Avoid Extended Warranty Traps

In recent months, the Federal Trade Commission (FTC) has investigated and filed suits against vehicle service contract providers for misleading sales tactics and unethical business practices. In response, consumers also need to remain guarded when considering a purchase of one of these contracts (also known as an extended warranty).

Safety First

Before making an extended warranty purchase, make sure you are fully comfortable with the provider. They should be well recognized and have demonstrated a firm commitment to their customers for many years.

Also, do not get duped by a low price. If it seems too low for the amount of coverage that you will be receiving, the contract is probably too good to be true

Vehicle Service Contract Cautions

Though an extended warranty can be a great way to save money as your vehicle ages and needs repairs, the wrong contract can create an even bigger headache. Viable contracts aim to protect consumers as their vehicles age from the high costs of repairs, yet some companies aim to swindle potential customers with faulty promises.

Consider the following before purchasing a vehicle service contract:

  • Is the contract easy to comprehend? Read the contract before purchasing and make sure that you fully understand the scope of the coverage. This should be clearly outlined within the agreement.

  • Are the coverage terms and limits applicable to your situation?

    • Do the term and mileage restrictions coincide with how long you plan to own the vehicle?

    • Are you comfortable with the deductible?

    • Does the company offer any additional benefits to their coverage (rental car insurance, trip interruption insurance, etc.)?

    • Can you cancel the contract if you sell the vehicle or want to terminate it? If so, what penalties and refunds are applicable?

  • Which company is providing coverage? Consider providers that deal with reputable insurance companies who are licensed with an “Excellent” rating from A.M. Best Co. (rating agency for the insurance industry). Visit www.ambest.com for more information.

    • Look for companies that have been in business for many years and have a loyal customer base.

  • What is the process for receiving coverage benefits? Reputable companies will make the repair process simple for their consumers.

    • Are there restrictions on where repairs can take place?

    • How are claims paid?

Zeiler Insurance wants to help you make cost-saving decisions. Give us a call today to learn about all of our insurance services.

Related Articles: Car Insurance Myths

If you have questions or concerns on this issue, do not hesitate to call Zeiler Insurance and speak to one of our customer service representatives. As an independent agency, Zeiler Insurance prides itself with quality customer service for the people of the Chicago-land area and the rest of the Midwest. Customer or not, we can review your insurance and see if you are being protected appropriately for the right price.

Dan
dan@zeiler.com
708.597.5900 x134

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