Extended Vehicle Protection Plans

When we buy cars, lawn mowers, electronics, and even big screen TVs we’re usually offered extended protection plans by the salesperson. But, are these extended protection plans or warranties as they are sometimes called a good investment? Will you get what you paid for in the annual payments or one-time payment?

World of Unpredictability

We live in a world of unpredictability. That’s why extended protection plans are a roll of the dice. That big screen TV could last years and years. Or, if something were to go wrong with the display or software or electronics, you’re covered if you went ahead with the protection plan. But honestly, there’s no way of knowing if you’ll be okay. One general rule of thumb is if you buy a brand known for quality, you may be okay skipping the extended warranty. Another general rule is the longer and more frequent you expect to use the product, the more an extended warranty makes sense, such as car which you will drive everyday for years and years.

Extended Vehicle Protection Plans

There are many extended vehicle protection plans to choose from. If you read the fine print of the contract these protection plans are actually service contracts. They are structured this way to be in compliance with regulations from the U.S. Federal Trade Commission (FTC). A warranty, according to the FTC, comes with a new car and is included in the purchase price of the car. The FTC says, on the other hand, a service contract is an agreement arranged at any time other than a new car purchase, and entails an additional cost. In reality, this is the definition of an extended vehicle protection plan.

Here’s the distinction. When you purchase a new car, typically, the standard manufacturer’s warranty covers certain mechanical failures for three years or 36,000 miles – whichever comes first. The word “certain” means that this standard warranty does not cover everything that can go wrong with a car. Extended vehicle protection plans, or service contracts, begin after the three-year mark or 36,000 miles manufacturer’s warranty has expired.

When purchasing an extended vehicle protection plan it is important to read the contract closely. Some protection plans offer comprehensive coverage from bumper to bumper. The downside is these protection plans are more expensive and cover parts on the car that probably will never break down. For less money you can cover only major items such as drive-train, transmission, engine block, etc. Repairing these things are very expensive and will keep your car on the road for years and years. But, if by chance, something breaks that is not covered in the language of the extended vehicle protection plan, you’ll have to pay out of pocket to have that fixed.