What Is An Extended Service Plan And Is It Worth It?

When you buy a new vehicle, your vehicle is commonly protected under a manufacturer’s warranty for a specific number of years or miles, typical 3-year/36,000 mile, whichever comes first. Once you pass the limited warranty’s time or mileage threshold, you are fully responsible for repairs to your vehicle.

Vehicle repairs can be very expensive. For example, a common timing belt replacement can cost up to $900 according to Angie’s List. In addition, a broken timing belt replacement may cost up to $2,000 or more if it causes damage to a vehicle’s pistons, water pump, or valves.

For some vehicle owners, purchasing an extended service plan is a wise decision and provides peace of mind. In other cases, a protection plan may not be worth the cost.

In this article, we’ll make it easier for you to decide whether an extended service plan is right for you by describing what extended service plans are, what they cost, and who the most reputable providers in the industry are.

Use the tool below to get free quotes from our top three picks:

An extended service plan, also known as a vehicle service contract or extended warranty, is an optional plan that is designed to protect you from costly repairs after your manufacturer’s warranty expires.

These plans are offered by dealerships and third-party providers. Third-party providers generally offer more affordable plans than those offered by dealerships.

Typically, you make relatively small monthly payments toward your contract and pay a deductible if and when you need covered services on your vehicle.

Different plans cover different repairs and there are usually some exclusions to every plan. Comprehensive coverage normally includes the equivalent of a drivetrain warranty, powertrain warranty, corrosion/rust warranty, and bumper-to-bumper extended warranty.

Most extended service plan providers also include additional services such as roadside assistance, rental car reimbursement, and towing, while many let you choose which repair shop to use for repairs.

Leading third-party providers such as CARCHEX and Endurance provide easy-to-find sample contracts on their websites for you to review.

The cost of an extended service plan depends on a variety of factors related to your vehicle and the type of provider with whom you choose to sign your contract.

Our review team has studied several providers, and we found that both Endurance and CARCHEX are excellent extended service plan providers with reasonable costs.

Here is a list of some of the factors that will determine the cost of your extended service plan:

• Age of the vehicle
• Mileage of the vehicle
• Buying from a dealership versus a third-party provider
• Vehicle year, make, and model
• Level of coverage
• Number of high-tech components in the vehicle
• Driving habits and routine vehicle maintenance

Deciding whether to purchase an extended service plan is an important and often time-consuming decision.

Generally, there are more pros than cons to buying an extended service plan if you can’t afford costly repairs and you want to keep your car for several more years. Extended warranty coverage is especially useful if you own or are planning to buy a used car for added protection, as high-mileage cars are more likely to need repairs. As extended service plans are transferable to a new owner, the additional coverage can increase the resale value of your car.

There are more cons than pros to buying extended warranty coverage if you’re able to afford costly repairs and you plan to purchase a different car in the next several years.

When searching for a reputable extended service plan provider, we recommend that you:

• Skim coverage options: The more coverage options the provider has available, the more likely you are to find a plan that provides the coverage your car need.
• Read through sample contacts: Many of the best extended extended service plan providers include sample contracts of their plans on their website. This will help you look at a breakdown of different plans, including what the plan covers and excludes.
• Check the number of years in business: The number of years a provider says a lot about the company, as many untrustworthy or scam companies haven’t been in business very long and don’t stay around long, either. Companies that are well established will also have many online reviews and comments.
• Examine industry partnerships: Industry partnerships and endorsements can verify the trustworthiness of company.
• Verify that plans are insurance-backed: Many providers offer extended service plans that are backed by a financially stable insurance company, which can give you extra assurance that your covered claims will be paid out.

When shopping for extended warranties, the best thing to do is call around and get quotes customized to your specific vehicle. That way, you can compare each company’s prices and get a feel for customer service. Get a free quote from our top three providers below:

#1 Best Coverage: Endurance

Endurance, which offers direct-to-consumer extended service plans, received a 4.6-star rating from Motor1. Endurance stands out among its competitors in the following ways:

1. Repair options: Endurance allows automobile owners to choose from any repair shop certified by Automotive Service Excellence (ASE) to complete their covered repairs.
2. Covers automobiles with high mileage: Endurance offers extended service plans to automobiles with up to 200,000+ miles. This mileage rate is much higher than many other providers.
3. Gold level certification from the Vehicle Protection Association: The Vehicle Protection Association (VPA) is a non-profit organization that ensures that member companies are using the best business practices. Few companies hold a gold level certification from the VPA, so this accomplishment by Endurance is very impressive.

Read more about Endurance reviews in our article.

#2 Best For Used Cars: CARCHEX

CARCHEX received Motor1 rating of 4.4-stars. Here are a few reasons that CARCHEX is an outstanding extended service plan provider for used cars.

1. Variety of extended service plan options: CARCHEX provides five different plan options, each of which can be customized. In addition, each of their plans comes with 24/7 emergency roadside assistance, trip interruption services, and lockout services.
2. Industry endorsements: CARCHEX has received industry endorsements from Edmunds.com, Kelley Blue Book, and CARFAX. These endorsements are a strong signal that CARCHEX is a top extended service plan provider.
3. A+ BBB rating: CARCHEX’s A+ BBB rating establishes that the company takes customer service seriously and is responsive to its customers.

Read more about CARCHEX reviews in our article.

Having trouble deciding between Endurance and CARCHEX? Read our Endurance vs. CARCHEX review.