Why You Need A Vehicle Service Contract

By: Jeff Hatch

October 19, 2017

Contemplating a vehicle service contract, but unsure of how it works or how it differs from an automotive warranty? You’re not alone. A lot of consumers tend to get the two mixed up or fail to understand just what they cover. But seeing as how your vehicle is usually the second most important purchase you will make right after your home, it is in your best interest to do your homework and make sure that you are protected.    
 
What exactly is a vehicle service contract? 
It is an agreement to cover costs associated with repairs or services made to your vehicle. A manufacturer’s warranty, on the other hand, is a promise from the manufacturer to stand by their workmanship for a limited time after you purchase the vehicle. Once this warranty expires, a vehicle service contract becomes valid and provides you with much-needed coverage on your vehicle’s most important systems and components. 
 
Is a vehicle service contract right for you? 
Here are a few things to consider:
 
Keep in mind that the average hourly rate for a mechanic is $100 an hour. A vehicle service contract can help do away with this cost, save you money and keep you from paying any unforeseen and unexpected repair bills. 
 
If you plan on owning your car for an extended period, it’s definitely in your best interest. A vehicle service contract can keep your car running at its very best and on the road for a long time. 
 
Even if you don’t intend to keep your car for long, a service contract can increase your vehicle’s resale value once you decide to sell. But before you do, make sure that the service contract you’re purchasing is transferable.  
 
Do some research into the make and model of the vehicle you plan on purchasing. Is it likely to need repairs and, if so, what are the costs? Weigh this against the price of the service contract to determine if it is worth it to you.
 
Does the contract include extras such as discounts on hotels and restaurants, rental car benefits, locksmith services and 24-hour roadside assistance? Not only do these add to the value of the service contract, they can provide you with added peace of mind in the event that something goes wrong while you’re on the road and away from home. 
 
Take your driving habits into account. Will you be on the road a lot? Is there a lot of stop-and-go traffic? What are the road conditions like? Do you park outside where the weather is extreme? These can all have an adverse effect on your vehicle. 
 
Check the terms and conditions carefully. Make sure you know exactly what you’re getting and what is covered specifically. 
 
In addition to the type of coverage, be mindful of the length of coverage, miles of coverage and deductible. 
 
Research the company providing the service contract. Are they reputable? Some guidelines to help determine this might include checking their Better Business Bureau rating to see how they work with consumers and finding out what their A.M. Best rating is to verify financial strength and stability. 
 
Have questions about a specific vehicle service contract? 
Don’t hesitate to ask your salesperson or agent for more information. Most dealerships typically provide you with a brochure or direct you to a website so you can review the plan in its entirety. Take time to make sure that you fully understand the scope of the service contract and don’t get pressured into purchasing something that makes you feel uncomfortable. With so many options currently available, you are sure to find something that is satisfactory for your budget and your vehicle’s specific requirements.
 
Visit us online to learn more about our available vehicle service contracts or call 800.833.8801 to speak with a customer service representative. We’re happy to help.

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

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

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