At TWWH, we help consumers who fall prey to illegitimate “extended warranty” scams only to have their legitimate claims for vehicle repairs denied or ignored, with no refund offered.  In speaking with these auto warranty consumers, we have found it is important for vehicle owners to understand the difference between an actual auto warranty—that is offered as part of the purchase of your vehicle—and an auto service contract (“extended warranty”), that is typically offered simply as an “add-on” after your purchase your vehicle by a company that is often not affiliated with your vehicle's manufacturer or the dealer where you purchased your vehicle.  Names like CarShield, CarCHEX, Endurance, American Auto Shield, and American Guardian Warranty Services may come to mind.  To help protect yourself from falling prey to a faulty extended auto warranty, here are some things you should know about auto warranties and auto service contracts.

The Difference Between an Auto Warranty and Auto Service Contract (“Extended Warranty”)

An auto warranty is a promise to fix certain defects or malfunctions during a specific timeframe—usually quantified by a certain number of months or miles—after you buy a vehicle.  Virtually every new vehicle comes with a manufacturer's warranty.  They are typically limited to unforeseen breakdowns or problems and generally do not cover regular maintenance (oil changes, tuneups, tires, etc.). 

An auto service contract — often referred to as an “extended warranty” is an optional contract, often sold by vehicle manufacturers, dealers, as well as independent companies.  In an extended warranty, the service provider agrees to perform (or pay for) certain repairs or services outlined in the contract.  Typically, the service contract will cover your vehicle for a certain number of months or miles.  Contract prices and coverage vary widely.  Some providers promise to extend the length or coverage of the actual auto warranty that came with your vehicle upon purchase.  Others will cover some maintenance tasks like scheduled oil changes.  However, they generally will not cover damage caused during an auto accident or by normal wear and tear to the vehicle.

What You Should Know About Auto Service Contracts

When you buy a new or used car, dealers or independent companies will often try to get you to buy an auto service contract—which is sometimes called an “extended warranty.”  These are optional products that can often be quite expensive.  Dealers typically mention auto service contracts and other “add-ons” after you have spent a long day at the dealership and you are tired and your guard is down.  Dealers may also try to include an “extended warranty”—without fully explaining the extended warranty to you or obtaining your approval—in the immense paperwork you must sign during the purchase transaction.  This is why you must review anything provided to you at an auto dealership very carefully before you sign.  In the past few years, dozens of companies have begun calling and texting potential customers claiming their “extended warranty” is about to expire and using pushy sales tactics to get vehicle owners to purchase an auto service contract they may not really need and/or that may not be legitimate. 

Compare the Auto Service Contract with Your Auto Warranty Before Buying

New cars usually come with warranties for a certain number of months or miles, whichever comes first.  Before purchasing any additional “extended warranty,” know the dates of your actual auto warranty coverage.  It probably will not serve you a great benefit to purchase a service contract that starts before your manufacturer's warranty expires.  

Know What It Costs and Whether a Deductible Will be Required

Auto service contracts can range from a couple hundred dollars to—more typically—several thousand.  Ask questions and get answers in writing setting out specifically the cost (one-time or recurring) of the contract being offered to you and whether you will be required to pay a deductible anytime you file a claim or seek repairs. 

Vet the Auto Service Company's Reputation

The value of an auto service contract is only as good as the company that is responsible for providing the coverage promised.  Before you purchase any auto service contract know exactly what company is providing the service.  It may be your manufacturer or dealer where you purchased your vehicle, or it may not.  Many service contracts sold by dealers are handled by independent companies called administrators.  Administrators make the decisions about authorizing the payment of claims under the contract.  Read the offered contract before you sign to learn if you have rights if the administrator declines to pay a claim.  Once you identify the company that will actually handle claims and provide the auto warranty service, check their reputation online to see if consumer complaints have been filed against the company for wrongfully denying claims, underpaying claims, or ignoring claims altogether. 

Read the Agreement in Full to Know What is Covered and What is Not

Few auto service contracts cover all repairs and maintenance.  Find out what limitations apply. For example, if the contract says it covers only “mechanical breakdowns,” it may not cover problems caused by normal wear and tear. Also find out if the contract will pay for towing or related rental car expenses.  How much will it pay for parts needed to affect repairs?  Some companies only pay a depreciated amount for parts or pay only a partial amount for replacement costs based on your vehicle's age or mileage.  Does the contract approve (or require) the use of remanufactured, refurbished, or replacement parts in your vehicle?  Will the contract pay for the labor and cost to disassemble or reassemble the engine to diagnose/repair problems?  These are all things you should know and understand before signing and purchasing an “extended warranty.” 

The auto service contract might also require you to follow all the manufacturer's recommendations for routine maintenance, like oil changes, tune-ups, etc.  Meaning, if you miss a required maintenance obligation, it might void the auto service contract and end your coverage.  Keep your service records and receipts to show you've properly maintained your vehicle. 

Know How to Get Service Pursuant to the Contract and How to Get Your Claim Paid

Some auto service contracts let you choose among several authorized service or repair centers.  Others make you use the dealer that sold you the vehicle or other designated repair shops.  Find out if you need to get pre-approval from the company that administers the contract for any repair work or towing services or from a third party.  If the contract limits who can provide services, consider whether the contract will have value if you move or want to obtain services or repairs elsewhere.

The service contract should explain how to make a claim for covered repairs, how you get reimbursed, and how long it takes to get your money.  If you have a dispute about whether a claim should be paid, you will need to contact the auto service provider (sometimes referred to an “administrator”) or the dealer where you purchased the contract, if it was provided by a dealer. 

If You Feel Your Auto Service Claim Has Been Wrongfully Denied

Florida has consumer protection laws in place designed specifically to protect consumers like you against fraudulent, deceptive, or unfair commercial practices.  Our attorneys have years of experience handling consumer protection claims.  At Taylor, Warren, Weidner & Hancock, each case, no matter the value, is personally handled by one of our experienced attorneys.  We handle cases on a contingency basis with no fee or cost if there is no recovery and we do not require any cost, fee, or obligation to simply discuss your case and provide you with our thoughts and advice.  If you purchased an extended auto warranty or auto service contract and your claim for repairs was wrongfully denied, you have rights.  Contact us today to speak to one of our consumer protection attorneys about your rights.