Q#1 We’re buying a used car and the salesman is pushing us to buy an extended warranty. He is telling us that it will cover most any problem. With today’s vehicles, computers can cost a fortune to repair. Should we buy the warranty or not? We were told that we have 90 days to decide after buying the car. What are your thoughts on extended warranties?
A#1 Extended car warranties come in many flavors, as in what is and is not covered. As a consumer, you have to do some homework to be sure an extended warranty is right for you.
1. Not all extended warranty companies are nice to work with. It seems some will do whatever they can to avoid paying for a repair.
2. Not all repairs are covered. It all depends on the level of coverage you purchased.
3. Not all extended warranty companies are bad. There are some that have really great coverage and are easy to work with.
Knowing this, you can understand the importance of educating yourself, before you purchase an extended warranty. Be an informed consumer before you sign on the dotted line and fork over the money.
Hey you owe me money!
Many times people have come in believing that anything that needs to be repaired is covered, but rarely is this true. Understand that if you have had a repair performed you can’t just call the extended warranty company and demand a check. “Hey you owe me money!” “Sorry sir, we don’t, didn’t you read your contract?” Who’s going to help you collect when you do have a claim?
We’re here to help
Here at the Northwood Garage we work with extended warranties companies. Our goal is to get the most value/dollars for you, from your extended warranty. For us to help you with your extended warranty we need you to provide copy of your extended warranty contract’s primary page. This page shows the contract #, your name, vehicle information and the contact number, all the information necessary to begin a claim.
Diagnosis is required
Extended warranty companies require that diagnosis on the vehicle be performed first. Once completed, an estimate for the needed repairs with a complete breakdown of parts, fluids and labor times must be created. Once this information is collected and organized, the extended warranty company is contacted. They will review the estimate and provide authorization on parts, labor and/or fluids covered by the contract. The customer is responsible for any parts and/or labor not covered and the contract’s deductible if applicable.
Maintenance history can be important
You need maintenance records on the vehicle. Our electronic management software keeps a complete service history on our customers vehicle’s with time & date stamps, with detailed service descriptions. We can electronically send this information right to your extended warranty company. If you have other service records we can scan and send those files as needed.
When extended warranties are bad
Case of no payment; 2005 BMW 325xi September 2015
JS had his BMW towed to our shop for a no start condition. He had recently purchased this BMW and knew that BMWs were known for having expensive repairs. Being a used car he decided it would be best to purchase an extended warranty on the vehicle; he was looking for peace of mind knowing that if he had a major failure, the repairs wouldn’t bankrupt his charge card. The BMW he purchased did not come with a warranty from the used car dealership, so knowing this an extended warranty made even more sense.
Initial Computer Scan:
With today’s vehicles it is critical to collect information from the vehicle’s computers, yes computers, before any repairs begin. The initial computer scan on JS’ car came up with 6 codes. All of these codes are important to the operation of the vehicle but none of them could directly be related to a no start condition on the car.
- 45 Steering wheel interface monitor
- 124 Actuator, variable intake system
- 168 Electrical thermostat, mechanical fault
- 141 Plausibility, Tank level
- 228 O2 bank 2 control deviation
- 227 O2 bank 1 control deviation
Why won’t you start?
Diagnosis and testing found that the there was good spark, really worn spark plugs, but the BMW had no fuel pressure.
Out comes the back seat
The backseat of the BMW was removed, that is where you can find the electrical connector for the fuel pump. It is also how you access the fuel pump assembly for replacement. Testing of the electrical circuit found that the car’s computer was sending a signal to the fuel pump and that there was a good ground, but no noise could be heard coming from the fuel pump in the tank when there was power. A replacement fuel pump was needed.
Over $1000 of needed repairs, not covered!
JS provided us with his extended warranty contract. An estimate was created for repairs and the warranty company was contacted. Here was his first surprise; the extended warranty did not begin until 90 days after the purchase of the vehicle. He had only owned the vehicle for a month so the extended warranty was of no value at this time. The total repair, with towing, diagnosis a replacement fuel pump from BMW, fuel filter, spark plugs and addressing only 2 of the computer codes, exceeded $1000 and his extended warranty did not cover a single penny!
JS had his BMW is towed to our shop with a large coolant leak. Diagnosis found that water pump had failed, replacement needed, and we also recommended a replacement serpentine belt because it was soaked with anti-freeze. The code for the thermostat from his first visit was still present so it only made sense to replace the thermostat while we had the system drained to replace the water pump.
An estimate for the needed repairs was prepared and the extended warranty company was called. Bobby, the extended warranty rep, said “Before we authorize any repairs we need to see the maintenance history of the vehicle.” What he meant was, has the customer been changing the oil and performing the proper maintenance on the vehicle? I asked him what would oil changes have to do with a failed water pump? Bobby’s reply was still, “We will not authorize any repairs without proof that the car has been properly maintained.”
Documentation is important
JS was contacted, he told us that there was a receipt is glove box for an oil change that he had done and asked if we had any records of performing an oil change as well? The only service he had us do was diagnosis and repair the no start last year. His receipt for the oil change and our documentation from last year were scanned and emailed to the warranty company. Later I called the warranty company and spoke with Bobby. He said, “Sorry we can’t pay this claim; he has not been properly maintaining the vehicle”.
Contract void, you’re out the money!
His contract was now void. He had paid a good amount of money to the used car dealer for the extended warranty that was of no help. The salesperson failed to explain to JS that he had to follow the guidelines outlined by the extended warranty. All the salesman told him was, the extended warranty will cover everything. JS was never told and he had failed to read the contract himself.
JS had paid over $1000 for an extended warranty that did not cover any of the repairs on his BMW that still has several costly issues to address.
Not all are bad
When buying an extended warranty be sure to read the contract. Watch out for that fine print. I’m not a big fan of these contracts, but a good contract is quite amazing. We have some links below to help you navigate the extended warranty programs. Take the time to be the informed consumer before you hand over your hard earned money.
We’re here to help
At the Northwood Garage we work with extended warranty companies. Our goal is to get the most value/dollars for you from your extended warranty. It requires time and patience to correctly document and follow the required procedures when collecting on a claim. Failing to follow the correct procedures makes it difficult to sometimes impossible to collect money owed to you.
I hope this article and the links provided were of help to you. If you have any questions we are here to help, just call 603-942-8882 and ask for Jim.
*Learn the right questions to ask when purchasing an extended warranty
*The top ten extended warranty companies list by Consumer Affairs.
When making an expensive purchase, a warranty offers peace of mind. When making a 5-figure purchase, the thought of paying out for major repairs in the first couple of years is nerve-wracking. Cars typically come with a warranty, though it may be offered through a third-party company. Auto warranties cover repairs that do not fall under the heading of regularly scheduled maintenance. ..link
Some F&I managers can make you feel that saying no to the extended warranty is like playing Russian roulette with your car. You never know when that costly repair “bullet” might strike. But new cars are more reliable than ever, and the data seems to indicate that most people might not need an extended warranty. According to a recent J.D. Power study, overall vehicle dependability averages are good. The 2013 survey had the lowest problem rate since the study began in 1989. ..link
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