A service contract is a type of additional coverage that a car buyer can purchase to cover costs associated with a mechanical breakdown or failure, including parts and labor. This contract is an agreement between a contractor and a customer where the contractor promises to perform (or pay for) certain repairs or services over a specified period. In this article, industry leader United Car Care shares five facts to consider when looking at vehicle service contracts.
1. Understand the Cost of the Service Contract
The cost of a service contract depends upon the make, model, condition (new or used), and mileage of the vehicle. The level of coverage provided by the contract and the terms of the contract also affect the overall price. If a contract calls for periodic premium payments, you should consider the total price of the contract for the full term in order to compare prices. Some contracts also require deductible payments when a vehicle is repaired or serviced.
2. A Solid Service Contract Is Backed by a Strong Company
When a dealership offers a service contract on a vehicle, it is important to know something about the company that supports the contract. Some dealerships offer their own policy while others offer a policy from a vehicle service contract administrator. Be sure to get information about whether the contract is with the dealership only, or if it is a separate vehicle service contract provider. Also, find out about the provider’s rating with the Better Business Bureau.
Ask if the service contract is underwritten by an insurance company and ask questions about the stability of the insurance company.Insurance regulations require service contract companies to maintain an adequate financial reserve to pay claims.
3. Service Contract Coverage Terms Can Vary
Every vehicle service contract has a specific term of coverage. The term you choose can be limited by the age and mileage of your vehicle. If a proposed service contract is for a longerterm than you expect to keep a vehicle, ask if the remaining term on a service contract can be transferred to a new owner when you sell the vehicle, if it can be cancelled and any unused portion refunded, or if you can purchase a shorter-term service contract.
4. Coverages Vary Under Different Contracts
You should be sure to understand exactly what a proposed vehicle service contract covers. There are some types of repairs or services that are normally excluded from the service contract. Some conditions are considered normal wear and tear while others are mechanical breakdowns, and coverage provisions can be different for each.
5. Understand the Claims Process
When your vehicle needs service or repairs, you should be aware of the process for making a claim under your service contract in order to receive the full benefit of the contract. Some contracts allow you to choose from authorized service providers for covered services. Other contracts require that a specific provider, or the selling dealership, make approved repairs. Most contract providers require prior authorization for certain services and repairs. Be sure to ask about the authorization process and emergency service outside of business hours.
About United Car Care
United Car Care does business with integrity and is proud of the A+ Rating we have earned with the Better Business Bureau. United Car Care provides reliable protection at an affordable cost through valuable vehicle service contracts. Customers who are looking for mechanical protection for their vehicles rely on our contracts which are backed by an A-Rated insurer. United Car Care has over a million satisfied customers and has long term relationships with multiple dealerships and agents who trust the power of protection of our service contracts. We build relationships with our customers based on our core values — quality, dependability, and customer service.