Reading any consumer review on any aftermarket/third party auto warranty is wrought full of denied claims, failed payouts and surprise charges. The overwhelming amount of negative reviews would cause any sane person to run away screaming at the mere mention of a ‘vehicle service plan’.

But here is the thing:

There is an overriding theme to all the negative reviews and it boils down to two simple things:

It’s not wholly the consumers fault. The pressuring sales tactics used during used vehicles sales, always ends with this cherry on top and the promises made range from:

‘‘It covers EVERYTHING’’

‘‘Just like a new car warranty!’’

‘‘Just pay now and you’ll never pay for another repair’’

Well, that’s just not true.

The steps of using a new car factory warranty is simple:

• If you have an issue, you go to the dealer and drop your car off. That’s it.

With an aftermarket/third party vehicle service plan, it’s more akin to filing an insurance claim, so it’s a ton more involved:

—You have an issue—

• You and/or your shop calls the warranty company and asks for permission to work on your car

• If and ONLY IF approval is granted, the shop can start diagnosing your issue

• Once the issue is found, your shop calls back and informs the warranty company of the issue

• The warranty company will then do their own preliminary estimates on labor hours involved, costs of parts etc

• Shop and warranty company will then tend to argue back and forth a bit on price

• Depending on the amount of the repair, the warranty company may send out an inspector to inspect the damage of your vehicle to substantiate claims

• Once the damage is substantiated, another invoice is generated by your shop and sent to you for approval

• If you didn’t read your contract:

  • You scream that you have to pay out of pocket for X

• If you read your contract

  • You rejoice that you didn’t have to pay out of pocket for X

• You sign the invoice

• The shop sends that copy to the warranty company

• The warranty company FINALLY gives approval to have your vehicle fixed

As you can see, it’s nothing like a factory warranty at all. It’s also, obviously, not a quick process at all. Sure it depends on the warranty company but there is always numerous layers of red tape to go through no matter what company is involved.

Oh and let’s talk about coverage…I said this before but just to reiterate

READ THE DAMN CONTRACT.

Depending on what ‘level’ contract you have…all or none of your issues could be covered.

IE:

• Classic case of pre-existing condition

  • the dealer supposedly did a ‘thorough’ inspection when you bought your car but 2 weeks later…the engine died, due to sludgy oil…you’re screwed

• If you have a plan that covers Powertrain Only and your AC went out…then you’re screwed.

• Your transmission goes out

  • But it only covers certain parts but not the entire unit….you’re screwed

• If you have a more comprehensive plan and let’s say your transmission dies

  • but it will cover only $1000 max on transmission repairs but you’re total repair cost is $3000…then you’re screwed

• Or the entirety of the repairs costs $8000

  • But the max, lifetime payout, is only $5000…then you’re screwed

BUT, if you read your contract to begin with….then know all of this ahead of time. There is a way to avoid all of this though and it’s going to suck initially but it’s well worth it when you need it…

Exclusionary Policy

What is that you say? Well, instead of listing all the parts it will cover (potentially not covering vast number of components) an exclusionary policy will list all the parts that are NOT covered. Giving you the exact idea of what will be covered, without any suprises.

Saving you from future headaches and anxiety, worrying about if your repair is covered or not.

So are vehicle service plans and aftermarket warranties worth it?