1) Always Read the Contract Before You Buy
Be sure to see and read the warranty policy you are going to buy. If the company you are dealing with will not show you the contract before you purchase - walk away. The reputable ones always do.
2) Know Where Repairs Can Be Done
All good extended warranties allow you to have your car repaired at any repair facility. Do not buy a warranty that restricts you to only their repair shops or their dealerships. There is nothing worse than being broken down on the road on a Sunday and the only authorized repair shops are closed or hundreds of miles away.
3) Know How Claims Are Paid
The major warranty companies pay the repair shop directly by corporate credit card when your repair work is done. Some warranties require you to pay the repair in full first, then submit a claim to be reimbursed. The better warranty companies will always pay the repair shop directly.
4) Know the Deductible and How it’s Applied
Is the deductible a per-visit or a per-repair? Per-repair will cost you much more out of pocket if multiple problems are diagnosed when in for a repair. The better coverages apply the deductible per-visit so you only pay a single deductible no matter how many components need repair or how many parts are needed.
5) Understand How the Expiration Mileage is Calculated
Some warranties expire “when your odometer reaches” the policy mileage. Some expire “in addition” to your odometer miles when you purchase the coverage. As a general rule, bumper-to-bumper policies expire when your odometer reaches the policy mileage, and stated component and powertrain policies expire in addition to the miles already on your odometer when you purchase the policy.
6) Know the Cancellation Policy
Most warranty policies can be canceled, however some cannot. Typically you will have 30 to 60 days to cancel a policy and get a 100% refund. After this initial period you will receive a pro-rated refund based on how many miles or months you were covered and any claims filed. All companies typically have a $50 cancellation fee that is deducted from your refund. Never buy a policy that cannot be cancelled.
7) Is There a Transfer Option
A transferable warranty will increase the resale value of your vehicle. Companies typically charge a small fee of $50 to $75 to transfer the warranty.
8) Get An Inspection
Have your vehicle inspected by a certified mechanic and have them put it in writing. This usually costs less than $100 and will avoid any questions or denials by the warranty company claiming a “pre-existing condition”.
9) Keep a Copy of the Policy in Your Car
You’d be surprised by the number of people who have a breakdown and don’t have the warranty company’s phone number or roadside assistance number with them. Always keep a copy in your glove box.
10) Perform Your Routine Maintenance
Always perform the manufacturer’s routine maintenance as recommended in their guidelines. Not only does this lessen the chance of problems occurring but you will avoid a possible claims denial.