GMAC Insurance Offers Five Questions Every Consumer Should Ask Before Purchasing an Extended Vehicle Warranty
Insurer recommends investigating reputation and ease of use to avoid fraud, rip-offs
SOUTHFIELD, Mich.- According to a recent AutoPacific survey, more Americans are waiting longer to purchase new vehicles, keeping older vehicles on the road longer and increasing the likelihood they may have to contend with unexpected, costly repairs that fall outside of a manufacturer’s warranty. GMAC Insurance today offered five questions consumers should ask when considering a vehicle service contract (VSC), sometimes called an extended warranty, which may help defray these vehicle expenses.
“During these challenging economic times, everyone is looking for ways to protect their budget,” stated Tom Callahan, executive vice president of GMAC Insurance’s Dealer Products and Services group. “In many cases, consumers are holding off on big purchases, like new vehicles. But, because the risk of major component failures increases with vehicle age, it can expose consumers to unexpected costs.”
VSCs may help by covering parts, labor and other expenses associated with vehicle repairs. However, not all VSCs are the same, and it is important for consumers to do their homework.
“Purchasing a VSC can be significant investment, and every consumer needs to consider his or her own unique circumstances and expectations,” explained Callahan. “A VSC with a reputable company can more than make up for its cost by covering future vehicle expenses, as well as providing consumers with peace of mind.”
Top Five VSC Questions Every Consumer Should Ask
GMAC Insurance, which has been offering VSCs for more than 35 years, recommends answering these five questions before purchasing a contract.
1. Is the contract easy to understand? Read the coverage terms before you purchase the contract -- the scope of coverage should be clearly stated in the body of the contract.
2. Do the coverage terms and limits make sense for your personal situation? Every situation is unique, but consumers should consider how long they plan to keep their vehicles and their typical annual mileage; the amount of the deductible in event of loss; whether coverage includes normal wear and tear; and the cancellation and refund terms. Ask yourself if the price seems reasonable for the level of coverage you are getting. If it seems too good to be true, it probably is.
3. Does the contract offer additional benefits? Some VSCs will cover repair expenses that go beyond just parts and labor by offering rental car coverage or reimbursing costs due to trip interruption.
4. Who is providing the coverage? As a general rule, a VSC should provide the right to make a claim against a licensed insurance company that maintains proper financial reserves to pay those claims. Make sure you are dealing with a nationally recognized company that has demonstrated a long-term commitment to the product and their customers.
5. Is it easy to receive coverage benefits? Is the repair process simple and convenient? Reputable VSC companies try to make the process of both purchasing and servicing the contract as easy for the consumer as possible. Consumers should investigate how claims are paid and if there are limitations on where vehicles can be repaired.
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