Twelve Important Questions to Ask Before You Buy an Extended Auto Warranty

Who are you buying the auto warranty from?
Extended auto warranty policies are usually offered by the dealer or an independent (or aftermarket) auto warranty company. Aftermarket auto warranties are often cheaper. Check out the auto warranty company with the Better Business Bureau. Next, look at how the auto warranty company is doing financially. You also want to make sure that the products sold by an aftermarket auto warranty company are insured—if they go out of business, insurance will make sure that your claims are covered.

Who will handle my claim?
If I buy my auto warranty from a company will they handle my claims? Or will I have to deal with a separate company, and how do I know who they are? Most companies that sell extended auto warranties are not the same as the companies that cover the claim. This is common. Make sure that you buy your auto warranty from a respectable sales company that only works with respectable administrators.

Who can I call if I have a problem?
When you bring your car in for a repair, tell the repair shop that you have an extended auto warranty. The repair shop will call your auto warranty company and get pre-authorization to do the repairs. If there is a problem they will let you know. First, call your auto warranty administrator and speak to them. If there is still a problem, call the company that sold you the auto warranty. Your selling agent may be your best weapon when it comes to getting a claim paid for—just one more reason choosing the right auto warranty sales company is so important. Before you buy an auto warranty, read some customer reviews and make sure that the sales agents have a reputation of being willing to help you after they have your money.

What are the maintenance requirements?
Some auto warranties have maintenance programs that you need to follow. Make sure that you understand everything that you need to do on your end to keep your auto warranty valid.

What is covered in my auto warranty?
Auto warranties are usually exclusionary (everything is covered except what is listed) or inclusionary (only the things listed are covered). Make sure that you understand what kind is best for you.

Here are some others questions to ask before you buy an auto warranty:

• Do you offer bumper-to-bumper coverage for vehicles out of the manufacturer's warranty?
• Do you include wear and tear?
• Do you offer Road Hazard protection?
• Do you offer car rental reimbursement with your extended auto warranty?

How does the deductible work?
What is the deductible? Is it per visit or per repair? If it is per visit then each time you take your car in you will have to pay a fixed amount, no matter if they fix one thing or ten. If it's per repair then you have to pay based on serviced part. Usually a per visit deductible is cheaper. There are also $0 deductible policies. If your car needs frequent repairs this might be the smartest thing for you to do.

How do I pay for a repair?
Again, it depends on the auto warranty. Some require that you pay for the repair in cash, send the receipt and then get reimbursed. Others will pay for the repairs directly. If you can afford to wait a few months while you get paid back then it might not matter, if you can't then you need to make sure you don't have to pay upfront.

Where can I get my repairs done?
This is important. Some auto warranties (especially those sold by dealerships) stipulate that you can only get repairs done at the dealership. This might be ok if you live next door to the dealer. But, if it is hard for you to get there this could prove to be very inconvenient. Also, what if your car breaks down while you are on a road trip? Don't you want the luxury of choosing where you get your car fixed? When choosing an auto warranty convenience is important.

What if I sell my car? Can I transfer my auto warranty?
There are some auto warranties that allow you to transfer it to a new buyer. This can be a huge plus for a prospective buyer and help you to sell your car.

Can I renew my auto warranty?
No, you can never renew an exact policy. When the time comes that you want to renew your policy your car will be older and have more miles on it, two of the biggest factors that contribute to an auto warranty's price. If you know that you are going to have your car for a long time it is a good idea to buy an auto warranty for as long as you can before your factory auto warranty runs out. This way you will get the best deal for the longest amount of time. Some auto warranties last for seven years. That's a good amount of coverage. If a sales agent assures you that you can renew your auto warranty hang up and call someone else.

Can I pay for the auto warranty?
Does the auto warranty company offer financing? Can I afford this? Also, is the price of an auto warranty worth buying; in other words, is the payout I can expect more than the price of the auto warranty?

Can I cancel my auto warranty?
You need to make sure that you can cancel and that you will receive a pro-rated refund. Look into the company you are planning on buying from and make sure they have a reputation of refunding money. The company you are buying from should offer a money back guarantee if you change your mind.

Take the time to understand what exactly is covered and what's not. Look online, call around, and compare your options. Make sure you are using a reputable company. Just like anything else, make sure that you are fully informed before you buy anything.