When 'Warranties' Won't Work: 2WTK Clears Up Car Coverage Confusion

5:36 PM, Jun 17, 2013   |    comments
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Courtesy: Getty Images

Greensboro, NC -- Buy a used car and you can be worried about problems. So, most motorists like Leslie Driver think about buying a warranty to cover the costs. The Statesville woman thought she was insuring against repair bills, but she thought wrong. It turns out Driver didn't buy a warranty at all. Instead she paid money for what's called a vehicle service contract. A contract with a different length of coverage than she thought. And the same thing could happen to you if you don't know what to look out for.

Driver bought her SUV in 2008 along with a service contract offering bumper to bumper coverage on the vehicle for $1,250.

"I was wanting the insurance that if anything went out on power train, basically any motor issues, would be covered for an extensive period of time," Driver said.

Two years later the transmission died. Much to her surprise - her service contract was dead too.

Driver thought it would cover her from the date she bought the car in 2011 - until 2017- the 60 months in the contract. But her coverage booklet said no. Her coverage actually started when the SUV was sold new in 2008 - and ended 60 months later in 2013.

"I was paying quite a bit of money for bumper-to-bumper for 19 months," she said.

That also means Driver had to pay $2,500 to fix her transmission without the service contract. The dealer wouldn't talk with 2 Wants To Know about the confusion, but they made a goodwill offer to Driver and she accepted.

The FTC has issued a warning about vehicle service contracts. Even though we car buyers often call them warranties, by law they are not. Warranties only come with new cars and are included in the price. The biggest complaint about these service contracts is what's covered - or really, not covered. The best advice: if an item isn't listed, assume it's not covered. And watch out for absolute exclusions that deny coverage for any reason. For example: if a covered part is damaged by a non-covered part, the claim may be denied. And of course, check the reputation of the service contract company with the Better Business Bureau.

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