Blog Post

Vehicle Extended Warranties… Are they worth it?

If you have purchased a vehicle in the last decade, you have probably been asked if you would like to add an extended warranty.  Do you remember how you felt when that question was asked? Did feel like you knew exactly what you were getting?  At Modern Auto Service, we deal with extended warranties on a regular basis and they are definitely not all created equal.  I squirm a little bit when people come in and say “go ahead and take care of anything you find… I have the extended warranty on it, so it should be covered.” In my opinion, extended warranties can be beneficial, but consumers need to have a clear understanding of what they are getting.

What questions should you ask before choosing a policy?

– Does this policy have a maximum contract value?

– This is a critical question to ask! The sales pitch most people use for an extended warranty goes something like this…”engines, transmissions, and computer modules are expensive but with this policy, all you are responsible for is the $100 deductible.”

I have seen numerous policies that have a $2,000 or $2,500 maximum contract value, which means they will not pay more than $2,000 or $2,500 over the life of the contract.  It is common for an engine replacement to cost in excess of $6,000 with parts, labor, and fluids which would leave you with a hefty balance.

– What is excluded in this policy?

– I find that a lot of people expect fluid leaks to be covered by their policy but in many cases the component (i.e. Differential) is covered, but the seals are not.

– Another system with poor coverage is A/C repair.  A/C repairs can easily reach $1-2,000 so it is worth checking into.

– Many warranties will only cover the cost of a used transmission or engine if there is a failure.  Many times the used engine or transmission will have similar mileage to the one being replaced, so there is not a lot of peace of mind provided.

If I can offer one recommendation for people before they purchase an extended warranty it would be to validate what you are being told.  Before you make the decision, ask the associate for the phone number of the claim center.  Call the claim center and tell them you want to verify the coverage of the policy you are considering.  Tell them which policy it is and ask if they would cover an oil pan gasket replacement, an A/C Compressor, or a heater core.  They will either tell you yes, no, or they will beat around the bush.  This practice will likely give you a gut-feeling of what you can expect from the contract.  I hope this information helps you with your next purchase.  If you have additional questions please feel free to contact our team at Modern Auto Service.