Two people both bought a bumper to bumper warranty. Both had their check engine light come on and both took their cars to the dealer for service. One was completely covered and the other had to pay out of pocket for the repair. How can this be, they both had bumper to bumper coverage?
A bumper to bumper plan is technically an exclusionary policy. This is just a general classification that means a coverage policy meets certain minimum standards. It doesn’t mean that a bumper to bumper policy from one company will cover the same parts as a bumper to bumper policy from another company.
Let’s take another type of coverage as an example, a stated component plan that covers most of of your majro mechanical and electrical systems including the engine. Policies from two different companies both say they cover the engine but one doesn’t cover the motor mounts, the water pump or the exhaust manifold. With one policy if the water pump fails its covered, with the other you have to pay.
Unless you’re a technician specifically trained in warranties it’s very difficult to tell two warranties apart. Most mechanics can’t even tell the difference. For this you have to rely on the company selling you the warranty to select the highest level of coverage for your particular vehicle.
There are some very good companies out there who are expert in selecting the best level of warranty coverage. On the other hand, there are some very bad companies out there who are very good at separating you from your money. Generally, you would want to look for an agent who works on your behalf to select the best coverage from multiple warranty companies.
You may also think the dealer will offer a good plan for your car. This is usually not the case. They tend to offer policies that make the highest profit for them and not the best coverage for you.
The Manufacturer’s Extended Warranty
Well, you probably can’t go wrong with the manufacturer’s extended warranty. Manufacturer’s extended warranties, or service agreements, are good coverage plans but certainly not the best. The reason extended warranty companies are in business today is because they offer a much higher level of coverage often for much less money.
You may also feel more comfortable with the manufacturer’s coverage plan because you’ll always be getting brand new genuine factory parts. Not the case. Even though the car maker may lead you to believe this, it is far from reality. Every single manufacturer’s extended warranty will have wording in the small print that says “we can use new, rebuild, used or of like kind and quality parts at our discretion”.
Take the Ford extended warranty for example, which says “repairs and maintenance services are made with authorized new or remanufactured parts”. You may assume “authorized” means a genuine Ford part, but the term “authorized” really means any part they want to authorize. The real phrase to pay attention to is “or remanufactured parts”. Guess which is their first choice of type of part to use, the more expensive new part or the much less expensive remanufactured part?
Some manufacturers won’t even try to hide the fact you’re not getting new parts. Take the Chrysler extended warranty which says “… using authorized remanufactured parts. If remanufactured parts are not available, the dealer will use new parts”. And the term “new” does not mean new genuine Chrysler, Jeep or Dodge parts.
Additionally, in many cases the manufacturer is not the actual warranty company. The contract may have the car company’s logo on it but it’s actually from a third party. The car manufacturer is just getting a piece of the profit. Hence the higher cost and lower coverage.
Not all warranties are the same and it takes diligence finding a good company and a good coverage plan to get the best value for your money.
Additional Resources: Where to Find the Best Deals, Top Rated Warranty Companies