Extended Warranty Checklist

RELIABILITY - Be sure you find out what insurance company is backing the warranty you are buying. The most reputable warranty companies are underwritten by "A" rated insurance companies as rated by AM Best Company, Standard and Poors and Duffs & Phelps insurance rating services. This guarantees that your warranty will be honored for the entire period of the warranty. You should be wary of any company that doesn't disclose the rating of the company that is actually backing the warranty you are purchasing.

COVERAGE - Do not waste your time trying to figure out (or listening to the finance manager or salesman explain) all of the things that the warranty covers -- it will appear to be an almost endless list.

Find out EXACTLY what the warranty DOESN'T cover, EXACTLY how many years and miles it will be effective, and specifically if "wear and tear" is covered.

WEAR AND TEAR - If "wear and tear" is NOT covered then you are being offered a "mechanical breakdown warranty" which does NOT offer true "bumper to bumper" coverage.

There are many components in your vehicle such as piston rings and CV joints, that usually wear out instead of breaking, in which case, they would NOT be covered under a "mechanical breakdown warranty", but WOULD be covered under a "wear and tear" warranty.

A "mechanical breakdown warranty" should be less expensive and should be considered ONLY for used vehicles which do not qualify for a true "wear and tear" warranty.

REPAIR FACILITY FLEXIBILITY - Find out where you can have your vehicle repaired under the warranty. There are some warranties that require you to return to the dealership that sold you the warranty if you are within 50 miles of the dealership, even if there is a dealership right next door to you! And most factory extended warranties require you to use manufacturer authorized dealerships to perform any repairs.

Most independent extended warranties allow you to have your vehicle repaired at ANY licensed repair facility. A real lifesaver should your breakdown occur in a sparsely populated location.

REPAIR PAYMENT/DEDUCTIBLE - Do you pay and then get reimbursed or does the warranty company pay the repair facility directly? If you have a deductible, does it apply to each visit or each component?

Obviously, you want the warranty company to pay the repair facility directly and you want your deductible, if any, to apply to EACH VISIT, not each individual component.

BUY NOW - The dealership finance manager and the salesman are going to want you to purchase your warranty NOW. Not tomorrow, not next week - NOW - so it can be included with your financing. Remember, you do NOT have to purchase your extended warranty with your vehicle, no matter what anyone tries to tell you. In fact most of the more reputable extended warranty companies will allow you anywhere up to the expiration of your factory warranty to purchase an extended NEW CAR WARRANTY.

BUY LATER - Even if you DO happen purchase an extended warranty at the same time as your new car, you most likely still have 30 days to change your mind and have your money returned or credited to your account if it was included with your financing. Be sure to compare what you purchased from the dealer with what is available from other independent sources in terms of coverage and price when you get home from the dealership.

RENEWALS - If you intend on keeping your vehicle for an extended period of time you want your extended warranty to be renewable for as long as you own your car.

TRANSFERABILITY - Most reputable extended warranties are transferable to the new owner in the event you sell your vehicle, adding value to your vehicle and providing peace of mind to the new owner. Beware of any warranty that is not transferable.

ADDITIONAL BENEFITS - Many extended warranties also include additional benefits such as towing, road service, travel expenses (food and lodging), and rental cars.

What Consumer Reports has to Say About Extended Warranties
Extended Warranty Company Directory - A listing of major warranty companies.
Extended Warranty Home Page