The consumer guide to uncovering the best value
in auto warranties and repairs.
What You Need to Know About Auto Warranties ...
Extended warranties can also include benefits such as free 24/7 roadside assistance for emergencies like lock-outs, fuel and fluid delivery, battery jump, flat tire repair, and towing. Many also come with car rental reimbursement and travel interruption protection in case of a breakdown. The better coverage extended warranties also include or offer options such as Wear and Tear coverage, Seals and Gaskets coverage, and Hi-Tech electronic equipment coverage which are much broader protections than a standard warranty.
Warranty companies are governed by Federal and State laws and regulations and these vary from State to State. Warranty companies must be backed by an insurance company that guarantees the obligations of the warranty company. The insider’s secret here is the very best warranty companies are “A” rated by A.M. Best & Company. They are an independent insurance analysis and rating company that has been around for more than 100 years and are the gold standard in insurance ratings.
The one note here is mechanical breakdown insurance. For all intents and purposes this is a vehicle service contract however it also has a legal aspect. Mechanical Breakdown Insurance is available in California and is regulated and overseen by the California Department of Insurance. In some other states mechanical breakdown insurance is not backed or regulated by the State. Reputable warranty companies and warranty brokers know the difference and will quote you policies that best meet your particular State requirements. See your State Department of Insurance for more information on types of warranties regulated by the State.
Product Warranties
Product Warranties generally cover far fewer parts than an extended warranty or vehicle service contract. A product warranty is only allowed by law to cover parts that are in direct contact with the product or parts that are mechanically connected to those parts. For example, a manufacturer of engine oil may warrant that by using their product, the engine will not break. However, the manufacturer is not allowed to warrant that the car’s horn will not break, since the horn is not in direct contact with the engine oil.
Product warranties may not be sold for a separate price and must be offered free of charge. These warranties, or guarantees, usually limit how much you can recover for repairs. Extended warranties must be guaranteed by an insurance company, product warranties do not.
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