Speed Reads
- Direct Buy Auto Warranty, ASAP Warranty, and US Fidelis are our top picks for the worst extended auto warranty companies.
- A warranty company should be avoided if it has a bad reputation among customers, high costs, major coverage limitations, and a lack of industry endorsements.
- For great warranty companies with excellent coverage, affordable costs, and good customer satisfaction reputations are Endurance, CarShield, and CARCHEX.
Once your factory warranty ends, you’re responsible for any car repairs you might face unless you invest in an extended car warranty. The trouble with finding the best providers is that you have to first weed through the worst extended auto warranty companies.
Fortunately for you, we’ve spent 1,475 hours researching, what to look for, what to avoid, and how to find the best deal. For a complete overview of the best extended car warranty companies, see our full review in which we declared Endurance our No. 1 choice.
Our Worst Extended Auto Warranty Companies Review And Methodology
There are many elements that make an auto warranty provider the right fit for you. We create an overall review score for each provider based on its ratings in five main areas: industry standing, coverage, cost, transparency, and customer service.
How We Rated The Worst Auto Warranty Companies
To give you the most current information, we update our review standards several times each year. Below are more details for what we look for in each rating category:
Industry Standing
Providers are given a high score in this category based on any awards, ratings, or recognitions by trusted warranty evaluators, like Kelley Blue Book, CARFAX, or the Better Business Bureau (BBB). We also consider customer reviews on sites like the BBB and Trustpilot, and how much experience a warranty provider has.
Coverage
Providers that offer several different coverage options are rewarded with a higher score in this category. If a company offers plans with long-term limits and several benefits, its Coverage score increases.
Cost
Providers that offer affordable coverage plans as well as deductible options can expect to see a higher score in the cost category. If these same providers offer discounts, their score will increase.
Transparency
When it comes to this category, if a company offers a money-back guarantee and allows customers to view sample contracts on coverage plan pages, it will receive a high score. Its website also has to be relatively clear and easy to navigate.
Customer Service
Strong customer reviews online bring providers high scores in this category. If a provider has a mobile app and offers an online chat option for customers, its score for customer service will increase as well.
Worst Car Warranty Companies
You’ve likely had a car warranty at some point, especially if you’ve ever bought a new or certified pre-owned (CPO) vehicle. Some car warranties provide top-tier protection, while others barely offer any coverage. Our team reviewed 46 warranty providers to find the best and worst members of the industry. This article will cover what you need to know to spot the worst car warranty companies.
What Is A Car Warranty?
All new vehicles come with a limited manufacturer’s warranty that pays for covered repairs and replacements during the warranty period. However, after your initial warranty expires, you’re left without additional protection.
Drivers can purchase an extended warranty or vehicle service contract to protect against high-cost car repairs when their factory warranty expires. However, as you’re shopping around for coverage, it’s essential to research each provider and read through the fine print to understand the coverage provided by your contract before agreeing to terms.
While you may never use a car warranty, it’s considered to be more of a purchase for peace of mind. In a 2022 survey conducted by our research team, 75 percent of respondents stated that their extended warranty covered repairs some or entirely. Meanwhile, 18 percent of respondents stated that they never had to use it for repairs.
Car Warranty Company Red Flags
As you navigate the worst extended auto warranty companies, it helps to know what red flags to look for during your search. Below, we touch on a few warning signs to keep your eyes open for.
Bad Reputation
One of the easiest ways to research an extended auto warranty company is to look at what other customers are saying. You can examine complaints lodged with the BBB or simply do a Google search on the provider. The company’s reputation will speak for itself one way or another. We analyzed 3,850 online customer reviews to get a sense of what customers thought of each warranty provider.
While some reviews need to be taken with a grain of salt, you can generally get a good feeling for how the company operates with this simple research.
Lack Of Industry Endorsements
Most reputable extended car warranty companies have been endorsed by industry leaders or even celebrities. Edmunds.com, Kelley Blue Book, and CARFAX are all reliable sources of information in the car industry. If no one is willing to recommend the provider in question, you must ask yourself why.
Major Limitations
There aren’t many service contracts that handle every repair, but the most common repairs should be included in your coverage. For the most part, if you don’t see a component listed, you must assume it’s not covered. Our research team found 2,215 data points to compare and contrast what each warranty covers.
You also want to be aware of what any contract’s absolute exclusions are. For example, some contracts will have fine print, such as the ability to deny your claim if a covered part gets damaged by a non-covered component.
Many extended warranty providers don’t cover normal wear-and-tear replacements, so that shouldn’t necessarily be a dealbreaker. Some apply a depreciation factor while calculating your coverage, though. This means the provider only pays for replacement costs or partial repairs if your car is under a certain mileage.
You need to be clear on what is and isn’t covered before you sign up for any warranty protection. If something is unclear, or the company is unwilling to help you understand the coverage, you should think about running the other way.
High Costs
The cost of an extended warranty is rarely considered cheap, but it also shouldn’t be exponentially more than you expect to spend on repairs during the length of the contract. Of course, the price depends on what coverage you choose, as well as the make, model, year, and condition of your vehicle.
We always recommend reaching out for several different quotes. During the process, you might learn a lot about vehicle service contracts and what you’re looking for. If one quote comes back much higher than the others, a company might be trying to overcharge you. In the same way, a company with rock-bottom prices could indicate that the coverage isn’t as comprehensive as some of the other plans you’re considering.
Inability To Transfer Plans
The top providers for extended warranties almost always allow you to transfer your plan, although there might be a fee involved. The ability to transfer could increase your car’s appeal during the selling process and give its next potential owner a sense of trust when looking at your vehicle.
How To Avoid Car Warranty Scams
The Federal Trade Commission (FTC) outlines some great steps to steer clear of scams:
1. Walk away from fast talkers. A telemarketer pushing auto warranties is going to use high-pressure tactics to hide any faults in the product. Legitimate companies that care about protecting your vehicle will give you the time you need to make a decision and provide you with written information to reference.
2. Don’t give out any sensitive information. Unless you know who you’re dealing with, never provide your bank account, credit card, or Social Security numbers. It’s best to hold onto your driver’s license number and Vehicle Identification Number (VIN) too. This data can be used against you to commit fraud. If a company asks for sensitive information while you are simply researching plans, it could be a sign that the company is untrustworthy.
3.Beware of unsolicited phone calls. If you put your phone number on the National Do Not Call Registry, you shouldn’t be receiving unsolicited sales pitches, either from live salespeople or recordings. If you do receive these, make sure you report them.
Worst Extended Car Warranty Companies Examples
As you do your research on extended warranties, you can learn from some of these companies that are now out of business:
Direct Buy Auto Warranty
Back in 2015, the state of New Jersey reached an $810,000 settlement with Direct Buy Auto Warranty because the provider misled customers about warranty protection and didn’t follow through with promised coverage. The lawsuit alleged that the company violated the New Jersey Consumer Fraud Act, as well as the Plain Language Act, the Regulations Governing General Advertising, and the Corporations Act.
Direct Buy Auto Warranty promoted comprehensive extended warranties that claimed to pay for most repairs. Instead, the policies had many exclusions that left customers paying for the majority of repairs. In the end, Direct Buy Auto Warranty was ordered to cease business in the state, but the company ended up filing for bankruptcy and ceasing operations across the entire country instead.
ASAP Warranty
According to the BBB, American Standard Auto Protection, otherwise known as ASAP Warranty, was noted to be out of business in March 2019. This comes after a number of complaints that ASAP Warranty was not honoring its 30-day cancellation policy and that customers were unable to contact anyone at the company.
The BBB reached out to ASAP Warranty about these complaints and also to substantiate claims of being rated the most trusted extended auto warranty program. Contact attempts went unanswered.
When consumers dial the phone number today, they receive a message saying that the company isn’t taking new customers and existing customers can no longer receive service. If involved in this scam, BBB recommends that consumers contact their attorney general’s office and file a formal complaint against ASAP Warranty.
US Fidelis
US Fidelis is another third-party company that has a record of poor business practices. You might remember the provider’s TV ads, which showcased a halo above the logo to imply that the organization was faith-based. It turns out the company wasn’t as trustworthy as it led consumers to believe and is now out of business, according to the BBB.
In 36 months, the company received more than 1,000 complaints with the BBB. Because of these complaints, several attorney generals across 40 states started an investigation. The basis of the inquiry was for violations of the “Do Not Call” registry and misleading consumers into believing that the company had dealer and car manufacturers affiliations.
At the end of the investigation, Darain and Cory Atkinson pled guilty to insurance fraud, felony stealing, and other violations in 2012. Darain was sentenced to eight years in prison, while his brother Cory received a four-year sentence.
Do You Need An Extended Car Warranty?
Looking at the worst extended auto warranty companies can make some car owners hesitant about purchasing extended protection at all. But if you don’t have a plan after your factory warranty ends, you must be prepared to handle any costs associated with breakdowns out of your own pocket.
While that might not sound like a big deal, take a look at some of the more expensive common car repairs according to RepairPal, a repair cost data site:
- Airbag control module replacement: $657 to $682
- Suspension shock replacement: $806 to $904
- Head gasket replacement: $1,079 to $1,361
- Transmission replacement: $4,967 to $5,167
If you don’t have the cash on hand to cover potential repairs like these, you could be putting your financial situation in jeopardy. On the other hand, with an extended warranty, you can make small monthly payments rather than being expected to pay a lump sum without warning.
Here are a few more reasons to consider long-term vehicle protection:
| You want to keep your vehicle longer. | Your car model might be dependable, but you want to get every mile out of it that you can. With an extended auto plan, you ensure that all major components and systems of your car are protected. |
| You can’t afford high repair costs. | With a warranty, you know precisely what you are going to pay, whether it is through the premium or monthly payment plans and a deductible. |
| You want peace of mind. | With the right warranty in place, you know you have coverage when something breaks. You can also get a plan with roadside assistance to relieve even more potential stress. |
| You’re going to sell your vehicle. | Even if you plan to sell your car in the future, a warranty could greatly increase your car’s curb appeal. Many companies allow you to transfer coverage to a new owner. |
Vehicle owners receive countless benefits with trustworthy auto protection in place. The key is finding the warranty service contract that fulfills your needs.
How To Find The Best Extended Auto Warranty Companies
If you do your research, you can find a reputable warranty company. As with any industry, there are companies out there looking to take advantage of unaware consumers.
Evaluate any potential warranty provider by these criteria:
- Reputation: Research companies with the BBB. A high number of complaints about the same issues could indicate that the company is untrustworthy.
- Customer service: Is the company responsive? Do representatives allow you time to review the paperwork? Are they able to give you details regarding the warranty coverage and exclusions in writing?
- Coverage: Find out what vehicle protection plans are offered and how these plans can be customized for your specific needs.
- Additional perks: Does the organization provide roadside assistance, towing coverage, rental cars, or any other extra benefits?
- Claims process: Can you choose your repair facility? Do you have to pay for the repair bills up front and wait for reimbursement, or does the company handle claims directly?
- Cancellation policy: Check the cancellation policy to ensure you can change your mind once the plan begins. Many reputable providers offer a money-back guarantee.
What To Do If You’ve Been Scammed By A Warranty Company
If you’ve been victimized by one of the worst extended auto warranty companies, you should take action. Follow these steps when you don’t get what you paid for with a warranty scammer:
- Attempt to resolve your dispute with the company privately.
- If that doesn’t produce results, contact the attorney general of your state.
- File complaints with the state insurance commission and the FTC.
The FTC likely won’t intervene in the dispute, but the information you submit could be used to indicate a pattern of abuse and prompt action from the FTC if violations are blatant.
Worst Extended Auto Warranty Companies: Conclusion
In this article, we explained how to identify red flags and avoid car warranty scams from the worst extended car warranty companies. Among some of the worst companies, we gave examples of how Direct Buy Auto Warranty, ASAP Warranty, and US Fidelis went out of business based on poor business practices. We also provided information on what to do if you’ve been a victim of a scam and characteristics to look for in reputable companies.
Best Extended Car Warranty Companies
On the opposite end of the spectrum, there are some exceptional companies out there for extended protection. We recently evaluated the most popular providers on a number of criteria, including reputation, quality of coverage, customer service, and added benefits.
Having the right extended warranty coverage matters. Get free quotes from reputable providers at the links below.
Endurance: 4.6 Stars
In our research, we found Endurance to be the most well-rounded extended warranty provider. The car warranty provider offers six different service contracts, ranging from bumper-to-bumper protection to powertrain warranty coverage for your vehicle’s engine and transmission.
For new cars, plans pick up where the manufacturer’s warranty leaves off, and older vehicles are protected too. Even if your car has more than 100,000 miles, you can gain peace of mind with a protection plan. If you change your mind later, you can take advantage of the company’s 30-day money back guarantee.
Read more: Endurance Warranty reviews
CarShield: 4.5 Stars
Another great option for coverage is CarShield, which we found to be the most popular provider in the industry. We performed an in-depth comparison of CarShield and CARCHEX and found that the companies have a lot in common, including a high number of plans.
CarShield provides six affordable plans with several tiered options. The provider even has a specific warranty for motorcycles and ATVs. As with other top providers, CarShield allows you to choose your repair shop, so you don’t have to visit the dealership for warranty work. The claims process is simple, with CarShield handling payments directly, so you aren’t left waiting for reimbursement.
Read more: CarShield reviews
CARCHEX: 4.4 Stars
CARCHEX is a highly reputable brand with an A+ rating from the BBB, which can be difficult to obtain in this industry. Experts from CARFAX to Edmunds.com recommend the provider. CARCHEX also partners with Mothers Against Drunk Driving to increase road safety and stop drunk driving.
CARCHEX offers five levels of coverage. Warranty plans have a 30-day money back guarantee and don’t require down payments. Plus, all plans come with perks like 24/7 emergency roadside assistance, rental car reimbursement, and trip interruption services.
Read more: CARCHEX reviews
Worst Extended Auto Warranty Companies: FAQ
Below are frequently asked questions about the worst extended car warranties.