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.
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.
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
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.
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.
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
**Not maintaining your vehicle as recommended
by the Manufacturer will void your warranty coverage
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.
When discussing extended warranties, the term new vehicle
means an automobile that is still covered by the original manufacturer's
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.
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.
The amount you will be reimbursed for actual expenses incurred
for substitute transportation while your vehicle is being repaired.
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
A vehicle having an extended warranty can have the warranty
transferred to the new owner of the vehicle if the vehicle is sold
Travel Expense / Trip
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.
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.