Extended Auto Warranty

An extended auto warranty is not, contrary to popular belief, an insurance policy. It is simply a policy that can be purchased to protect a person from very specific problems that may occur with a vehicle once the vehicle's normal manufacturer's warranty expires.

Extended Warranties Can be Confusing

People rarely think about their vehicle's extended warranty after they purchase it. In fact, most don’t think about it until they need it five years after they’ve bought it. For example, when a person buys a new vehicle from a car dealership, the dealer usually tries to get the customer to buy an extended auto warranty. Usually, people go ahead and buy the warranty because it sounds like a good deal and it can be easily added and financed along with the total cost of the car.

For several years after a new car is purchased, if there are any problems with the car, the manufacturer's warranty usually covers them. However, if the car's transmission goes out when the car is five years old, an extended auto warranty might come into play.

An extended warranty may, in fact, cover a blown transmission. However, a few things must happen before a claim may be submitted.

#The original paperwork or warranty certificate must be available. Because there are so many extended warranty companies in existence, an auto repair shop will have no idea which one to bill unless the vehicle owner has the information.

#The extended warranty will contain very specific details on what sorts of problems are covered, and the problem with the car must match the specifics; otherwise the extended warranty company will not pay.

Wear and Tear vs. Mechanical Breakdown

Many extended auto warranties contain specific (and often confusing) verbiage that says it will cover either "wear and tear" problems or "mechanical breakdown" problems with a vehicle. The concern with these types of warranties is that if a problem arises and a person has a "wear and tear" warranty, the company will likely respond by saying that the problem is a "mechanical breakdown" problem and will not pay for it. This can also happen in the reverse with a "mechanical breakdown" warranty with the company claiming that a vehicle's problem is really a "wear and tear" problem.

To avoid the wear and tear vs. mechanical breakdown issue that can be a real problem when trying to actually get some value out of an extended auto warranty, the best thing may be to buy an extended warranty that covers both wear and tear as well as mechanical breakdowns. This way, the warranty company is less likely to get out of paying for the repair.

Is an Extended Auto Warranty Really Necessary?

Purchasing an extended warranty on a vehicle is usually a good idea, as long as the contract is completely read and understood before it is signed. The truth is, most cars begin to need repairs within a year of the expiration of the original manufacturer's warranty.

While it may seem like an unnecessary expense when spending a lot of money on a car, it's best to buy an extended warranty as soon as the car is purchased because it's cheaper to buy it sooner rather than later.

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