Ideally, when purchasing an extended auto warranty, you should do your due diligence. You should search for the best car warranty companies, read all the fine print and know exactly what kind of coverage will suit your needs. But mistakes happen.
Rushed decisions are easy to make when you’re excited to drive your new or used car out of the showroom and just want to get all the paperwork out of the way.
However, purchasing an extended auto warranty could be one of the best investments you’ll ever make—so be sure to avoid these three common mistakes before you sign the dotted line.
Buying a plan with the wrong coverage
A common mistake when buying an extended warranty is trying to save a few dollars on a basic plan that will only cover mechanical failures—these plans will not cover automobile failure due to wear and tear.
The top reason extended warranty claims are rejected is because people claim for wear and tear when their policy only covers mechanical breakdowns, so it’s vital to know exactly what is covered and what is not before purchasing an extended warranty.
Not understanding the difference between a breakdown caused by mechanical failure and a breakdown caused by improper maintenance can cost you thousands in rejected claims.
Most failures on any vehicle after the manufacturer’s warranty expires are classified as wear-and-tear failures—for instance, piston rings wear down over time, they don’t break.
Many people only find out they purchased the wrong coverage months or years after they signed the paperwork, only to find out that their warranty won’t cover an expensive and much-needed repair.
To avoid claim rejections and to make sure you have adequate coverage, purchase the right plan for your needs.
Making a decision based on price alone
Purchasing an auto extended warranty solely due to its price and without inspecting the contract thoroughly can lead to rejected claims and a lot of frustration.
One of the most common mistakes people make is choosing a basic extended warranty plan simply because it is the cheapest. These plans are usually inclusionary—they will typically have a long list of specific components that are covered, but everything that is not on this list is not covered.
Exclusionary plans have a specified list of what the plan does not cover, which will cost more, but you can be sure that you have adequate coverage from your plan.
Purchasing without doing proper research
Before you decide to go ahead and purchase an extended auto warranty, do your research first. Many people purchase extended warranties while waiting in a car dealership’s finance office – they have not had a chance to look into what their needs are and what coverage would be best for them.
Although it may be tempting to quickly sign all the sales paperwork and go home with your new car, read the contract for the extended warranty carefully, and don’t feel pressured to sign the paperwork right there and then.
Rather, do your research before visiting the dealership. Don’t forget to read all the fine print, too!
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