Vehicle Service Contracts

A vehicle service contract can help to cover a wide range of auto repairs after your car’s factory warranty expires. That way, you won’t have to worry about unexpected repair or replacement costs because most fixes have already been paid for.

Here, we’ll give you an overview of vehicle service contracts – what they are, what they cover, how much they cost, if they’re worth it, and who the best providers are. By the end, you’ll be on your way to making an educated decision about the value of vehicle service contracts.

A vehicle service contract is a paid plan that helps to cover costly car repairs and takes effect once the new vehicle warranty has expired. Often called an extended car warranty, a vehicle service contract can be purchased for both new and used cars, though the likelihood of repairs increases as your vehicle begins to age.

You can use vehicle service contracts whenever your vehicle needs a repair that’s covered by your contract. Remember that all vehicle service contract providers offer multiple levels of coverage, so not every service contract will cover every repair.

Difference Between Factory Warranties And Extended Warranties

There are subtle differences between vehicle service contracts and extended warranties, even if the two are mostly the same. The key difference is that service contracts do not literally extend a manufacturer’s warranty – only the automaker can do that. Instead, they mirror the factory warranty coverage and sometimes provide additional protection as well.

What Does A Vehicle Service Contract Cover?

Vehicle service contracts can cover just the powertrain (engine, transmission, and drive axle) or almost anything a factory warranty covers. Plans can include air conditioning, electrical, steering, braking, suspension, fuel systems, and more.

If you want to be completely covered, you’ll probably want to purchase a contract that offers exclusionary coverage. That means the contract covers everything except the parts specifically listed as exclusions.

When purchasing a vehicle service contract, it’s important to read the fine print very carefully. Most contracts will specifically list all the parts that are covered. However, exclusionary contracts do the opposite, covering everything except the listed parts.

What Is Not Covered Under Extended Warranties?

That said, even parts that appear to be covered by a contract won’t always get protection. Many contracts specifically state that they only apply to mechanical breakdowns and exclude repairs due to wear and tear. That means you’ll have to foot the repair bill if one of your covered components breaks for any reason other than the one specified in the contract.

Some providers may also deny coverage if a noncovered part damages a covered part. At times, diagnostics are required to figure out what’s wrong with your vehicle. Even if the policy covers actual damages, you’ll be required to pay for the vehicle diagnostics.

Warranty exclusions can be complicated, so it’s vital that you carefully read through the jargon to ensure that you understand what you’re getting yourself into.

There’s no one set price for vehicle service contracts. The cost of your contract will depend on your car’s make, model, year, and condition, as well as the level of coverage and term length. Like an insurance policy, the riskier your car is to the provider, the more you’ll probably pay for a contract.

Each provider will also have its own process as to how claims are filed and covered. Some companies require you to pay the repair facility upfront, after which they’ll reimburse you. Others deal with the repair facility from the start and pay directly, meaning that you’ll rarely have to spend a dollar out of your pocket for costly repairs.

Average Cost Of A Vehicle Service Contract

On average, most vehicle service contracts cost somewhere between $350 and $700 per year. Total costs range from about $2,000 to $4,000. Before purchasing a vehicle service contract, you should consider how much you’d spend on repairs without one to determine whether it makes financial sense.

Whether a vehicle service contract is worth it depends on the company you’re buying from, how much you’re paying, what’s covered, and the condition of your vehicle. Remember, it’s not uncommon these days for motorists to put over 150,000 miles on their cars over the vehicle’s lifetime. If you plan to hold onto your car for a while, a vehicle service contract may be worth it.

You may never use the vehicle service contract, but coverage becomes extremely valuable if a major component of your car breaks. Remember that not all vehicle service contracts are made equal, so check out our guide to the best extended car warranties if you haven’t yet.

Choose Your Provider Carefully

Vehicle service contracts are often worth the money, especially for used vehicles, if you purchase from a reputable brand and value your peace of mind. For some people, the knowledge that they have a clearly defined limit on how much they’ll spend on repairs is worth it alone. Vehicle service contracts will come in handy for other drivers by saving them hundreds or even thousands of dollars.

Some companies make it so difficult to get a claim covered that you’d probably be willing to pay just not to deal with the provider. But when you purchase a vehicle service contract from a reputable business, the peace of mind may not only ease your worries about the car’s condition but also help you to set a budget more easily.

Motorists can purchase vehicle service contracts from both dealers and third-party providers. Whether you buy an extended warranty from a dealership or a independent option, you should know the pros and cons of each. Let’s take a quick look at their advantages, disadvantages, and differences.

Vehicle Service Contract Companies

Third-party vehicle service contract providers act completely independently of your car’s manufacturer. This brings along some risk: unlike buying an extended warranty from Ford or Hyundai, you need to research third-party providers to make sure that the companies are trustworthy.

However, vetting third-party providers doesn’t take long. If you do find a provider you like, you often have far more flexibility with car repairs. Endurance, for example, has a massive network of service providers across the U.S., so it’s much more likely that you can get your car repaired at your favorite local store and still be covered.

While we recommend Endurance, we urge you to get quotes from several different warranty providers to get the right coverage at the best price. It’s a good idea to ask for a sample contract so you can read the fine print and better understand what parts are covered and what’s considered normal wear.

Service Contracts From Car Dealerships

The advantage of purchasing an auto service contract from a dealer is that you’ll always get genuine replacement parts from your manufacturer when car repairs are covered. However, you’ll also be limited to servicing your vehicle at one of your manufacturer’s authorized service centers. Don’t plan to bring your car to your favorite auto body shop and still receive coverage, and expect to pay more than for third-party coverage.

In this article, we explained what vehicle service contracts are and how third-party extended warranties differ. We also looked at the average coverage plans and costs of vehicle service contracts to determine whether they’re worth purchasing. In our opinion, it’s smarter to get an extended warranty from an aftermarket warranty company than from a car dealership.

Best Vehicle Service Contract Companies

To cut through the noise, we reviewed the top extended car warranty providers and ranked them based on customer service, business reputation, coverage options, and perks. We’ve sorted through the best and worst providers, and the companies that came out on top are Endurance and CARCHEX.

Endurance: 4.6 Stars

The highest-ranking extended warranty company we reviewed is Endurance, which also scored best in coverage options. Out of all the vehicle service contract providers we reviewed, Endurance is the one we recommend the most highly. We named it the Best Coverage option for its large repair network, great customer service, and large number of coverage plans.

Unlike most extended warranty companies that work as brokers between customers and plan providers, Endurance directly administers its warranty plans and is involved at every step of the claims process. The company’s one-stop shop service speeds up claims and offers peace of mind knowing you have only one company to contact if you need assistance.

Endurance Warranty Coverage Options

The coverage plans offered by Endurance are comprehensive and account for different ranges in price and protection. Plans are offered with up to 8 years/200,000+ miles of protection.

• Select Premier coverage: Endurance’s plan for high-mileage vehicles, this warranty has a fairly extensive inclusion list that focuses on the powertrain.
• Secure coverage: Endurance’s most basic auto warranty only covers parts of the powertrain, meaning the engine, transmission, and drivetrain.
• Secure Plus coverage: This mid-level warranty provides the shortest wait time out of all the plans. The waiting period for coverage is only 30 days/1,000 miles.
• Superior coverage: This high-tier comprehensive plan provides great coverage for hundreds of listed parts throughout the vehicle.
• Supreme coverage: This top-tier plan is Endurance’s exclusionary, bumper-to-bumper warranty. It includes coverage for most parts with only some exclusions.
• EnduranceAdvantage™: This plan covers both mechanical breakdowns and maintenance needs like oil changes, engine diagnostics, and brake pad replacements.

Unlike some dealership extended warranties, many Endurance contracts don’t charge a deductible or require you to visit a specific dealership. You can choose any repair shop you like and are only required to pay a monthly payment that fits your budget.

Endurance plans come with extra perks like rental car reimbursement, towing services, and roadside assistance. Customers also get one free year of Endurance Elite Benefits including tire repairs and total loss protection.

CARCHEX: 4.4 Stars

CARCHEX has been in business for over 20 years and maintains an A+ rating with the Better Business Bureau (BBB). It has been endorsed by major brands like Edmunds.com, Kelley Blue Book, and CARFAX and has received numerous recognitions, including:

• Thoroughly Reviewed 2017 Top Pick
• A five-star rating on TopConsumerReviews.org for six years in a row
• The BestReviewsHub.com Best Choice Award for four years in a row

CARCHEX works hard to prioritize its customers’ warranty satisfaction. It guarantees that calling in for a quote won’t put you on the line with a high-pressure salesperson. When you call, CARCHEX will place you in contact with someone who can make sense of plan options. This is helpful because, like all legal documents, vehicle service contracts can be confusing.

All CARCHEX warranty contracts come with extra perks like roadside assistance and trip interruption benefits.

Auto Service Contract: FAQ

Below are common questions vehicle owners ask regarding vehicle service contracts.