Sunday, December 02, 2007

Warranty Direct - extended warranty

Extended warranty for automobiles seems to be next only to used cars business in terms of negative publicity. You can search on the web and you will so many people complaining and cursing extended warranty companies which did not pay legitimate claims by using some fine print or made it so difficult that the customer could not wait them to resolve the issue and went ahead and paid for the repairs and some flimsy companies even went belly up.

I had not really thought about extended warranty. However, soon after my previous car - 2002 Honda Accord V6- was out of warranty, my repair shop recommended that lower ball joints be replaced. I am not sure if it was really required or was simply ripped off. Since it was related to safety, I went ahead and had it replaced. Cost of the repair was around $500. That's when it really started sinking into me that even reliable Japanese cars can lead to costly repairs. What if transmission were to fail or engine or something other than routine parts such as brakes, bulbs, tires etc. It is one thing to plan for known wear and tear and totally a different thing to suddenly be hit with an expensive repair bill which can go up to a few thousand dollars in case engine or transmission rebuild.

In 2006, I researched for extended warranties. There are literally thousands of companies selling variety of auto warranties. It seems to me many are simply fronts to the same business entity based on their advertising pitch. Most of the extended warranties are exclusionary type. Unlike bumper to bumper warranty you get on a brand new car, these extended warranties specify in finest detail and finest print, what is covered and what is not covered. It looks like they want to sell you something so complicated that when time comes, they can give you a run from pillar to post with all that legal jargon. What do you do at that time? Fight with them or pay for the repairs and get moving.

After some research, Warranty Direct (www. stood out for several reasons. First they had many types of extended warranty plans. Each one clearly explained so that you can make a reasonable decision on what plan to buy. Easy quote process. Excellent web site. Variety of payment options and plans in case if it is important. One of the plans which covered most of the items was closest to bumper to bumper warranty. Exclusions were routine stuff like brakes, bulbs only. All other parts and repairs fully covered. No fine print and legal jumbo mumbo. Even the price was very reasonable. Like $1275 for 100, 000 miles or 8 years whichever came first. Seemed like less than dollar a day for 4 years coverage. Also impressive was the requirement for them to examine your car before they decided whether it made sense to sell the warranty. Fair enough. If you are serious about selling extended warranty and honest, you want to make sure the car you are going to cover is a fair deal for you and the customer. They waive this examination if you buy the extended warranty when your car is still in the factory warranty. Since my car was out of warranty for close to an year, I had to have this exam and they charge you extra for this. Like $90. They will send an expert mechanic who can come to wherever your car is, does a through check up, takes it for a ride (you can go with him) and then files a report. You will get a copy of the report. If your vehicle passes, you pay the quoted fee and your vehicle is covered under extended warranty.

Luckily there was no occasion for me to make any claims against my extended warranty. My car was in an accident recently and was totaled. Due to this, I remembered another positive point from Warranty Direct. They let you cancel extended warranty anytime and refund you pro-rata. Good feature. I was not sure how it was going to be to get my money back. I went to their web site, called the customer service line. Their rep gave me a fax number to fax my request for cancellation and refund. I did that and waited for a week or so. Then called them again and was told it would take up to 4 weeks. In less than 2 weeks, I see today they have promptly credited the refund to my credit card. No hassles. Refund seems reasonable. I was midway through the 4 year period and I got little more than half the money back. May be because I had not put much miles anyway. Not sure what formula they use. I am happy to get more than half as I go by time and not necessarily how close I was to 100,000 miles.

I can not really say what would have been the experience if I had to claim warranty services if something were to go wrong and I had to have it repaired. You can search Internet and you will find experiences of other car owners. I can certainly recommend them from the point of smooth business transaction and professionalism. Also, not many companies seem to offer the comprehensive plans they offer. Extended warranty comes with basic road side assistance, trip break coverage etc. Prices are reasonable. Seems like a ethical company in the industry which is marred by some many scandals and bogus companies. You can also transfer the warranty to the new owner for a small transaction fee. This should make it very attractive to prospective buyers if you want to sell your car.

If you want better extended warranty, it makes sense to buy the extended warranty from the manufacturer of your car. If you buy it from the dealer when you buy the car, chances are you will pay a steep mark up. But, there are several other dealers who have taken extended warranty seriously and sell the same factory extended warranty at much competitive price. For example, you can buy Toyota or Honda factory extended warranty from say Bernardi Warranty (also a dealer in MA). I have not yet purchased for my new Toyota Camry. But, prices seem very reasonable, extended warranty plans are good (from most comprehensive to very basic) and you can get repairs done by any factory dealer or other mechanic.

All said and done, I prefer "best warranty is one which you will never have to claim". It is more of peace of mind than anything else. Who wants to have the hassles of a broken car. Give me a car which runs well for a long time with least maintenance. Luckily for us, most of the cars these days are like that. May they get even better.

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