Here are some common terms you will need to know as you research extended warranties.

Administrator:
The company that authorizes and pays the repair facility for repair work to your vehicle. The administrator works with the repair facility to make sure your claim is handled properly. As they are the company that pays your claim, their financial strength is the most important factor in choosing a warranty company.

All Wheel Drive (AWD)
All four wheels are driven by the engine. AWD systems are superior to 4WD because they can be used under any road conditions. AWD systems use a center differential to allow the front and rear wheels to rotate at different speeds. AWD provides better traction than front or rear-wheel drive.

Auto Warranty:
See Extended warranty.

Basic Warranty:
The specific terms established by each manufacturer to repair vehicles through a specified mileage and/or time period. All factory installed and many dealer installed parts are covered under this warranty.

Better Business Bureau (BBB):
The Better Business Bureau (BBB) has long been a means consumers have used to check out a company. In order to participate in the BBB Online Reliability Program, a company must have a satisfactory complaint handling record, agree to participate in the BBB’s advertising self-regulation program, agree to abide by the BBB Code of Online Business Practices, and agree to dispute resolution with the BBB. Most of the companies who participate in this program value their standing in the BBB, and tend to do a better job at handling complaints

Bumper-to-Bumper Warranty:
The most comprehensive warranty you can buy. It will cover all parts of your vehicle and will only exclude a small list. Because the coverage is so comprehensive, it will only list the few parts not covered. Most similar to the manufacturer’s warranty.

Certified Car:
Many cars sold used or off lease are certified by the manufacturer. This means they have undergone a quality inspection process prior to sale. Often, a limited powertrain warranty is attached to them. Most do not have extended or bumper-to-bumper warranties. There is no industry standard for certification.

Claims Reserve Accounts:
An insured account that the administrator will maintain to pay future claims.

Consumable Items:
Parts such as tires, batteries, clutch plates and wiper blades that are generally not covered under any warranty.

Corrosion Warranty:
Covers rust through perforation on sheet metal. Offered as original warranty on new vehicles. Extended warranties do not cover corrosion.

Deductible:
The amount that you must pay the repair facility for work when vehicle is being repaired. Many plans are offered with a zero deductible option.

Drive Train:
The components that transmit the flow of power from the engine to the wheels. The components include the clutch, transmission, driveshafts (or axle shafts in front wheel drive), U-joints and differential.

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Filed under: Glossary of Auto Warranty Terms, Warranty Direct

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