Auto
Warranty Glossary
A-Rated: A rating
by the independent insurance evaluator A.M. Best. An A-rating
(A-, A, A+) is the highest ranking an insurance company can
receive. It means the company is absolutely stable.
Administrator:
The company that is responsible for authorizing the repair,
and for paying the claim. The administrator ensures that your
vehicle is repaired correctly and in compliance with your
contract.
A.M. Best & Co:
A.M. Best Company is the premier insurance analyst. It offers
evaluations for more than 7,000 insurance companies. A.M.
Best & Co. is more than a century old, and many players
in the financial community, and consumers, rely on Best’s
ratings system understand an insurance company’s stability.
Authorization: The
approval provided by the warranty administrator to permit
repairs to be performed.
Auto Warranty:
An extended service contract that agrees to pay claims
for mechanical failures and breakdowns. Also know as a Vehicle
Service Agreement, Extended Service Agreement, Mechanical
Breakdown Agreement, or Extended Warranty. This type of policy
is intended to protect a consumer from paying for unexpected
vehicle expenses.
Better Business Bureau:
The BBB is a consumer organization that monitors a company’s
record of addressing customer complaints. A company affiliated
with the BBB Online Reliability Program agrees to confirm
to the BBB Code of Online Business Practices and agrees to
cooperate with the BBB to resolve disputes. Most companies
who participate in this program value their reputation and
tend to have an excellent record of addressing customer concerns.
Investigating a BBB record is important.
Bumper to Bumper:
Also known as an “exclusionary” policy. This is the most complete
extended auto warranty in existence. A bumper-to-bumper contract
lists only parts excluded from coverage, since there are too
many covered parts to list. Unless a specific part is not
listed on the contract, then it is covered by a bumper to
bumper plan.
Cancellation: A cancellation
provision permits the extended warranty holder to cancel
the contract and to obtain a refund. Most extended auto warranties
allow a 30 day money-back guarantee, providing there has been
no claims. Cancellation refunds are normally prorated based
on the remaining time and miles in the plan.
Corrosion Warranty:
A corrosion warranty is a manufacturer’s warranty that
covers claims for rust and perforation on the metal body of
the vehicle. Such a plan can also be purchased on an aftermarket
basis.
Deductible:
The amount that a customer is responsible for paying the
repair facility for a claim, as stated in your extended auto
warranty policy. The warranty company pays the balance of
the claim. Deductibles usually range from $0 to $200. Lower
deductibles are typically options that can be purchased for
a small charge.
Diagnostics: The
effort by the repair facility to determine the cause of the
vehicle’s problem, and to determine the necessary course of
repair. Most auto warranty plans typically do not cover diagnostics,
unless the diagnostics lead to the repair of a covered component.
Eligibility:
The level of warranty coverage available on a particular
vehicle based on certain criteria. Eligibility is typically
based on the vehicle’s age, mileage, make and model. Other
important factors are whether the vehicle is a four-wheel-drive,
is turbo/supercharger, and its number of cylinders. History
and usage can also be factors, for example whether the vehicle
is used for commercial purposes. Each extended auto warranty
plan has its own set of eligibility requirements. Many extended
warranty plans offer riders, or surcharges, for certain components
or usages.
Exclusionary Policy:
Also known as a bumper-to-bumper policy. This is the most
complete extended auto warranty in existence. A bumper-to-bumper
contract lists only parts excluded from coverage, since there
are too many covered parts to list. Unless a specific part
is not listed on the contract, then it is covered by a bumper
to bumper plan.
Extended
Auto Warranty: An extended service contract that agrees
to pay claims for mechanical failures and breakdowns. Also
know as a Vehicle Service Agreement, Extended Service Agreement,
Mechanical Breakdown Agreement, or Extended Warranty. This
type of policy is intended to protect a consumer from paying
for unexpected vehicle expenses.
In-Service Date:
The original purchase date of the vehicle’s first owner. The
first owner can have been a rental agency or other company.
Inclusionary Policy:
Also known as a “Stated Component Coverage” extended warranty.
The contracts for inclusionary policies list covered components.
If the component or part is not listed then it is not covered.
Inspection: The examination
of your vehicle by a certified technician. A pre-warranty
inspection is when a technician ascertains the condition of
the vehicle, and notes any problems, or the lack of any. Inspections
are sometimes required by some auto warranty companies for
higher mileage or older vehicles.
Insurer: Also known
as re-insurers, the insurance company that guarantees the
obligations and responsibilities of the warranty administrator.
Any reputable auto warranty company is backed by, or insured
by, a traditional insurance company to guarantee the payment
of claims should the auto warranty be unable to do so.
Make: The
vehicle’s manufacturer.
Manufacturer:
The company which produced your vehicle.
Manufacturer's
Recommended Maintenance Guidelines: These are the manufacturer’s
suggestions for properly maintaining your vehicle to ensure
optimal performance. Usual maintenance guidelines would include
when to change the oil, information about fluid levels, when
to rotate the tires, and replacement of certain parts at specific
intervals. Not following the manufacturer’s recommended maintenance
schedule may void the warranty agreement.
Manufacturer's Warranty:
This is the warranty supplied by the maker of the vehicle.
It promises to repair your vehicle for a specified period
of time and/or mileage. Manufacturer’s warranties typically
are not all-inclusive, and cover only a limited number of
specific components. Carefully review your manufacturer's
warranty agreement for coverage details and specifics.
Model: The
nameplate of your vehicle.
New Vehicle:
As related to auto warranties, the term new vehicle refers
to a vehicle that is covered by the manufacturer's bumper
to bumper warranty. For a vehicle to be “new” for a warranty
does not mean that the vehicle was purchased with no miles,
or you are the first owner, simply that the vehicle is still
covered by the original manufacturer’s warranty.
Odometer Miles:
The actual miles the vehicle has traveled as recorded
by the vehicle’s odometer. Failure, removal, or adjustment
of the odometer will void an auto warranty agreement, unless
whatever repair or modifications has been certified by the
repair facility and documented to the warranty company.
Plan Expiration:
This is the date or odometer mileage when the extended
auto warranty policy will conclude. For example, a 5 year
/ 100,000 mile extended warranty will end 5 years from the
date that you enroll your vehicle or when the odometer reads
100,000 miles. The plan expiration is recorded in the warranty
agreement.
Plan Mileage: The
total mileage that the extended warranty plan applies to your
vehicle. Usually this is the mileage on the vehicle’s odometer,
but can also be additional mileage from the commencement of
coverage, or unlimited mileage based on the extended warranty
plan coverage expiration terms.
Plan Term:
The amount of time in years or months and/or the total
mileage that your extended auto warranty policy will apply
to your vehicle.
Powertrain Coverage:
This is warranty that provides coverage for, typically, components
of the engine, transmission, and drive train. A powertrain
policy normally covers only the components that are most expensive
to repair on a vehicle.
Product Warranty:
Product warranties generally cover fewer parts than an regular
extended warranty, service contract, or mechanical breakdown
insurance policy. A product warranty is permitted by law only
to cover parts that are in direct contact with the product
or parts that are mechanically connected to those parts. For
example, a manufacturer of an air conditioning lubricant may
warrant that by using their product the air conditioner will
not break. However, the maker of the lubricant is not allowed
to warrant that the power window won’t break, since a window
is not in direct contact with product and is not mechanically
connected to a part in contact with the lubricant.
A product warranty may not be sold for a separate price and
must be provided free of charge along with the product. Product
warranties typically limit how much you can recover for parts
that need repairs. Unlike extended warranties, product warranties
are sometimes not backed by an insurance company.
Ratings: Ratings
are independent assessments for reporting a company’s financial
strength. (see A.M. Best & Co. and A Rated.)
Re-insurer: Also
known as a Re-insurance Company. An insurance company that
issues a policy to guarantee, or re-insure, the financial
responsibilities of the warranty provider.
Rental Benefit:
The amount you will be reimbursed for obtaining a rental
vehicle/ substitute transportation while your vehicle is being
repaired. Rental benefits are only reimbursed if the breakdown
was caused by a covered part or component. Rental benefits
are specified in the warranty contract. There will be criteria
related to the number of hours a car must be in the shop,
for example, to use the rental benefit. Other criteria relate
to the number of days that the benefit can be used, or the
maximum dollar amount to be reimbursed.
Repair Facility:
A place where vehicles are repaired. More specifically, warranty
companies require that the customer use a licensed auto repair
facility as described in your specific extended auto warranty
plan. This includes, but is not limited to, a dealership,
service station, or national repair center.
Roadside Assistance:
An additional auto warranty plan benefit that offers emergency
assistance such as towing, battery jump, flat tire repair,
fuel and fluid delivery, or help if you are locked out of
your vehicle. These benefits are normally accessible through
the warranty company’s claims number.
Stated
Component Coverage: Also known as an inclusionary
policy. The contracts for inclusionary policies list covered
components. If the component or part is not listed then it
is not covered.
Transfer: A vehicle
with a transferable warranty can have the warranty transferred
to another owner if the vehicle is privately sold. Sometimes
there is a nominal transfer fee, and/or the number of transfers
is limited.
Travel Interruption Benefits:
Reimbursement for food and lodging expenses due to mechanical
breakdown of your vehicle during a trip, usually further than
100 miles from home
Used
Vehicle: As applicable to extended warranties, the
term used vehicle means that a vehicle is outside of its original
manufacturer's bumper to bumper warranty. This term does
not mean that the vehicle was not purchased with no miles,
or that you are not first owner, only that the vehicle’s original
manufacturer’s bumper to bumper warranty has ended.
Vehicle
Identification Number (VIN): The serial number
of the vehicle. The VIN is assigned by the manufacturer based
on the vehicle’s individual characteristics, such as the year
built, and country of final assembly. The VIN can be found
in several places:
1.
The vehicle’s title
2. The vehicle’s registration
3. The vehicle’s insurance card
4. A plaque on the driver-side dashboard of the vehicle, observable
through the outside looking in.
Vehicle
Protection Association (VPA): The VPA is a not-for-profit
trade association representing firms that are active in the
automotive service contract industry. VPA member firms are
committed to educating consumers on their rights, protecting
consumers, and otherwise ensuring the integrity of the automotive
service contract industry.
Wear
and Tear: Auto warranty
coverage for parts that have worn out so that they are operating
outside of how they were designed to operate. This is a much
deeper coverage of parts than found in a standard extended
warranty. Normal maintenance items are not covered, such as
brake pads/shoes, rotors/drums, clutch plates, wiper blades,
and fan belts.
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