FAQ-15Should I buy an aftermarket or extended warranty?It is increasingly difficult for me to suggest you buy an aftermarket warranty policy for the following reasons:
So, we are creating a report card for aftermarket companies we do not think treat our Customers fair. We hope you will avoid them. We also are accepting impute from other repair shops and consumers who can document their problems with after market warranty companies.
Don't buy what Consumer's
Reports called
However, if you just have to . . .
Drivers Edge
by First Automotive OR AutoExam Do I really need an aftermarket or extended warranty? Buy an aftermarket or extended contract, only if you look over your shoulder and in the past (not what you think you are going to do, what you have done in the past) you have kept your previous cars well into the covered period? Or is 3 years the longest you have kept the last three cars? Only buy an aftermarket contract if you expect to get into the 60-80k mile range and expect to pay $1000-2500 for a good contract that will cover everything. The variables are the price, the deductible, options (is towing, car rental, diagnostics time covered) and how is the money distributed. But no matter what, make sure the cost of the contract does not exceed the cost of the biggest repair you may face during the time you are covered. What kind of contract should I buy? To make this easy, let's talk about policy "A" and policy "B". Policy "A" --- This is an aftermarket or extended warranty contract that says they cover everything, bumper to bumper except what is on their short list. This is the premium policy and chances are slim that you will argue about what is and what is not covered. Policy "B" --- Try to avoid an aftermarket or extended warranty contract that says we cover the following items. That list, no matter how long, will not have the part that broke on your car, or at least that what happens to me. That's why the other contract (the "A" policy) that covers EVERYTHING EXCEPT this short list is far better, should you have the choice. How much should I pay for a aftermarket or extended warranty contract that covers me for 6-7 years and 100k miles? Depending on how many folks are in the food chain, how many folks are going to make money on your purchase (you buy from the dealer who keeps $300-800 who buys from another person who makes $150 who buys it from someone else who makes . . .). It's like a pyramid. But if you buy close to the source, you should pay between $1,000 and $2,000. When should I buy my extended warranty contract? Just before your manufacturer warranty is over. You will not get a premium price or a premium contract once the base or manufacturer warranty is over. But if you decide to buy it when you buy your new car, make the cost
of this warranty part of your purchase negotiation, make them believe that the cost can be
a deal breaker. Then you will see a $1,800 contract drop to $1,000 real fast. Do not buy
your new car, then ask for a price on an extended warranty because at that point, they
have Mark, what do you think of aftermarket or extended warranties? Many of us will no longer accept a purchase order (PO) from aftermarket companies. It can sometimes take 6 months to get paid for a $4,000 engine. Many of us, including dealers, will only work for a company who pays the day the car is delivered with a credit card over the phone. I gotta tell you that there are some real bad aftermarket companies out there and one of the biggest bandits out there has their claims reviewed right here in Phoenix. As the chairman of the BBB Auto Advisory Board, I saw them deny an engine claim first because they thought the customer did not have "seal and gasket coverage" then when it was proven the customer did have that coverage, they denied it ‘cause the seal that failed was not on their list of covered seals. Then after we showed them the customer did in fact have that coverage, they denied the claim ‘cause it wasn’t authorized by them first. Then we reminded them they had their chance to review this claim before any work was done and they backed out saying the right coverage wasn’t there, they again changed their mind and said the o-ring that caused the engine failure wasn’t a "seal". When we brought it to their attention that this oil filter housing seal wasn’t even a part of this engine until two years after the contract was created and a seal and o-ring are the same thing, they still said no. Ugly uh? I also just watched a company insist that they be allowed to guide the diagnostic procedure, even though they said the customer had to pay for it. The engine had come apart. We wanted to pull the valve covers and take a look for about 1.5 hours of time. They wanted us to pull the oil pan to the tune of about 3 hours. We had no choice and we pulled the pan and saw nothing. Then they authorized us to pull a valve cover and we saw a valve had broken off and fell into the engine. The customer was charged for 4.5 hours for nothing. Then this companies own local representative jacked up the cost of the motor to cover these expenses because even he had a bad taste in his mouth. But he’s the first adjuster I’ve seen in a long time with a conscience. I could go on and on, but you get the picture. Before you buy an aftermarket warranty, call your BBB and the BBB in the city of the companies home office and get and read both reports. Last, internal documents from these after market warranty companies bank on you getting back, in car repair dollars, about 50-90% of your premium. Obviously, if you pay $2,495 for the contract and only collect $1,230, you lost. That is why these contracts are more appropriately called a "Prepaid Auto Repair policy". You may be better off just going to a Casino with your premium. Copyright ©1997-, Mark Salem, Salem Boys Auto, All Rights Reserved |
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