Auto Extended Warranties

What is covered and not covered?

Few extended auto warranty contracts cover all repairs.
It should, however, state exactly what it covers or what is excluded from coverage and for
 what period of time.
Common repairs for parts such as brakes and clutches generally are not included in the contracts.

Watch out for absolute exclusions that deny coverage for any reason. For example:

• If a covered item is damaged by a non-covered component, the claim may be denied.
• If the contract specifies that only "mechanical breakdowns" will be covered, problems caused by normal "wear and tear" may be excluded.

Pay particular attention to the specifics of additional labor costs associated with repairs. If your vehicle's engine must be disassembled to diagnose a problem, and it is discovered that a non-covered part needs to be replace or repaired, you may have to pay for the tear-down and re-assembling of the engine.

Determine if the specific contract you are considering uses a "depreciation factor" in calculating coverage. If so, the company may pay only for partial repair or replacement costs depending on your vehicle's mileage.

Understand that some vehicle contract companies authorize the use of "reconditioned" items as replacement

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