Is an extended warranty on my car a good deal?

Is an extended warranty on my car a good deal? At Central Garage in Pataskala we are asked this question quite often. Understanding warranties and how they work is essential in making a good choice.

Think of the warranty in much the same way you consider health insurance coverage. Your health insurance policy will have a deductable, co-pays, and a perhaps a list of uncovered services. Some procedures may be capped at specific amounts. The better your coverage, the higher your premium and you can expect out of pocket expenses with every policy. Extended vehicle warranties work the same way. We have had mixed experiences with warranty companies – ranging from great coverage that pays well to very limited coverage that pays very little.

Our best advice is to read the contract carefully and ask questions before you buy! To assume that your failed engine will be replaced free of cost is a misconception. In most cases it would be best to consider this “catastrophic coverage” meaning it will help with most but not all of the expense of a new engine, new transmission, new ball joints, or other covered items. Most contracts name specifically covered or uncovered components so read the fine print carefully.

Brake pads and rotors are examples of non-covered items, because they are expected to wear out. Some warranty companies may require records of maintenance if you have a claim, so don’t neglect your maintenance and expect them to pick up the tab.
A legitimate warranty should pay the majority of the expense if a major failure occurs. But many times there is a maximum amount allowed toward labor and parts that may not cover the retail costs of such a repair. Case in point, our customer recently purchased a used pickup truck and extended warranty. Within a few months the oil pressure dropped with timing chain failure and the engine failed. One of his valve covers which is not on a list of “covered parts” is cracked and cannot be reused. His spark plugs, water pump, belts and hoses are original with 100,000 miles on them; we’d never allow these old parts to be transferred to a new engine! Yet the warranty company calls these, wearable accessory parts – and as such they are not covered under his warranty agreement. They have capped the amount allowed for engine oil and antifreeze to cover half the cost for these fluids and the oil filter is not a covered part.

Is this fair? Sure, the customer purchased a warranty that will assist with major repairs, and it is covering exactly what the contract states. In this case it amounted to 80 % of the needed repairs. That’s not a bad deal, if you understand what you are purchasing, but you would be very disappointed if your understanding of the contract and covered expenses comes with the bill for the twenty percent difference; in this case $905.83.
We found this vehicle also has a leaking power steering hose, and loose ball joints, but the warranty purchased is for drive train only. These are not covered services and will need to be cared for when the customer can plan and budget for those expenses.
One final thought, because the cost of the warranty paid up front will be higher for a policy that covers more options, consider if you are purchasing full coverage or limited coverage for your vehicle and weigh the purchase price against the expected benefit. If you don’t understand the warranty contract, get help understanding it before you buy!

At Central Garage we always have the quality of the repair and our customer’s best interest in mind. We work for you not the warranty company. We’re here to help and you’ll find us conveniently located near the Reynoldsburg, Pataskala, Pickerington, and Blacklick areas.