Auto Extended Warranty Claim Information

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)