1. How long have you been in business?
2. Do you pay the claims or are you a broker? What company actually is responsible for paying the claims?
3. Are you able to offer coverage in all 50 states?
4. Are you a Better Business Bureau accredited business?
5. How many warranty contracts has your company sold?
6. Do you sell through car dealers and financial institutions or only on the Internet?
7. Do you cover wear and tear failures or only mechanical breakdowns?
8. Do you cover seals and gaskets?
9. Do you cover damage due to overheating?
10. Do you include $100 towing benefits with your plans? What about a full roadside assistance plan?
11. Can I preview the actual contract online?
12. What companies endorse your company?
While there are many other questions one can ask in evaluating warranty companies, the 12 above will provide a great start.

About Warranty Direct

Founded in 1980, Warranty Direct is the direct-to-consumer division of one of North America’s leading providers of service contracts and extended warranties for automobiles. Through its automobile extended warranty portals, www.warrantydirect.com, www.carwarranty.com, www.warrantyinfo.com and www.warrantydirect.ca , Warranty Direct leads the industry in efficient and expedited claims handling, impeccable customer service and a technology infrastructure that far surpasses the industry standard. Coverage is available in all 50 states and many parts of Canada.

For a free, instant online extended warranty rate quote, please click here.

Extended Warranty Administrator – This is the company that actually issues the warranty and is responsible for paying any claims. This is the company that should come under the closest scrutiny by consumers. Buying coverage direct from an administrator offers the most security as your money goes directly to the company responsible for fulfilling the obligations under the warranty contract. You will also be able to obtain the same coverage they sell through car dealers and avoid the car dealer’s markup. Administrators will offer you pre-sale counseling and after sale support.

There are many warranty administrators (national and regional) with varying business models. You should select a company that offers their coverage through many different channels and not just the Internet. Like insurance companies, the larger the pool of warranty holders, the more likely the company is financially stable and has adequate funds to pay future claims.

Regional warranty administrators tend to be small and have a smaller base of customers. National warranty administrators will offer coverage through car dealers, financial institutions (banks, credit unions) and may even handle warranty programs for manufacturers. With a larger, more diverse customer base, these companies are more financially sound. When a warranty administrator handles coverage for banks, credit unions and manufacturers, you can bet those companies did a lot of research before selecting a warranty partner.

 More and more states are regulating the sale of extended warranties. Larger states like California, Florida and New York have licensing requirements and have done the homework for you. If a company is licensed in all of these states, that is a good indication of a stable company and one dedicated to compliance.

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Internet Only Warranty Companies – Based on our 14 years of selling coverage direct to consumers on the Internet (and 28+ years through car dealers, banks and credit unions), we have seen companies with this business model come and go. While the Internet allows consumers to buy products at more affordable prices than traditional selling channels, companies that only do business on the Internet present a risky business model.

Internet only companies are loosely regulated and some are not regulated at all. As they do not sell through car dealers or other channels, they are able to bypass the regulatory requirements that more and more states are implementing to protect consumers. These regulatory requirements most often deal with the company’s financial health.

By only selling car warranties on the Internet, these companies are not able to amass a large customer base and often are not able to set aside appropriate funds to pay future claims. They take in money on Monday to pay claims on Tuesday. Couple this with a lack of regulatory over-sight and you have a recipe for disaster.

Questions you should be asking…

How long has the warranty administrator been in business?
Have they been around long enough to have been through several claims cycles?
Do they set aside adequate funds to pay future claims?
Do you sell your products only on the Internet?
When you type their company name into a search engine, what are their customers saying about them?
Are they members of the Better Business Bureau?
How many complaints do they have on file?
Are they members of WebAssured.com?
Are they Dun & Bradstreet verified?
Are they able to do business in all 50 states?
Are they recommended by reliable, trusted automotive web sites?
Do they have a formal complaint resolution process in their contract?

About Warranty Direct

Founded in 1980, Warranty Direct is the direct-to-consumer division of one of North America’s leading providers of service contracts and extended warranties for automobiles. Through its automobile extended warranty portals, www.warrantydirect.com, www.carwarranty.com, www.warrantyinfo.com and www.warrantydirect.ca , Warranty Direct leads the industry in efficient and expedited claims handling, impeccable customer service and a technology infrastructure that far surpasses the industry standard. Coverage is available in all 50 states and many parts of Canada.

For a free, instant online extended warranty rate quote, please click here.

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.