Vehicle Protection Plan Advice
Vehicle Protection Plan Advice
I am often asked by friends and business associates for vehicle protection plan advice and what to look for. Here are a few ideas.
My advice is the same as it would be for buying any product or service. Do a little homework! Knowledge is power and will translate into a happy buying experience and not leave you with buyers remorse down the road.
A vehicle protection plan (VPP) is a piece of paper that promises to pay for your covered repairs should something break on your vehicle.
If you’re looking into a VPP for the first time, there may be some terms you run across. BestCompany comprehensive list has put together a to help you better understand you warranty and its conditions.
So what do you look for to avoid disappointment?
How much does it cost?
Who makes the promise?
What are they agreeing to pay for?
Do I buy from a dealer/manufacturer or a third-party like AM Protection?
How Much Does it Cost?
For most of us, this is the big question and may determine whether or not we purchase a vehicle protection plan or a vehicle service contract.
A rule of thumb – the more expensive your vehicle the more the extended coverage will cost. Coverage on a Honda Civic will be a lot cheaper than on a Mercedes Benz S550.
Do not buy from the first company from whom you get a quote. Check out at least three. You might be surprised at the price difference. Remember to compare apples to apples. If one company is quoting basic drive train coverage and another exclusionary coverage with few exclusions, it is not a fair comparison.
Who Makes the Promise?
The VPP landscape is littered with the bones of failed companies who tried to be successful in this business. Some died because they were bad business people. Some because they were dishonest and took the money and ran. Some have survived and prospered providing millions of consumers with valuable protection and peace of mind.
How do you know the good ones from the bad? That piece of paper you get, a contract, is backed by someone. Make sure it is at least an “A” rated carrier by A.M. Best. You can easily check by going to www.ambest.com and entering the company name. Do this before you buy! Also, demand a sample contract. Any company worth its salt will gladly provide one for you.
Next, find out how long the company has been insuring or underwriting this type of business. Obviously the longer the better, as this indicates stability.
What are They Agreeing to Pay For?
There are two types of vehicle protection plans or vehicle service contracts.
One lists all the parts that are covered and can range from very basic and minimal to an extensive list covering almost everything.
The other is a named exclusion contract and lists only the things that are not covered. Simply stated if it’s not excluded it is covered. Generally, these are the most comprehensive contracts.
Again demand to see the contract and review the list of covered or excluded parts. The more expensive and high-tech your vehicle, the more you should probably favor the exclusionary coverage. This would be my advice. Some companies also provide a “high-tech” option to cover navigation systems and other electronic/computer devices. Ask about them and how much that coverage will add to your cost.
Buy From a Dealer or a Third Party?
There are two types of contracts that do essentially the same thing.
Dealer/Manufacturer extended vehicle warranty
Third-party vehicle protection plan or vehicle service contract
Only a dealer through a manufacturer program can sell an extended vehicle warranty. Only the manufacturer can truly “warrant” the many components that make up a vehicle. All others, including AM Protection, offer a vehicle protection plan or vehicle service contract with several notable exceptions. In California for example, third parties are required to sell mechanical breakdown insurance. An actual insurance contract between you and an approved insurance company.
Dealer offered coverage is attractive because you can complete the total transaction in one place and probably include the cost of your coverage with your auto payment. Several reasons you may not want to choose this option:
Not all dealers sell a manufacturer’s extended vehicle warranty (many sell the same programs as AM Protection).
You may be required to return the vehicle to the dealership or a similar dealership to obtain repairs. This may be inconvenient or you may have your own favorite independent mechanic.
Dealer/manufacturer contracts are typically more expensive.
Recently many dealers have gone out of business.
Quality third-party providers (like AM Protection) offer payment plans with no fees and many other benefits.
My vehicle protection plan advice is to do your homework. Compare coverage, price, and underwriter and you will be happy for many years to come. Who doesn’t want peace of mind? Let us know if we may be of service.