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Warranty coverage explained
At least four levels of auto warranty coverage are available from
many of warranty companies and they usually follow the same breakdown:
Powertrain:
This warranty includes engine, transmission, transfer case and drive
axles. The actual extent of coverage (number of items within each
component) may vary from company to company. This is usually the least
expensive coverage and the most important because it is the most costly
to repair.
Powertrain Plus:
This includes all the Powertrain components plus between 5 to 10
additional components such as: steering, electrical, air conditioning,
cooling and fuel system.
Full Coverage or Premier:
This is usually the best coverage where all the covered components are
named (listed).
This is an important distinction because in the next higher level of
coverage, Bumper to Bumper the covered components are not named
(listed). In "Full" coverage the covered Components include all the
Powertrain Plus components plus items such as: Hi-tech Electrical and
Customer Convenience packages. These are all the sophisticated and often
complex items such as "remote keyless entry module", "cruise control",
"Basic antennae motors", "rear wiper motors" etc. Additionally, all of
the components covered in the full coverage may have more individual
items listed than in the "lower coverage". For example: in the
Powertrain Plus coverage under "Air Conditioning", the compressor,
clutch, coil, pulley, orifice tube, condenser and evaporator are
covered, whereas under Full Coverage the Air Conditioning system may
include: all the previous items plus Expansion tank, dryer tank,
accumulator, POA valve, pressure cut-off switch, ducts and outlet hoses
and the automatic temperature control programmer. So you can see that
the coverage builds not only in the number of components but also the
number of items within the component. Don't assume that just because the
contract says cooling system that all of the various parts that make up
the cooling system are actually covered.
Bumper to Bumper or Premier Plus:
Also known as "Factory Coverage" which refers to the type of coverage
the factory provides on a brand new vehicle. This is the best and most
comprehensive coverage available and is technically known as
"Exclusionary Coverage". In this type of coverage EVERYTHING IS COVERED
EXCEPT THE ITEMS EXCLUDED. A list of excluded items is provided and must
be read carefully. This is the distinction between "named component"
coverage and "exclusionary coverage". You must not assume that just
because it is called Bumper to Bumper that it is true "Exclusionary"
coverage. The true "Bumper to Bumper", "Exclusionary" coverage has the
following terminology: "repairs on all assemblies (components) and parts
are covered with the exception of those items listed in the exclusion
section of this contract."
If you want to be sure that everything is covered, then this
exclusionary coverage is for you. It is often only available for lower
mileage vehicles.
The amount of coverage available generally decreases as the mileage on
your vehicle at the start of the contract increases. This is true unless
the vehicle is still quite new and covered by the full factory warranty.
In that case, the top level of coverage is usually available up until
your factory coverage has expired.
Terms and Conditions:
All contracts have a section found in the small print called "Terms and
Conditions". This section provides all the definitions of the contract
and details of the conditions of the contract. It is important that you
read and understand this section so that you don't have any
misunderstanding as to what you are buying. Most companies have almost
identical exclusions.
Some important examples of Excluded items:
• Most maintenance items are not covered.
• Failures caused by misuse or abuse including lack of normal
maintenance.
• Failures where the true mileage can not be determined.
• Seized or damaged engines caused by operating without oil or coolants.
Some important definitions:
• Failure: Failure is deemed to have occurred when a covered part ceases
to perform the function for which it was designed. Usually this includes
some additional language with regards to failures due to "normal wear
and tear". Some contracts include normal wear and tear some don't and
some prorate.
• We, Us Our: refers to the entity who is obligated to perform (pay)
under the contract. In most cases when you are buying direct on the
internet it will be the Administrator.
Some important conditions:
• Replacement parts may be new, remanufactured, or replacement with
"like kind and quality". What this really means is that if you have a
high mileage vehicle the claims department has the authority to replace
a failed part with even a used part. This is most likely only to occur
when replacing an entire engine, however remanufactured parts are
routinely used for replacement. In fact, remanufactured parts are often
the only parts available.
• Limits of Liability: Maximum limit of liability per occurrence shall
be the actual cash value of the vehicle at the time of the repair.
Aggregate limit of liability for all claims under the service contract
shall not exceed $75,000 or the actual retail price of the vehicle.
Contracts vary widely in their limits of liability.
• Renewal: Some companies offer continuous renewal and some offer none.
• Maintenance requirements: Most companies have very strict maintenance
requirements. You must maintain your vehicle according to the
manufacturer's recommendations.
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