Service contracts marketed by automakers through their dealership franchisees - though generally the subject of fewer complaints - usually require that you use the dealers' repair shops. Get a repair without first obtaining authorization and you're likely on your own. Instead, claims are handled by third-party "plan administrators." If you need a repair, you contact the administrator, and it decides whether to pay for it. With some companies, paying more upfront lowers or eliminates per-repair deductibles, which are usually around $100.ĬarShield and many other sellers don't provide the coverage themselves. Generally, the more you pay the broader your coverage. But most of the plans we checked cost around $3,000 to $4,000. We found one plan priced at nearly $6,700 and short-term plans for around $2,500. Prices for plans vary depending on the breadth of coverage vehicle make, age, and mileage and number of years (the longest terms are seven years or 100,000 miles). These companies commonly use misleading marketing to scare consumers into paying thousands for their products and then, when customers' vehicles need repairs, go to great lengths to avoid paying for them.
Our review of auto-service contracts from dozens of sellers indicates their products are especially lousy buys. These plans are highly profitable for the companies that sell and administer them but are usually awful deals for consumers. Judging by all the fine print gotchas and the staggering number of consumer complaints these plans generate, Twin Cities Consumers' Checkbook concludes they're not.Ĭheckbook has long advised against purchasing any type of mini-insurance policy, including home warranties, service contracts for electronics, trip-protection plans and others. Whether it's rapper-turned-actor Ice-T or ESPN's Chris Berman hawking plans from CarShield or robocalls warning that your car's warranty is about to expire, you've likely experienced a sales pitch for a vehicle-service contract, also known as an extended warranty.Īnnoyances aside, you're probably wondering whether these plans are worth the cost.
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