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What Vehicle Upkeep Am I Responsible For in Order for My Service Contract to Remain Valid?

What is a Vehicle Service Contract?

A vehicle service contract (VSC) is an agreement between a buyer and an entity that covers certain repairs and replacements of vehicle parts after the expiration of the manufacturer’s warranty. It is designed to protect consumers from expensive, unexpected repairs. Coverage levels vary depending on the individual contract, and the costs associated with any given repair are based on the terms in the agreement.

There are two main types of vehicle service contracts: manufacturer contracts, which are provided directly by the vehicle’s manufacturer, and third-party contracts, which are provided by companies that are not affiliated with the manufacturer. Additionally, within third-party contracts, there are two types – direct and indirect. A direct contract is paid for directly by the customer, while an indirect contract is offered by the dealer and paid to the contractor.

When a vehicle service contract holder experiences a mechanical breakdown or failure covered by their agreement, they typically must contact the provider’s claims center and provide the repair facility with the information related to their contract. This facility must then be approved by the provider and have an ASE certified technician. Depending on the terms of the agreement, the contract holder may need to pay a deductible before being covered for the repair.

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What are the Benefits of Having a Vehicle Service Contract?

1. Guaranteed repairs in case of mechanical breakdowns

Having a vehicle service contract can provide peace of mind in the event of a mechanical breakdown, as it can help cover the costs of repairs. In comparison to a new car warranty, which is issued by the car’s manufacturer and typically covers major parts of the car for several years, a vehicle service contract typically has a deductible and covers other parts beyond what a new car warranty typically covers. In Louisiana, companies wanting to sell extended warranties must register with the state’s Commissioner of Insurance and get licensed before they can sell the service contracts. The contract also has to be filed with the Commissioner, who may require extra funds to cover losses. This means that you should read your contract carefully and assuming that if it’s not mentioned as being covered in the contract, it’s not covered.

2. Reduced repair costs

Having a vehicle service contract can help reduce repair costs by providing coverage for unexpected repairs. By locking in the costs of a vehicle service plan while the vehicle is in its best condition, car owners can avoid costly repairs later on. With a vehicle service contract, the amount of the deductible payment can be adjusted before purchase. An obligor or administrator will often dispatch an independent inspector to examine the car, and if the breakdown is covered by the contract, the obligor will provide the repair facility with a claim authorization number. This authorization is a promise that the obligor will pay for the particular repair, which can provide car owners with peace of mind and financial savings.

3. Peace of mind knowing that unexpected repairs are covered

A vehicle service contract can cover repairs from a variety of different causes, such as regular wear and tear, breakdowns, and factory defects. Examples of repairs that may be included in a vehicle service contract are suspension repairs, engine repairs, transmission repairs and replacements, oil changes, brake repairs, tire replacements, electrical repairs, fuel system repairs, and more. Most contracts also allow you to choose a deductible amount, which you will need to pay before the contract will cover any repairs.

4. Ability to keep your vehicle manufacturer’s warranty intact

Having a vehicle service contract can help to keep your vehicle manufacturer’s warranty intact by providing additional coverage for repairs and maintenance that are not covered by the factory warranty. A vehicle service contract can also help to protect your warranty by providing coverage for certain parts and labor that would otherwise be excluded from the manufacturer’s warranty. Additionally, having a vehicle service contract can help to maintain your vehicle manufacturer’s warranty by offering roadside assistance and other services that may be necessary to keep your vehicle in good working condition. Finally, having a vehicle service contract can help to ensure that the manufacturer’s warranty is honored in the event of a dispute, as the Magnuson-Moss Warranty Act states that a manufacturer or dealer cannot void a warranty or deny coverage due to the owner performing their own repairs.

5. Access to certified mechanics

Having a vehicle service contract enables users to access certified mechanics because it gives them the flexibility to take their car to any service center that is willing to work with their vehicle service contract, as well as the assurance that the mechanics are certified. Most contracts require the vehicle to be taken to a facility with an ASE Certified technician, and many dealerships are included as service centers. Furthermore, the USMCA trade agreement, which was signed into law in 2020, ensures that vehicle owners have access to the parts and services they need to keep their cars running safely. The Right to Repair laws, such as the one passed in Massachusetts in 2020, also ensure that owners have access to the mechanical data they need to make informed repair decisions.

6. Ability to make warranty claims without having to pay upfront

Having a vehicle service contract can help with warranty claims by providing direct coverage for repairs and other costs associated with a broken down car. With a direct warranty provider, you don’t have to worry about the hassle of dealing with a manufacturer or retailer to get warranty service. The direct warranty provider pays your claims directly to the service center, or reimburses you for repairs made. This makes the process of claiming warranty much smoother and less time consuming. Additionally, with a vehicle service contract you can adjust the amount of your deductible payment before purchase, giving you more control over the cost of your coverage.

7. Extended vehicle coverage

A vehicle service contract (VSC) is an optional extended protection plan that covers certain repair costs for your vehicle beyond the manufacturer’s warranty. It is like a health insurance policy for your car, as it helps protect you from the high costs of unexpected and potentially expensive repair bills. VSCs can be worked into car financing, so that you pay a small amount monthly to avoid costly repair and maintenance expenses down the road. Generally, the earlier you purchase a service contract in the life of the vehicle, the better coverage you can obtain. VSCs are customizable, so you can choose the coverage that works best for your vehicle, budget, and lifestyle. Coverage can include mechanical breakdown coverage, extended warranties, powertrain coverage, roadside assistance, and more.

8. Ability to negotiate with the insurance company if there are disputes

Having a vehicle service contract can help with disputes over repairs with the insurance company by providing a framework for understanding the agreement and any exclusions that may apply. The contract holder can review the terms and conditions of the contract to gain a better understanding of the coverage provided. In the event of a claim being denied, the contract holder can obtain more information from the claim administrator, such as which specific provisions of the repair agreement are being used to deny the claim and what evidence the administrator has to support their decision. The contract holder can also obtain a copy of any inspection report or obtain input from the mechanic/service writer to better understand the situation and build a case for why the repair should be covered. If the claim is still denied, they can write an appeal letter or email explaining their position and provide copies of all relevant documents to support their argument.

9. Convenience of having all the service work done at one location

Having all service work done at one location can benefit the customer in numerous ways. For example, having all repairs done in one place can save a customer time and money, since they won’t have to search for different service centers and are more likely to receive consistent, quality work. In addition, customers can rest assured that their car is being worked on by qualified technicians who are certified to work on their vehicle and backed by the warranty provider. Furthermore, customers may be able to find lower labor rates at a single service center as compared to multiple service centers. Finally, customers who purchase a vehicle service contract from a reputable provider will not have to worry about their information being shared with other sources. All in all, the convenience and peace of mind that come with having all service work done at one location are invaluable benefits for the customer.

10. Savings on rental car costs

Having a vehicle service contract can help save money on rental car costs by providing coverage for unexpected repair costs, minimizing the amount of money needed for repairs. This can help keep a car in good working condition, maintaining its value and reducing the need to rent a car during times of repair or breakdowns. Having a vehicle service contract also offers peace of mind, knowing that many of the repair costs will be covered without incurring a lot of extra, unexpected expenses. Additionally, most vehicle service contracts come with a one-time deductible, which can help reduce the overall rental car costs by limiting the costs you would otherwise have to pay for multiple repairs on a single repair visit.

What are the Responsibilities of Vehicle Owners with Respect to Their Vehicles Under a Vehicle Service Contract?

1. Take the vehicle to the repair shop when needed.

Step-by-Step Instructions for Vehicle Owners Taking Their Vehicles to the Repair Shop Under a Vehicle Service Contract:

  1. Do your research to find a reputable mechanic or repair shop with ASE certified mechanics.
  2. Consider taking your vehicle to an auto parts store for a free computer diagnostic test before visiting the repair shop.
  3. When you arrive at the repair shop, ask for a written estimate of the cost of repairs and make sure all additional costs are disclosed before work begins.
  4. Ask if the repair shop offers a warranty on the services they provide.
  5. Make sure the repair shop obtains written approval of the loan from the finance company if you are borrowing money to pay for repairs.
  6. Make sure the repair shop obtains your written approval for any additional work to be done that was not set forth in the original written agreement.
  7. Ask if the repair shop offers free towing and/or a free rental car during repairs.
  8. Be aware of the deductible amount for your vehicle service contract and make sure it is paid only one time on each repair visit.
  9. Be aware of your rights under the Magnusson-Moss Warranty Act and the Federal Trade Commission.
  10. Once the repair work is completed, ask for a written invoice detailing all work done and the cost of the repairs.

2. Pay any fees associated with the repair.

When you purchase a vehicle service contract, you may be required to pay a deductible. This deductible is usually a predetermined amount stated in the contract and can be adjusted before signing. In many cases, the payment is made directly to the service center, while in other cases the policy owner is eligible for reimbursement for repairs made.

If you suspect you have been overcharged for a repair, you may question the bill and ask the mechanic to explain the difference in cost in writing. You may also return your old parts to the mechanic. Keep in mind that if you refuse to pay a repair bill, the mechanic may legally keep your car until you pay.

If you feel the mechanic has not properly repaired the vehicle or charged too much, you can take your car to another repair shop for a second opinion. Be sure to get this report in writing. You may also dispute the charge with your credit card company, provided you submit the dispute in writing within 60 days of receiving the credit card bill.

Finally, all repair agreements have a toll-free phone number where you can report needed repairs immediately to the obligor or claim administrator. It is important to follow the contract’s instructions exactly to ensure that the repair is covered.

3. Provide the vehicle warranty company with documentation of the repairs.

Step 1: Obtain a vehicle service contract from the dealer or manufacturer.

Step 2: Ensure that the service contract includes the details of the service that is being provided and the terms of the warranty.

Step 3: Collect all necessary documentation related to the repair, such as invoices, estimates, and other related paperwork.

Step 4: Contact the warranty company and provide them with the details of the repair.

Step 5: Provide a copy of the service contract and the related repair documentation to the warranty company.

Step 6: The warranty company will review the documents and determine if the repair is covered under the service contract.

Step 7: If the repair is covered, the warranty company will provide you with a reimbursement for the repair costs.

4. Allow the vehicle warranty company to inspect the vehicle.

Step 1: Before allowing a warranty company to inspect your vehicle, make sure you obtain a copy of the inspection authorization form that contains your signature and outlines the requested information.

Step 2: Do not accept verbal agreements. Get everything written down in the inspection authorization form.

Step 3: Do not allow anyone to speak for you when negotiating car repairs.

Step 4: Do not provide any personal information, especially your driver’s license number or credit card account number, unless you have approved the work and the work is finished.

Step 5: Make sure to clearly indicate in writing that the providing of this information does not constitute an authorization to inspect or repair your vehicle.

Step 6: Make sure that the service contract company has registered with the state and insured their contracts to guarantee payment of claims.

Step 7: Make sure that the contract clearly specifies which company insures it, allows for a full refund within 10 days, explains how to get approval for repairs, states if there is a deductible for service, and discloses any exclusions to coverage.

Step 8: Make sure that the contract also specifies if the company will be using non-original parts in repairs, and whether it covers consequential damages or preexisting conditions.

Step 9: Make sure that the contract also states what you need to do in order to maintain coverage, such as performing scheduled maintenance on the car.

Step 10: Lastly, make sure to remove all valuables from your car before allowing the warranty company to inspect it.

5. Have the vehicle warranty company approve the repairs.

Step 1: Make sure you read and understand the terms of the service contract before signing it. Make sure you are aware of any exclusions or conditions under which coverage is not provided.

Step 2: Obtain a written authorization to inspect, test drive, diagnose, or disassemble any part of your car to provide an estimate of repair costs. This authorization should include the actions to be taken, the charges, and whether any parts will be removed or the vehicle disassembled.

Step 3: Be present and speak up when the vehicle is inspected or disassembled. Do not disclose any personal information unless you have authorized the work and are ready to pay for it.

Step 4: Clarify any discrepancies between the estimate of repair costs and the actual repair costs. Ask for a detailed explanation of any additional work that needs to be done.

Step 5: Make sure the authorization to commence repairs is on a separate form from the authorization to inspect, and that both forms require your signature. Ensure that the authorization to commence repairs also includes the date and time that you signed the form.

Step 6: Make sure the initial work order clearly specifies the work to be done, fees, completion date, terms of payment, and more.

Step 7: Monitor the progress of the repairs and make sure the work is being completed according to the terms of the service contract.

Step 8: Ask for an itemized list of all charges and make sure the work performed is consistent with the list of charges.

Step 9: Make sure you get a copy of the completed work order and the original document authorizing the repairs.

Step 10: Make sure any warranties and guarantees are provided in writing.

6. Enforce your warranty rights if needed.

Step-by-Step Instructions for Enforcing Warranty Rights when Having a Vehicle Service Contract:

  1. Understand your rights. Vehicle owners have a legal right to implied warranties under state law, as well as express warranties stated in the service contract. Most states limit implied warranties to four years.
  2. Contact the retailer and manufacturer. If you discover that something you bought is defective, contact the retailer and manufacturer to ask for a repair, replacement, or refund.
  3. Understand any disclaimers. Most states allow companies to negate, or “disclaim,” the implied warranty by conspicuously disclosing that a product is being sold “as is” or “with all faults,” or by simply stating there’s no implied warranty.
  4. Know your state laws. Eleven states and the District of Columbia prohibit consumer products from being sold “as is.” In some of those states, stores can still sell items without implied warranties if they follow strict requirements, such as telling the customer exactly what’s wrong with the product or by selling the item as a factory second.
  5. Check your credit card. Many credit and some debit cards extend the manufacturer’s written warranty, usually for up to one year, on most products you buy using the card. Check the documentation that came with your card or go to the issuer’s website.
  6. Investigate chargebacks. If you have a problem with the quality of a product or service you paid for with your credit card, federal law gives you up to a year to seek a chargeback. The disputed amount must be more than $50, the merchant must be in your home state or within 100 miles of your mailing address, and you must have first tried to resolve the problem with the merchant.
  7. Contact the Better Business Bureau. If none of the above steps resolve the issue, contact the Better Business Bureau and your state attorney general or consumer protection office.
  8. Consider legal action. If the product is expensive, contact a consumer attorney for legal action or send a demand letter threatening to take the company to small-claims court.

7. Understand your warranty coverage and terms.

When purchasing a vehicle service contract, it is important to understand the different types of coverage and terms available. Express warranties are written or spoken promises from a manufacturer or retailer and are transferable, don’t limit implied warranties, and require no fees for service. Implied warranties are automatic protections granted by state law. Lifetime warranties may refer to how long a company carries the product, the length of time the product is available from the manufacturer, or how long the company is able to provide service. Consequential or incidental damages are losses caused by a defective product. Tie-in sales provisions require customers to buy products or services from a particular company to maintain warranty coverage, which is prohibited. The federal Magnuson-Moss Warranty Act prohibits companies from disclaiming implied warranties during any period that its written warranty or any service contract is in effect.

When shopping for a vehicle service contract, it is important to understand the type and length of coverage you are getting, as well as any fees or restrictions that may be associated with the warranty. Make sure to ask questions and read the fine print to ensure you are getting the best coverage for your needs and that you are fully protected.

8. Read the fine print of your vehicle warranty.

Reading the fine print of a vehicle warranty can help vehicle owners make informed decisions about the coverage offered by their vehicle service contract. By understanding the details of their coverage, including the costs and exclusions, vehicle owners can be sure they are getting the best value for their money when it comes to repairs and maintenance of their vehicle. Additionally, understanding the laws and regulations surrounding warranties and service contracts can help vehicle owners identify and avoid potentially fraudulent offers. Knowing the details of your coverage can help protect you from any surprises down the road.

How Long Does a Vehicle Warranty Last?

A vehicle’s warranty typically lasts up to three years or 36,000 miles, although some companies such as Hyundai offer five year / 60,000 mile manufacturer warranties. The contract is between the manufacturer and the end consumer and must be included in the purchase price, and available to read prior to purchase. After the warranty expires, repairs are no longer covered and vehicle service contract coverage may be purchased to fill the gap. The coverage of a vehicle service contract may be based on the car’s mileage and age, and can be purchased at any time. If a car is sold or traded through the dealership, the VSC will be cancelled and reimbursed as a prorated amount.