Glossary of Extended Warranty Terms (Part 3)
Lemon Law:
The general definition of a Lemon Law vehicle: A vehicle with (a) major, repeated problem(s) that has been repurchased by, or had its purchase price renegotiated with, the manufacturer. The state then earmarks these as Lemon Law or Buyback vehicles. These vehicles are ineligible for coverage.
Maintenance Guidelines:
This is the normal, routine maintenance that is recommended by the manufacturer of your vehicle to keep the vehicle in optimum condition. These include such things as oil changes, tune-ups, checking fluid levels, tire rotations, wheel alignments, belts, hoses and others as described in your owner’s manual.
Manufacturer’s Warranty:
This is the standard warranty that every new vehicle sold comes with. All factory-installed parts are covered against defects. Typical manufacturer warranties are 3 years or 36,000 miles or 4 years or 50,000 miles. Check your manufacturer’s warranty manual for warranty information or visit our Manufacturer’s Warranty page.
Mechanical Breakdown Insurance (MBI):
A policy, contract, or agreement that undertakes to perform or provide repair or replacement service, or indemnification for that service, for the operational failure of a motor vehicle due to a defect in materials or skill of work or normal wear and tear, and that is issued by an insurance company authorized to do business in California.
Power Train Warranty:
A limited warranty from the manufacturer that covers certain parts of your vehicle’s engine, transmission and drive train assembly. If any of these components fail while the vehicle is covered under the powertrain warranty, the manufacturer is responsible for the repair. These warranties cover only about 25% of the vehicle.
Rebuilt Title:
See salvage title.
Recall:
When a manufacturer recalls vehicles it has manufactured back to the dealership for specific repairs related to unplanned mechanical problems and/or safety issues. Recalls are usually voluntary and are made in conjunction with regulatory control of the National Highway Traffic Safety Agency (NHTSA). They can originate with the manufacturer or with the NHTSA. Repairs performed under a recall are usually free to the consumer.
Repair Facility:
An authorized licensed repair facility located in the United States or Canada. This includes your dealership, local mechanic or national repair facilities.
Rental Benefit:
The amount you will be reimbursed for actual expenses incurred for substitute transportation while your vehicle is being repaired.
Roadside Assistance:
A program that provides you with a toll-free telephone number to call 24 hours a day 365 days a year. This is for assistance when your vehicle breaks down or when there is a vehicle emergency (towing, battery assistance, flat tire assistance, emergency lock out, or fuel, oil, fluid and water delivery)
Salvage Title:
A title issued on a vehicle where an insurance company has declared the vehicle a total loss. These vehicles were typically involved in a flood or severe accident. These vehicles are not eligible for extended warranties.
Technical Service Bulletin: TSB
This bulletin is produced by the vehicle manufacturer and alerts automotive technicians about specific service problem areas, repair procedures, and new service techniques for a vehicle. Thousands of these are issued each year.
Transferability:
A vehicle having an extended warranty can have the warranty transferred to the new owner of the vehicle if the vehicle is sold privately for a modest fee. An extended warranty can not be transferred to a dealer.
Travel Interruption Benefit:
In the event of your vehicle not being operable and caused a delay en route and you are more than 100 miles from your home, this is the amount you will be reimbursed per day for restaurants and lodging.
Vehicle Identification Number (VIN):
Your VIN is located in several areas and is a unique 17-digit identifier of your vehicle. The most common are:
- On the driver’s side dashboard of your car
- On your insurance card
- On the title to your vehicle
- On the vehicle’s registration card
- On a sticker inside the driver’s side door
Wear-and-tear:
Wear and tear warranties provide a broader contractual definition of what will be covered.
Some service contracts exclude repairs needed due to “wear and tear” However, a large number of car repairs are needed because a part wears out from a long period of use or improper maintenance, not because it was poorly built.
The more miles on a car when a repair becomes necessary, the more likely it is that the repair will be needed because a part wore out, rather than because the part broke due to poor manufacturing. Again, some service contracts do not cover parts that wear out.
Most service contracts and policies define “mechanical breakdown” as a defect in parts and workmanship as supplied by the manufacturer, or a defect that makes the part unable to perform the function for which it was designed. Service contracts that exclude wear and tear will not cover repairs needed because a part’s performance has gradually deteriorated because of normal wear and tear, unless a mechanical breakdown has occurred.
Before buying a service contract, you should carefully review what is covered and not covered to see whether wear and tear claims are excluded from coverage. If they are, you might want to consider buying a service contract that does not exclude wear and tear claims. That way, if it is not clear whether a repair is needed due to a manufacturing defect or simple wear and tear, it is more likely that the service contract company will pay for the repair. It is a mistake to assume that a repair agreement will cover every repair your car may need.
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Filed under: Glossary of Auto Warranty Terms, Warranty Direct
This glossary is my savior as I research extended car warranties…Thank you Warranty Direct!
Very good article! Warranties can be confusing to all of us. Please note that the Lemon Laws vary from state to state….so consumers should check with local laws to see if applicable.
@Steven James – thanks for your input!