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Extended Auto Warranty Tips
Key Terms for Extended
Auto Warranties
Automobile Systems
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The right warranty will protect your investment and save you money!


Deductibles & Coverage
Generally companies that offer extended vehicle warranty contracts offer a variety of service plans with deductibles ranging from $0 to $100. Read through all the plans and decide which one is right for you.

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Key Terms for Extended Warranties

Understanding the terminology will help you better understand your coverage options. The purpose of DealerCompete.com is to help the consumer make an educated choice when purchasing an extended vehicle warranty. This information is intended to help you understand what you are purchasing.

A company that authorizes and pays the repair facility for repair work to your vehicle. The administrator works hand in hand with the repair facility to make sure your claim is handled properly.

Typical cancellation clauses of an extended warranty are for the owner to receive a full 100% money back guarantee if the policy is cancelled with the first 30 days of enrolling, if there have been no claims filed. After 30 days the refund is usually prorated based on time and mileage that the policy was in force.

The amount that you must pay the repair facility for work when vehicle is being repaired.

Determining of a vehicle being in certain classifications and which coverage can be applied to the vehicle. A vehicle typically must be less than 10 model years old and have less than 100,000 odometer miles to be eligible for an extended warranty. Additionally, vehicles with less than 50,000 miles and less than 4 years old are eligible for more comprehensive coverage than may be available to older more driven vehicles.

Exclusionary Policy
The most comprehensive extended warranty available. It is typically referred to as a "bumper to bumper" policy. This particular policy lists components of your vehicle that are not covered under the warranty. If a part or component is not listed, then it is covered under an exclusionary policy.

Extended Warranty
A policy, which protects the automobile owner or lessee against mechanical failures and breakdowns. Can also be termed Vehicle Service Agreement or Extended Service Agreement. This warranty will pay for your vehicle's covered repairs after the manufacturer's warranty has expired.

In-Service Date
The date the Vehicle was purchased by the original owner and driven or the date the Vehicle was placed in use for rental, demonstration or other purposes.

Inclusionary Policy
A policy that lists the components and parts that are covered by the extended warranty. If the component or part is not listed, then it is not covered.

Manufacturer's Recommended Maintenance Guidelines
This is the routine maintenance that is recommended by the manufacturer of your vehicle to keep the vehicle in satisfactory working order. Typical guidelines to be followed include: changing the engine oil, checking proper fluid levels, tire rotations, wheel alignments

**Not maintaining your vehicle as recommended by the Manufacturer will void your warranty coverage

Manufacturer's Warranty
This is the promise of your vehicle's manufacturer to repair your vehicle for a specified period of time. Typical manufacturer warranties are 3 years or 36,000 miles or 4 years or 50,000 miles. Check your manufacturer's warranty manual for warranty information.

New Vehicle
When discussing extended warranties, the term new vehicle means an automobile that is still covered by the original manufacturer's warranty.

Plan Expiration
This is the date or odometer mileage that policy will no longer be in effect. For example, a 6 year / 100,000 mile extended warranty, will expire 6 years from the date that you enroll your vehicle or when the odometer reads 100,000 miles.

Plan Term
The amount of time in years or the total mileage that your extended warranty policy will protect your vehicle.

Power Train Warranty
A limited warranty that covers certain parts of your vehicles engine, transmission and drive train.

Rental Benefit
The amount you will be reimbursed for actual expenses incurred for substitute transportation while your vehicle is being repaired.

Repair Facility
An authorized licensed repair facility located in the United States or Canada. This includes, but is not limited to your dealership, local mechanical facility or national repair facilities.

Seals and Gaskets
Seals and Gaskets impact some of the most critical systems within a vehicle.  They are found within the engine, transmission; drive axle, steering, AC, and cooling system. Seals and Gaskets are essential in protecting all vital fluids within the automobile. The failure of seals or gaskets can lead to extremely detrimental damage to the vehicle and costly repairs.  This is a coverage which can be easily misunderstood.  If the language in a contract says “Seals and Gaskets covered only in conjunction with a covered repair”, that means no stand alone Seals and Gaskets coverage. This also means that if the seal or gasket is the cause of any malfunction, the claim is not covered. The correct language is “Seals and Gaskets are covered.”

A vehicle having an extended warranty can have the warranty transferred to the new owner of the vehicle if the vehicle is sold privately.

Travel Expense / Trip Interruption Benefit
In the event of your vehicle not being operable and caused a delay en route and you are more than 100 miles from your home, this is the amount you will be reimbursed per day for restaurant meals and lodging.

Used Vehicle
When discussing extended warranties, the term used vehicle means an automobile whose original manufacturer's warranty has expired. This term has nothing to do with ownership of a vehicle.

Wear and Tear
When a part or component has failed because it can no longer perform the function for which it was designed solely because of its condition. When the part has worn beyond the manufacturer's tolerances allowed for that particular vehicle at the mileage when the problem occurs, if it has received manufacturer's recommended maintenance. It is very important to understand the difference between "wear and tear" items and parts that are considered normal maintenance that can wear out. Normal maintenance items that usually wear out are typically not covered under an extended warranty program. Some examples of parts that wear out that are not covered are brake pads and rotors, brake shoes and drums, and manual clutches.



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