What Is The Difference Between A Warranty And An Extended Service Plan?

By: Jeff Hatch

September 07, 2016

This is one of the most frequently asked questions we receive and one that causes a lot of confusion among customers. Simply put, a warranty is an agreement to make any repairs or replace defective parts during a specified period of time upon purchase – a 90-day warranty, for example. It is provided by the manufacturer or dealer and included in the purchase price of a product. By contrast, a service contract/plan is a separate agreement designed to provide protection after the manufacturer’s warranty expires.  
 
Since a manufacturer’s warranty is only good for a limited time, having additional coverage for important purchases makes a lot of sense. An extended service plan (or vehicle service contract) is a popular choice among customers who want extended coverage on everything from consumer electronics, automobiles, home appliances, boats, power tools and other items they truly value or see as an important long-term investment. For instance, a cash-strapped college student who can’t afford to be without a laptop computer for schoolwork would be smart to invest in a service plan. 
 
A service contract also offers additional benefits that generally aren’t covered under the terms of the manufacturer’s warranty. If you bought a new vehicle, chances are your warranty only covers defects and issues that came about during the design and manufacturing process. With a service contract, you can get supplemental coverage for important systems like the transmission and suspension, and ancillary product protection that covers paint, dent, fabric and windshield repair. 
 
In addition to product and purchase protection, service contracts offer consumers convenience and peace of mind. There have been several articles as of late that all list this as one of the main reasons that people feel that a service contract is well worth the added expense. Should something go wrong with your purchase, you’ll receive immediate assistance. Plus, a service contract can be purchased for just a fraction of what you would normally pay for service repair or, in worst-case scenarios, an entirely new item. 
 
If you do decide that you are interested in extended protection, the best rule of thumb is to always make sure that you carefully compare the service contract with the manufacturer's warranty. Also, consider: 1) the cost of the service contract, 2) the types of coverage it offers, 3) the length of time covered, and 4) how you expect to use your purchase. And if you have any concerns regarding your service agreement or need help with a specific type of coverage, feel free to reach out to us. We’ll be more than happy to help.
 
Visit our website to view more frequently asked questions from our consumers. Or call us at 800.833.8801.

Filed Under: contract, plan, product, service, vehicle, Warrantech, warranty

Vehicle Service Contracts Remain A Popular Choice Thanks To Their Flexibility

By: Jeff Hatch

February 23, 2016

Having a vehicle service contract (VSC) gives you added peace of mind while taking away the risk of an expensive and unexpected repair bill. But as vehicle design starts to evolve even further, the appeal of a VSC continues to change as well.  

More dealerships are finding that consumers are less worried about mechanical failure and are more focused on in-vehicle technology. That’s not to say that there’s not a need for component coverage on items such as the transmission and engine — far from it. It’s just that as cars are being built with more electronics and connectivity features, items like navigation systems and Bluetooth technology are becoming more of a focus for customers interested in a VSC.     

In a 2014 study by the Consumer Electronics Association (CEA), in-vehicle technology was cited as an important factor when purchasing a new vehicle for more than half (59 percent) of U.S. drivers. The same study also found that two in five consumers (42 percent) stated that they intended to buy an in-vehicle technology device or accessory within a year. 

Fast forwarding to the present day, another study was just released that helps provide even further insight into VSC/automotive purchasing habits. According to a recent DealerRater survey question supplied by Automotive News, 30 percent of consumers said that they bought a service contract on their most recent vehicle purchase. Taking a deeper dive, here are some additional findings from the survey:

26 percent of new-vehicle buyers purchased service contracts 
40 percent of used-vehicle buyers purchased service contracts
33 percent of consumers who visited a dealership for service bought a service contract 
21 percent of all respondents purchased GAP protection, which was the next best-selling F&I product 
12 percent or less of all respondents purchased F&I products such as tire and wheel, prepaid maintenance, paint protection and coverage for alarm systems 

Advanced features and safety systems cost more to replace if they malfunction, so a VSC makes good sense if your vehicle features the latest state-of-the-art technology. And even if it doesn’t, a service contract is still a great option for covering the major components of your vehicle. Plus, a VSC gives your vehicle greater resale value. If you plan on selling your car or truck after a few years, keep in mind that you can get a higher price for it if it’s backed by a VSC. 

So, yes, car design has evolved and will continue to do so. But on the flipside, so have VSCs. Service plans have become more flexible, which allows every consumer to find the perfect fit for their budget and the way they drive. And this key advantage in how VSCs are designed allows consumers to stay out of the red and on the road a lot longer.  

Filed Under: automotive, consumer, contract, resale, service, technology, value, vehicle, VSC

Tips For Buying A Vehicle Service Contract

By: Jeff Hatch

December 17, 2014

A vehicle service contract (VSC) is a smart investment. It can help cover the cost of unexpected repairs and keep your vehicle running at its best. But how do you know if the plan is right for you? Here are a few questions you can ask your VSC salesperson to make sure you know exactly what you’re getting.  

How Much Does The VSC Cost?
Obviously, money is one of the most important factors in the decision-making process. Is your vehicle worth the investment? If so, you’ll want more coverage, which means more money. However, the amount you pay now could add up to hundreds of dollars in savings later. 

What Does The VSC Cover?
Consider your driving habits and the make and model of your vehicle. For instance, if the company who manufactures your car is known for the quality of their interior components and you plan on keeping your vehicle in a garage, then you probably don’t need paint and fabric protection as part of your VSC. 

How Long Does The VSC Last?
Again, the way you drive has a big impact. If you plan on keeping the vehicle for several years or know you’ll be spending a lot of time on the road, then having a VSC makes a lot of sense. You’ll also want to know if your vehicle is currently under a manufacturer’s warranty since the VSC typically goes into effect after the manufacturer’s warranty expires.

Who Backs The VSC?
Make sure that the company behind your plan is reputable. Some good indicators to help determine credibility include an A.M. Best rating, which demonstrates financial strength and stability, and a Better Business Bureau rating, which assesses the company’s business practices. Also, look at how long the company has been in business and examine their background.

How Are Services And Claims Handled?
Find out if the company has a network of service providers. Are they in your area and readily available to work on your vehicle? Once this has been determined, inquire about claim submission and processing. Can you submit claims online? Does the company have a reliable customer service department to assist you? And do they provide fast and convenient service to help get you back on the road as soon as possible?

Don’t Be Afraid To Ask Any Other Questions You Might Have
You should never feel pressured into purchasing coverage that you don’t understand. If there is anything about your vehicle service contract that doesn’t make sense to you, don’t hesitate to ask. Always remember, it is the salesperson’s responsibility to assist you. If you don’t feel that you are getting the help you need to make a proper purchasing decision regarding your VSC, then you probably aren’t going to get the right help should something go wrong with your vehicle.

Got a question about one of our vehicle service contracts? Contact us online at https://warrantech.com/contact-us/ or call at 800.833.8801. We’re happy to help.

Filed Under: A.M., automotive, Best, Better, Bureau, Business, claims, contract, service, vehicle, VSC, Warrantech

The Importance of A.M. Best's Financial Strength Ratings

By: Global Administrator

March 28, 2014

When deciding on an extended service plan or vehicle service contract, it is important to know who is backing your coverage. Is the company reputable? Is it financially stable? And, just as significant on your part, do you really have time to research each and every company?

This is where A.M. Best comes into the picture. As the world's oldest and most authoritative insurance rating and information source, it sets the benchmark for determining an organization's credibility. Insurance agents, brokers, financial advisors, banks and other insurance professionals have all come to rely on A.M. Best's ratings and analysis to verify each insurer's financial strength. And if you're like most smart consumers who insist on doing thorough research, this rating can be one of your most valuable tools.

A.M. Best's Financial Strength Ratings provide you with an independent third-party evaluation of an insurer's ability to fulfill its financial obligations and can help serve as a key indicator as to whether or not your coverage plan is a smart long-term investment. Each rating is based on a comprehensive quantitative and qualitative evaluation of a company's balance sheet strength, operating performance and business profile. So you're basically getting a snapshot of how the company's business plan is expected to perform over an extended period of time.

And when you consider how volatile the market has been in recent years, these ratings have become even more important. A.M. Best has a proven track record in indicating which insurers may encounter financial difficulties. Or as Warranty Week noted in a recent article: "A.M. Best gets it right over the long term … there is an insistence on the part of some banks and credit unions that they won't finance a VSC (vehicle service contract) without an A- or better. And we'd suggest this threshold could also become a defining level for VSC buyers. Ask the question: 'Who is your underwriter and are they rated A- or better?' If not, why not?"

For more information on A.M Best's Financial Strength Ratings, visit http://www.ambest.com/ratings/guide.asp

And to see the A.M. Best rating report for Warrantech's parent company, AmTrust Financial, visit http://www.amtrustgroup.com/About-Us/AM-Best.aspx

Filed Under: A.M., Best, contract, financial, ratings, service, strength, vehicle, Warranty, Week

Combat Weather-Related Car Trouble With A Vehicle Service Contract

By: Global Administrator

March 11, 2014

This has been a winter of extremes. While a number of cities in the eastern United States set records for frigid temperatures, snow accumulation and maintenance costs, western cities like Las Vegas and Tucson reported their warmest winters on record. The effects have been immediately noticeable to anyone who has had to endure the elements. But what might not be as apparent is the effect that these excessive record-setting temperatures can have on your vehicle.

“When consumers buy a new car, they may not be thinking about how weather extremes can affect the life of crucial car parts,” said Tim Meenan, executive director of the Service Contract Industry Council (SCIC). “No one can do anything to control the weather or its impact on vehicles, but extended warranties can make a tremendous difference in getting past those problems. They’re the best protection for your wallet when extreme weather causes damage that requires a trip to the repair shop.”

An extended warranty (sometimes referred to as a vehicle service contract) can also provide you with added peace of mind in case you find yourself stranded in a remote area during a snowstorm or heat wave. Plus, it allows you to protect your investment, increase your car’s value and make upfront payments that fit within your budget so you can avoid having to pay for any large or unexpected repairs in the future.

The SCIC points out that the winter and summer seasons are the busiest times of year for car repair shops. Salt, sand, UV rays and ice are just a few of the culprits that can lead to rusting, corrosion and expensive repairs to core components.

Brian Hafer, vice president of marketing for AutoMD.com, adds that extreme temperatures are a car killer, which makes regular maintenance all the more important. “Not following the maintenance schedule in the owner’s manual is very common,” says Hafer. “People have these repair issues because they didn't consult their owner's manual. Typically, it happens more often with younger drivers because they just aren't aware.”

What You Can Do About It

Besides having a reliable vehicle service contract and establishing a routine maintenance schedule, here are a few simple tips to help extend the life of your vehicle and save you money in the long run.

  • Check your antifreeze. Not having fresh coolant can cause your water pump to freeze during the winter and overheat your engine in the summer.
  • Examine all fluid levels. Oil, transmission, brake and power steering fluids can all thicken in cold weather, while excessive heat can cause fluid loss.
  • Make sure your battery is fully charged. Batteries get stressed in extreme temperatures. If yours is more than three years old, consider replacing it.
  • Consider an engine block heater for the winter months. At the very least, always warm up your car engine before driving to allow oil to circulate properly.
  • Keep the gas tank half full. This will help you avoid frozen gas lines.
  • Inspect your tires. Cold weather can cause tires to lose several pounds of air pressure and searing heat can lead to cracking.
  • Clean the windshield before using your wipers. Ice can tear wiper blades and restrict motion, which can also tear up the wiper motor and pop the arm.
  • Keep extra fluids in your car. Extra coolant and windshield washer fluid are always good to have on hand in case of an emergency.

For more information about vehicle service contracts from Warrantech, visit http://www.warrantech.com/partners/automotive/service-contracts/

Filed Under: contract, extended, extreme, service, temperatures, Vehicle, warranties

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