Auto Dealer Warranty
Aftermarket Auto Service Plans: Keep A Very Safe Distance
As you were using your PC today at the office, on the road or at home, did a pop-up appear telling you about some great aftermarket auto service plan that would save you money, especially if you have a large repair looming?
Tempting Isn't It? Although the ad seemed tempting, Consumer Reports urges you to stay away. The reason is that these "plans deny claims; refuse to make refunds and use misleading sales tactics." (source: www.comsumerreprots.org)
Typically, the type of ad we're discussing explains how to eliminate auto-repair bills. Such ads claim that they will save thousands on repairs of majors (and costly) parts of your car. Those parts include:
Engines
Transmissions
Transaxles
Driveline parts
These are the most expensive repairs facing any car owner, especially if the car has just slipped out from under the original equipment warranty or, if the customer has bought a factory-backed extended warranty, the need will occur just after the extended warranty is over. It's almost like "Murphy's Law" was written for car ownership.
It's at times like these that what we'll call aftermarket extended warranties seem to pop up all over your computer screen or, if you bother looking at your spam folder, you find them there seemingly by the score.
Consumer Reports has done an exhaustive study of aftermarket extended warranties and their results are not flattering:
Major Sites
"We've found that extended warranties usually don't make financial sense, and when we took a close look at the terms of those service plans we found other reasons to avoid them." (source: www.consumerreports.org)
Run by such internet marketers as:
StopRepairBills.com
Mogi
US Direct Protect
Each of these firms is not directly responsible for any of the products they advertise; they shift responsibility from themselves onto the many third-party firms they represent.
The plans offered by these internet marketers offer the moon, the stars and all the heavens, but really all they deliver is a lot of hot air, it seems. For example, they will offer you drivetrain or bumper-to-bumper coverage. This type of coverage "can cost hundreds or even thousands of dollars, depending on:
Your vehicle
Your vehicle's mileage
The plan drawn up for your vehicle
Some plans sweeten the offer by dropping deductibles or offering:
Towing
Car Rental
Meals
Lodging (if you're away from home)
(source: www.consumerreports.org)
Play on Desperation
Of course, this sounds great and if you are desperate because your car has a few miles on it and the manufacturer won't touch it again as an extended warranty or certified vehicle, then these plans have you where they want you. It's at this point that the smooth-talking sales rep. comes on the line, assures you everything will be all right and sells you a service plan (all you have to do is give them your Mastercard or Visa number and other information and you think you're set to go).
As Consumer Reports notes, it all "sounds great, but auto-service plan marketers ave drawn firm from sumer watchdogs, government agencies and consumers who complain that plans deny claims, refuse to make refunds and use misleading sales tactics." (source www.consumerreports.org)
Further, the industry has "drawn outrage from the public and members of Congress" because they're sleazy sales practices. They include:"
Sending letters to consumers advising them their car warranties were going to expire
Sending letters that gave the impression they were representing the manufacturer or dealer and giving them information that was patently absurd regarding their cars and warranties
(source: www.consumerreports.org)
For example, Chris Koster, Missouri attorney general, a state where many of the marketers seem to be located has indicated that the car service contract insurance fraud was one of their leading consumer complaints last year.
Many, Many Complaints
Complaints abound on various consumer sites as people who have purchased these aftermarket indicate that providers look for any excuse for any reason they can find to avoid paying claims.
They will try to find the smallest wiggle room to keep from paying. Investigators, such as Bill Smith of the St. Louis branch of the Better Business Bureau, notes the marketers often try to wiggle out of paying by simply claiming they are the middlemen, just marketing, and they don't have any contact with the insurer. Smith calls them a "problem industry" and indicates that it is hurting consumers because some repair shops refuse to accept some plans because they are too much trouble.
Rosemary Shahan, president of Consumers for Auto Reliability and Safety in Sacramento, Calif., founded by consumer advocate Clarence Ditlow, indicates that because the marketers are middlemen consumers have a tough time figuring out exactly who is responsible for fulfilling claims, get repairs or refunds. because they won't accept some plans because they don't get paid. (source: www.carconsumers.com)
And, when the actual contacts offered by the middlemen are examined closely, you find that there are more escape clauses and hatches and holes than you'll find in a good piece of Swiss cheese. Just one example to keep pre-existing conditions from being covered, some contracts have a 30-day/1, 000-mile waiting period clause. If something happens during their period, good luck.
Or, they will often turn the tables on consumers and use the manufacturer's own requirements against the consumer, saying that they didn't maintain the vehicle according to the manufacturers recommendations. In other instances, even if they can prove they have followed the recommendations, claims are rejected because cars generally wear out over time, something that can't be helped but something they can also try to use. Or, another tactic, to keep costs down, is an absolute cap on a problem - if he problem costs more you're on your own.
Who Is Responsible?
Often, will continually try to shift the blame to the consumer because they will indicate that the consumer didn't read the fine print until he needed the contract. Those same companies say they realize this is a problem they are working to correct. (source: www.consumerreports.org)
The marketers also bail on taking responsibility by saying that they are pressuring coverage providers to pay claims and that they stop doing business with those who won't. Whether they are or aren't, no one really can know
So what can a consumer do? You can rely on the manufacturer's warranty that have, in some cases, gotten so good, people wonder how they can afford the 100, 000 miles they claim to offer. Or you can real a magazine like Consumer Reports and find the most reliable vehicle in the category they want and purchase it. Once they've purchased it, following the manufacturer's recommendations should keep you rolling for 200, 000 miles (source: author's experience).
If the car you are buying is used be sure it has a high set of ratings for reliability, something that does makes sense. (source: www.consumerreports.org)
Bottom Line
Wait a minute, even if you've signed up and they have your information because you still have an out: the "buyer's remorse" law, a 72-hour period in which you can return cancel the contract get your money back. They have to pay and it makes sense to invoke this action if you have the least hesitation.
Even if it's passed the 72-hour mark, you still have an out. If you paid by credit card, ask Mastercard or Visa to cancel the sale because it wasn't what you had expected, so you still can keep a little of your sanity.
(sources: www.consumerreports.org, www.carconsumers.com, author's experience)
By Marc Stern - An writer, who has specialized in things automotive and technological, among other topics, for more than 30 years, I have been published in the traditional media (eg. magazines, newspapers), where I spent mo...
Who is to blame?
Last year, Russell Lashbrook paid $1,600 for a four-year warranty on the used Dodge Durango he was buying. But as the Waseca, Minn., resident discovered last Friday when his "check engine" light came on and he took the SUV in for repair, the warranty is already worthless.
Some 137,000 people across the United States and Canada -- including more than 11,000 Minnesotans such as Lashbrook -- may be holding worthless car warranties from Ultimate Warranty Corp. The Ohio-based company has all but disappeared, leaving $15,000 in a loss fund to cover an expected $48 million in claims, according to South Carolina regulators who are investigating the company.
Its nationwide collapse has come with a new twist, as officials handling it plan to ask car dealers who sold the warranties to cover the repair claims themselves. That's because dealers pocket from one-tenth to more than half of every premium they sell, said Doug Hartz at the South Carolina Department of Insurance, which got involved because South Carolina is home to the company on the hook to insure Ultimate Warranty.
In the meantime, some of Hartz's staff are at Ultimate Warranty's headquarters, answering calls from car dealers and warranty holders, although there aren't many answers yet, he said.
In Minnesota, Ultimate Warranty ignored a ban to do business in this state, said Bill Walsh, spokesman for the Minnesota Department of Commerce. It has a long and public record with the department, he said.
Minnesota denied it a license to sell here in 2002, for lack of adequate capital. Enforcers then discovered it selling here anyway in 2004, so they issued a cease-and-desist order and fined it $2,000.
Out of cash
The bulk of Ultimate Warranty's business is used-car extended warranties for which customers paid up to $2,000, Hartz said.
"It would appear that Ultimate has run out of cash entirely," Hartz said.
On Oct. 2, the company filed a claim with its insurer, the Capital Assurance Risk Retention Group, to cover the warranties, some of which run into 2017. The size of that claim could collapse Capital Assurance, too, which prompted South Carolina insurance regulators to put it in receivership, a process similar to a bankruptcy.
With Ultimate Warranty essentially out of the picture, the fate of its warranties is now tied to that of Capital Assurance.
If the insurer is liquidated, the customers of Ultimate Warranty will be very low on a list of people making claims on any assets -- a process that also could take years.
Hartz, who is heading South Carolina's efforts, said it's possible to avoid that with the help of others involved in the warranty sales.
"What we need is a commitment from most of the dealers, agents and finance companies to cover the consumers' repair costs and complaints," he said. "They should recognize that it's better for everybody that these people can get their cars repaired."
To encourage their cooperation, Hartz promises that, if it comes to liquidation, letters will go out to all warranty holders with the names of their auto dealers, warranty sales agents and any finance companies -- and what slice of their warranty premiums went to each one.
If Capital Assurance emerges with assets, dealers and others who pay these claims eventually can file for reimbursement, Hartz said.
It's a new approach, said Walsh at the Commerce Department.
"Nobody here could remember an attempt like that," he said.
Still Walsh questioned why dealers didn't check with the Commerce Department before selling Ultimate Warranty contracts, given its ban on doing business here.
Scott Lambert, executive vice president of the Minnesota Auto Dealers Association, wasn't keen on South Carolina's approach.
"Car dealers will work to satisfy their customers," Lambert said. "But from what I could gather, it's the South Carolina Department of Insurance that has egg on their face, so I'm not sure that threatening letters are appropriate."
'We want to do something'
Get the answers...
Crack on front window glass in car ?
My mom bought a Kia Sorento SUV type from auto dealer back in 2004, it's still under the warranty I believe . Couple week ago, she said to me that there is a small crack on the front window glass . The crack is like when you have a hot glass and put it in cold water right away and they produce a nice cut on the glass .
That was couple week ago, a small about 1 inch crack, now it is like a 20 inch something o_O . This car never have any accident whatsoever and only around 17k-ish miles yet this stuff happen . I don't want to paid this out of our pocket since this isn't even our fault, it's should be the manufacturer fault for making cheap glass . I got a Mazda 6 sedan and I drive more than her car yet still everything is good, even if my car got hit by a rock, the glass still solid unlike her car a tiny rock can damage it too.
Does the auto dealer warranty cover these cost or are they gonna said no ?
This crack appear out of nowhere and no evident that it even got hit at that spot.
Get the answers...
Next page: Cadillac Extended Warranty
Bookmark/Share This Page:
|
|
|
|
