Vehicle Service Contract Myths and Stigmas

There are many stigmas affiliated with extended warranties. To some customers, the idea of extended coverage for a low price sounds too good to be true. The reality is that consumer protection laws, contract law, and insurance backing all serve to protect the consumer and enforce contracts. Just like any contract, VSC’s are face value and enforceable by law. Any reputable warranty company has an obligation to the customer and expectations by the car dealership to handle claims with integrity and due diligence.

Preexisting Conditions

It is not uncommon for a customer to buy a used car and return to the dealership a soon after with issues. These issues will typically initiate the claims process. The service department will start by diagnosing the problem. If the issue is a leaking seal, wear and tear such as worn out motor mounts, bad breaks, etc. the claim may be denied. Why? A head gasket leak for example doesn’t happen overnight. Seals take time to fail the same way break pads or tires slowly wear out. If a car has 100,000 miles and a claim is initiated 2 weeks after the vehicle is purchased, the likelihood that the claim is turned down due to preexisting conditions is substantial. Many dealers clean up an engine to conceal leaks and sell the car as-is. They then put the burden on the warranty company to cover issues that were actually already a problem at the time of sale. Preexisting conditions are a gray area that have been heavily scrutinized and lead to many myths about warranty companies. If an ac breaks 6 months after purchase or an engine overheats and breaks 2 years into a service contract, the warranty company should be obligated to pay assuming the items are covered by the contract.