-be-true deals. Do your research, and stick with a name you know and trust, like AAA.
What deductible should I choose? Weigh the amount of the deductible against the additional cost for a lower deductible. If there is a $200 difference between a deductible of $0 and $50, you have to use the plan four times to pay for the difference in cost. Also, note whether the deductible is charged per visit or per repair. If you have five items to be repaired, with a per visit deductible, you will pay only once. With a per repair deductible, you will pay five times.
How are claims reimbursed? Many companies, especially those offering discount warranties, require you to pay the repair shop first and then receive, or try to receive, reimbursement from the warranty company. Reliable auto warranties pay the repair shops directly.
What parts are covered? Extended warranties offer various levels of coverage, from basic engine and transmission repairs, to more extensive coverage of brakes, heating and cooling systems, electrical systems and interior and exterior hinges, handles and locks. Also check to see if your warranty covers such computer components as GPS systems or SIRIUS satellite radios. If the parts are installed by the manufacturer, they should be covered.
Do I get a rental car? Coverage against breakdown is great, but what are you supposed to do while your car is being repaired? Make sure your warranty covers a rental vehicle for use during repairs.
What if I sell my car? Your vehicle may be worth more to potential buyers if it includes an extended warranty. A good warranty will be transferable to the new owner upon resale.
For more information about extended warranties, or to learn about AAA's Repair Assurance Plan, call 800-323-4300.