Third Party Auto Warranty Extension (Insurance) Policies ~ Not Even a Good Gamble

Turns out that, if the specific part or parts that fail are not listed under the fine print of a policy like the one I had, a claim will be denied. Only the parts least likely to fail are covered.

February 3, 2011 — Consider mine to be a voice of experience, folks. Take my advice. When your new car warranty runs out, start putting some money away for the inevitable breakdown, trade your old car in for a new car, or purchase a warranty extension from a trusted, local dealership. After all, mechanical things aren’t made to last forever. Do not … I repeat… do not purchase a third-party power train insurance policy.

I bought such a policy last year, a so-called “gold” policy through Nationwide Auto Protection for my five year-old Dodge Magnum. The salesman made it sound like everything having anything to do with the power train would be fully covered. So I figured, with the premiums for the insurance being much cheaper than payments for a new car, this would be a smart buy. I could take my time considering what to buy next, maybe even waiting a year or two to see how the new electrics like Chevrolet’s Volt perform. Wrong decision.

While hundreds of miles away from home recently, I had transmission problems. Long story made short, it took over a week to get my claim approved, and then only after a sympathetic service representative was able to convince an insurance inspector that the failure was because of a “covered” part in the trans- mission. Turns out that, if the specific part or parts that fail are not listed under the fine print of a policy like the one I had, a claim will be denied. Only the parts least likely to fail are covered. To top that off, I had to agree to pay the transmission teardown expenses in the event that my claim would be denied. So, I had to gamble around $700 in labor costs that the policy’s inspector would rule in my favor. Fortunately, I had recently had the transmission serviced too and had proof of this. Otherwise, the claim would have been denied for this reason also.

Had I not had a relative to stay with while all this took place, it would have cost me many times more to get the repairs done using the insurance than it would have just paying for it out-of-pocket. Good thing I am retired now too and didn’t need to get back to a job.

Do not walk away from this company or other such third-party insurance companies — run!

I invite your comments on this post, whether pro or con.

Published in: on February 3, 2011 at 12:30 pm  Comments (10)  

The URI to TrackBack this entry is:

RSS feed for comments on this post.

10 CommentsLeave a comment

  1. Sorry to hear of your difficulties, and unfortunately these things are all too common. Since your experience with them, have you had an opportunity to check out the company with the Better Business Bureau? You may also wish to report the actions (or lack of them) to the BBB as well so they can add the firm to their website.

  2. Yes, Curtis. Right after I got back from my trip, I checked them out on-line and canceled my policy the same day. The problem was a year ago that there wasn’t anything about this company posted. They were too new. There’s lot’s of horror stories now. So, I’m guessing the company will be history within months. And the instigators of this scheme will laugh all the way to their off-shore bank accounts. Such is the danger in an unregulated industry. As P. T. Barnum is famous for saying, “There’s a sucker born every minute.”

  3. In my days as an insurance agent, I was approacched by 3rd party warranty vendors about selling those contracts. Since they were not under the jurisdiction of the state board of insurance, nor bonded, I had no interest in their products. I do think warranties provided by the product manufacturer would offer reasonable protection.

    When I’m approached about buying any kind of extended warranty with too much pressure, I run. The pressure indicates that the sales person is getting a commission to sell the product. If the vendor pays a commission as incentive to sell, it’s obvious that the profit is very good.

    I NEVER buy an extended warranty. While I’ve been burned a couple of times, the aggregate savings on everything I’ve bought exceeds the few times I would have used one.

  4. Thanks, Ron. I had to wait till I was a grandfather and retired before I got suckered-in. Like my mom used to say, “There’s no fool like an old fool.”

  5. You sound like you don’t know anything about cars. I’m betting since you decided not to state what actually happened to your car that you’re only mad because you needed to have your transmission rebuilt or replaced from it slipping. They were in the right because this is regular wear and tear. I bet they don’t cover needing a new clutch either huh? LOL, idiot. I bet they cover items like broken axles, engine problems, computer malfunctions, and things would be deemed either “factory defects” or “factory malfunctions” which makes these 3rd programs a good idea if you own a foreign car.

    Tip: DODGE/JEEP WERE KNOWN FOR TRANSMISSIONS PROBLEMS DUMMY? IF YOU ARE SO SMART, YOU’D KNOW THAT. That problem alone states you have an older car as well.

    Another tip: Ford has shitty wiring.

    GM by far is the best American brand on the road and yet are overlooked. This is a fact.

  6. No, I would not admit to knowing nothing about cars, but I’m certainly not a master mechanic either. Most people aren’t. However, a few who are, including my younger brother, have told me that the problem I had with my Dodge was highly unusual. And calling me an idiot doesn’t make you sound like you know it all either.

  7. It is in point of fact a nice and helpful piece of info. I’m happy that you shared this helpful information with us. Please stay us informed like this. Thank you for sharing.

  8. We’re a gaggle of volunteers and opening a new scheme in our community. Your website provided us with helpful info to work on. You have done an impressive process and our whole neighborhood will probably be thankful to you.

    My web log concerning modern technology: Steve

  9. Can I simply just say what a relief to uncover a person
    that genuinely knows what they’re discussing on the web. You actually know how to bring a problem to light and make it important. More people have to look at this and understand this side of the story. I was surprised you are not more popular since you surely possess the gift.

  10. Thank you for your flattering comment. I don’t normally approve comments posted by non-people like this one, i.e., businesses using blog comments for marketing. But my ego needed a boost today, further, I have removed your URL.

    Yes, I’m aware that some of my posts, such as this one on third-party auto warranty insurance, are less popular than others. That is simply because people are not greatly motivated to check the validity of insurance companies’ marketing claims before buying. Sometimes people just have to get burned. Other posts of mine get scores of hits every day. Seasonally, as just prior to Fathers’ Day or in days and weeks leading up to elections, some get hundreds of hits daily. Then too, I do not post new articles daily or even on a regular basis.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s