Which Vehicle Service Contract is right for me?
Making an informed decision about your Vehicle Service Contract (VSC) purchase can be easy if you ask important questions to assist you in choosing the coverage and claims administrator that’s right for you. The following questions are a guide to help you obtain a basic understanding of the contract you’re considering and what you can expect from your Vehicle Service Contract protection.
Vehicle Service Contract Buying Checklist
Is your vehicle under factory warranty, and is the coverage in sync with how long you anticipate owning it?
For example, if the vehicle has a factory warranty of 3 years or 36,000 miles, and you only plan on keeping it for less than 3 years, with an anticipated annual mileage of about 11,000, any necessary repairs will likely be covered under the manufacturer’s warranty while you own the vehicle. However, if you plan on keeping your car or truck after the manufacturer’s warranty expires, enhancing your coverage with a Vehicle Service Contract is a wise decision and worth your consideration.
What’s your vehicle’s reliability record?
Research your vehicle’s reliability history to give you an idea of its typical repairs and their costs. Consider whether you could afford to pay these repairs out of pocket should your auto need them.
How much does the Vehicle Service Contract cost?
Make sure the coverage is adequate, what you expect, and within your budget. Analyze your projected budget and your most important investments and expenses, and consider that labor rates have risen by an average of $20 per hour in the past 3 years. A Vehicle Service Contract helps to offset these rising repair costs at an affordable price by protecting your vehicle against tomorrow’s repair bills, at today’s prices. Often consumers find that more coverage and upfront cost now can save thousands in repair costs down the road, while providing a sense of security that only quality coverage can.
How long does the Vehicle Service Contract last?
Understanding how long your coverage lasts is another important factor in making an informed decision. Consider how much driving you do now and plan to do in the future, and make sure the mileage and term you choose meet your needs.
What does the Vehicle Service Contract cover (or not cover)?
Understanding what is covered is important, but equally important is understanding what is not covered. This question may influence which contract you purchase based on what types of repairs you’re willing to pay out of pocket for in the future. Remember that unlike an insurance policy that covers you and your vehicle in case of an accident, Vehicle Service Contracts protect your budget by covering necessary automotive repairs when covered breakdowns or failures occur. Each Vehicle Service Contract is different and specific coverage varies depending upon the VSC purchased, optional coverage selections, state of purchase, place of purchase, and seller agreement. It’s important that potential buyers review any contract carefully and ask any questions they may have before purchase.
What are the Terms and Conditions of the Vehicle Service Contract?
Never purchase a Vehicle Service Contract from a company that will not provide a copy of the terms and conditions of the contract. Likewise, you should never need a legal degree to understand your coverage. Make sure you understand your VSC’s coverage, the administrator’s obligations, and your obligations, such as vehicle maintenance or claim authorization.
Can repairs be performed at any repair shop?
Many extended auto warranties require you have your vehicle serviced at the dealership where it was purchased. In addition, many automotive service agreements require you to take your vehicle to an authorized shop for repairs. Either can be a huge hassle. Find a Vehicle Service Contract that allows you to have the repairs performed at any professional repair facility.
What’s the nature of the deductible? What is the cost and is the deductible per visit or per repair?
The difference can have a major impact on your wallet. A per visit deductible means you will pay one [set] deductible per visit to the shop, regardless of how many repairs are performed during that visit. A per repair deductible applies to each serviced part – so if you have a $100 deductible and you have the fuel pump, air conditioner, brake calipers and power window repaired, you’ll be out $400 for the per repair deductible alone. Ouch.
Is a cash layout required for repairs?
Some extended auto warranties require that you pay the bill out of pocket, and then submit the receipt for reimbursement. Ideally, you’ll want a Vehicle Service Contract that pays the repair facility directly with a credit card.
What kind of replacement parts will the Vehicle Service Contract ensure are used?
Many Vehicle Service Contracts include information contained in their terms and conditions concerning parts sourcing. A company may source new parts, like-new parts or reconditioned parts. Many times these replacement parts will be warrantied as well. In some cases, where these parts are not easily obtainable, high-quality used parts may be substituted. Although these parts are most often just as operationally superior as brand new parts, and warrantied as well, it’s important that you review how your Vehicle Service Contract sources parts and decide if the use of alternative parts would be a cause of concern for you.
Who handles claims for the Vehicle Service Contract?
Knowing who will be administering your Vehicle Service Contract can give insight into any potential weaknesses of the coverage you’re considering and the company’s ability to pay claims. Administrators act as claims adjusters, authorizing the payment of claims to the service repair facility under the contract terms – so make sure they have the financial resources to meet their obligations under the VSC. The ultimate measure of an administrative company is ensuring that your claims are paid quickly and easily. Find out how long the company has been in business, their financial strength, their standing with consumer organizations, if they are rated by the Better Business Bureau, and if they are backed by an insurer.
Does the claims administrator provide direct and online claim filing?
Life is busy. Find out if the Vehicle Service Contract administrator provides direct as well as online claim filing and account management. Filing a claim online can save you and your repair facility time, and having access to your account when it’s convenient for you is invaluable.
Who backs the Vehicle Service Contract?
Find out if your Vehicle Service Contract and administrator are backed by an insurer. Typically, a claims reserve account with a separate insurer is maintained to cover consumers with contracts should the administrative company dissolve. If the administrative company is insured by a separate entity, research their financial strength, how long they’ve been in business, and their rating through companies such as A.M. Best Company.
Is the Vehicle Service Contract transferable?
If you plan to broaden your vehicle’s coverage with a Vehicle Service Contract, be sure to purchase one that is transferable – it will increase your auto’s resale value. Having a VSC to include with the purchase can make your car or truck more attractive to a prospective buyer. Passing along security to another driver is one of the best ways to ensure sales success.