Do you need an extended car warranty?

via Do you need an extended car warranty?,

PDF: Do you need extended car warranty

Once every few days, my mailbox contains an official-looking letter with a dire warning: My car’s warranty is about to expire, and if I don’t do something about it I’ll be on the hook for some major expenses that won’t be covered by my car’s standard warranty. The letter even has my car’s make, model and year as it tries to persuade me to shell out thousands for an “extended warranty.” Often, the letters refer to vehicles I no longer own, or which are still covered by the factory warranty.

Millions of Americans get these letters every day, along with telemarketing calls and emails. Unfortunately, many consumers take the bait and shell out big bucks to cover the cost of an extended warranty (it’s actually not a warranty at all, but a service contract). The only problem is that much of the time, these products are worthless. It’s important to note that these are different from extended service contracts often sold when you buy a new vehicle.

Statistically, buyers of third-party extended-warranty coverage haven’t been happy with their decisions. In late 2013, Consumer Reports surveyed vehicle owners who had purchased extended warranties (and whose original warranty coverage had run out). More than half reported they’d never used the warranty, despite paying an average of $1,200. And about three in four said they wouldn’t buy an extended warranty again.

Consumer complaints against third-party warranty companies have typically centered around non-coverage of most-likely-needed services, failure to cover for “pre-existing conditions,” expensive deductibles, lack of cancellation options and not being responsive to complaints or questions.

There have been several high-profile cases in which auto-warranty companies have been accused of deceptive practices. For example, in 2016 the Federal Trade Commission announced it was sending $4 million in refunds to consumers who bought policies from a company called My Car Solutions, after a 2010 complaint that the company had falsely claimed affiliation with auto dealers and manufacturers.

 The decision whether to purchase extended warranties (of any type) should be undertaken with some deliberation. First, vehicles are a lot more reliable than they once were, and factory warranties are a lot better, too. Factory warranties vary in what they cover, how long they last and under what conditions they can be used. They’re generally serviced by your dealer, while third-party warranties might not be. According to vehicle website, most factory warranties don’t charge a deductible for use, while many third-party warranties do.


Here are a few other tips about third-party warranties:

No warranty covers everything. Even the best “bumper-to-bumper” warranties have limits on what they’ll cover, so be suspicious of claims to the contrary. And few warranties will cover damage due to excessive or improper use, or failure to perform basic maintenance (the limitations should be spelled out clearly in the fine print).

Make sure your warranty has a servicer. If you purchase an extended warranty without doing your homework, you may find yourself with no one to service it. Before you decide to buy, call your dealership or mechanic and ask whether they will accept the warranty.

Keep up with your car’s warranty requirements and deadlines. When you buy a new vehicle, there should be paperwork that clearly spells out the terms and limitations. Be aware of when the manufacturer’s warranty expires, and what it does and doesn’t cover.

Avoid scams. If you get a solicitation by mail, phone or email, be careful about responding. Some solicitations come from scammers, looking to get your personal information. Instead, contact your vehicle dealer to explore your options when your vehicle is nearing the end of its warranty.

Consider self-insuring for car repairs. Instead of putting money into a costly contract you’ll never use, get a reliable vehicle, service it as the manufacturer prescribes, and take what you would have spent on a service contract and set it aside in a bank account. That way, the money will be there if you need it later (and, if you don’t need it for repairs, you can use it for whatever you want).

For more advice on auto warranties, visit


Consumer Reports: Tread life warranties may not be all that great

Originally published on, 11/11/2015

PDF: Consumer Reports finds car warranties lacking

Tires are one of your car’s most important safety features. The role of a vehicle tire is not only to support the weight of your vehicle and to look good, but also to provide solid contact with the road at all times. If you think about it, they work pretty hard. They have to work flawlessly in all sorts of weather and road conditions, suffer through extreme heat and cold, and do their job despite the way we sometimes neglect giving them proper attention. You can thank your tires for bringing your vehicle to a stop when the guy in front of you slams on his brakes unexpectedly, or for keeping your vehicle straight despite a torrent of water gushing across the highway.

Good-quality, properly-installed tires can save your life, but they aren’t cheap. Replacing tires – even when you can find a bargain — can put a serious dent in your budget.

One key selling point for tire companies in recent years is the tread warranty, by which the manufacturer promises that the tires will remain functional (as measured by the depth of tread remaining) for up to a specified number of miles. Tread warranties vary widely, but in general, they promise you can get that specified mileage out of the tires before they have to be replaced. If they wear out before then, you may be eligible to file a claim. If you are successful, you will usually get credit toward a replacement.

But a recent Consumer Reports investigation found that many warranties are so full of conditions, and claims so hard to make, that many consumers will give up before they collect. And when they are able to collect, consumers may find they’ve wasted their time.

Consumer Reports looked into tread warranties from several tire companies, and found several conditions for filing a warranty claim, including:

  • The buyer may have to produce the original receipt, notated with the odometer reading, and original paperwork.
  • You may have to produce documentation you had the tires rotated at the recommended intervals, for example, every 5,000 miles.
  • The wear must also be absolutely even across the tread. “If your tires ever got misaligned, or were under- or over-inflated so the wear isn’t quite uniform, there goes the warranty,” Consumer Reports noted.
  • There is a time limit, usually four to five years.
  • Finally, if your tires are truly worn out (defined as having a tread depth of 2/32 inches or less), you have probably lost much of the protection provided by the tread – such as helping prevent hydroplaning or sliding in snow and ice. Waiting that long could be dangerous.

The report went on to note that if you do file a successful claim, you’ll get a pro-rated credit reflecting the amount or years of tread wear you didn’t get. (For example, if the warranty promises 50,000 miles, and you only get 40,000, you might get 20% credit.) The problem, however, is that they don’t cut you an actual check you can cash, then use to shop around; it’s usually good only for tires from specific manufacturers, and then only at the “manufacturer’s suggested retail price”(MSRP), or dealer’s price. But tire dealers often have special deals and discounts, which may actually allow you to get new tires cheaper than you would if you applied the credit toward the MSRP.

To read Consumer Reports’ informative article, click here.

Extended warranties: to buy or not to buy?

Originally published in the Clarion-Ledger, 11/15/2014.

PDF:Ask questions before buying extended warranty coverage

We Americans love our electronic devices. In the past few years, the number of devices intertwined in our lives has exploded, affecting nearly every aspect of our existence. It’s only going to increase; pretty soon, they’ll all be talking to each other in what’s being called the Internet of Things.

We have come to rely on these devices working, and they perform flawlessly most of the time. We don’t realize just how reliable they are; most will keep on working for years, often far beyond their expected lifetimes. It’s really a success story; but exceptions happen all the time.

Once upon a time, every town had a TV repair shop, which would take your old Zenith or RCA tube model and have it fixed in a few days. Things were relatively easy to repair; they were built that way. But as devices became more sophisticated, it became more difficult (and expensive) to repair them, and those TV repair shops began to disappear.

So on those rare occasions when the TV goes on the fritz or the microwave stops heating your leftover fried chicken, it can disrupt your space-time continuum (ok, a little hyperbole there…) But, if you find yourself in the unfortunate situation of having to seek repairs, you can be in for major sticker shock. In many cases, the cost of repairs can be more than the cost of replacement. And just finding a suitable repair shop can be nearly impossible. Consumers really don’t like this fact, and in an age where a disgruntled customer can take to social media to voice their disapproval, company reputations can be destroyed overnight.

Product manufacturers know this. The last thing they want is to deal with customers who are unhappy (a cynic might say they don’t want to deal with their customers at all). So, most manufacturers have a “factory warranty”, which basically covers defective products and a limited range of issues.

But if you’ve bought an electronics product (or high-dollar non-electronic product) in recent years, you have probably also been offered an “extended warranty”. For a few dollars more, you can extend the factory warranty and possibly get even better coverage for things like accidental damage. It might sound like a good deal, but it’s hard to know if it really is.

You can think of an extended warranty as an insurance policy, in which risk is balanced with reward. Just as an insurance company makes profits because people pay more in premiums than the company has to cough up in claims, the product manufacturer is betting you won’t need to get that product repaired. Thus (statistically), extended warranties amount to almost pure profit.

Statistics are important here, because in order to make a really good decision on whether to get an extended warranty, you would need to know the likelihood the product will fail or need repair. Those figures are hard to come by.

Every time I’m confronted with this question, I have to stop and ask myself whether it’s worth it. In the past, I’ve been glad I did. I bought a TV many years ago from a local retailer, and one day the screen just went blank. I had bought a five-year warranty, and the retailer replaced the screen, no questions asked. All I had to do was to lug the heavy TV to the store, then pick it up. (I’ve had similar results with AppleCare.) But there have been many other times I have declined the warranty, and been just fine.

In many cases, experts say you don’t need the extended warranty; products are just too reliable (statistically speaking). But, if you’re the statistic, it’s cold comfort. So should you buy that extended warranty or not? Here are a few questions to ask:

  • How hard will you be on the product? For example, if you’re prone to dropping things, you should probably invest in a protection plan which covers the cost of accidental damage.
  • Does the product have a good track record for reliability? For a major purchase, spend a few minutes researching reliability of the product. Consumer Reports and CNET are good places to go for product reviews.
  • Am I paying double for the same coverage? Make sure the extended warranty doesn’t cover the same time period as the manufacturer’s warranty.
  • Does my credit card company offer coverage? Most credit card companies have purchase protection built in to their card accounts. If you pay with that card, you may be covered. But be sure to check first.
  • How long do I expect the product to last? Anticipate replacement. If you have a TV that has lasted for 10 years, that’s pretty good. But you should be thinking about replacement. So, a good plan would be to put away money over time, should you need to replace the TV. That money could also be used to cover the cost of repairs if needed.
  • Consider what the warranty actually covers. For example, some warranties provide coverage for manufacturing defects or failures, but don’t include damage repairs. And read the fine print, because you may be on the hook for the cost of getting the item to the repair location.

True “Lifetime Warranties” make for happy customers

via True “Lifetime Warranties” make for happy customers,

Thirty-five years ago, my Dad and Mom gave me a special gift for my 15th birthday. It was a shiny new Buck knife, complete with a leather carrying case, rosewood handle and beautiful brass accents. I treasured that knife, and used it for years. But over time, the brass began to fade, and the blade grew thin from sharpening, so it wound up in a drawer. Last year, I found it again and threw it into my camping box, where I had also stored a battery-operated lantern. The battery compartment had come open at some point, and the batteries leaked acid all over the brass, making it bluish in color.

I tried desperately to restore the shine to the brass, but with no luck. Going online to look for a solution, I noticed that people had talked about how Buck products have a Lifetime Warranty, and there were many reports of Buck accepting old knives for cleaning and refurbishment. So I sent the knife to them, eager to see the results. When I got the knife back about six weeks later, I was amazed. Although I knew it was my knife because of the markings on the wood, I would otherwise think they had just sent me a new one. The brass now gleamed like a mirror, the blade replaced, and even the wooden inlays on the handle were polished.

Once upon a time, companies stood by their products. The good thing is that many companies still do, and that’s part of the reason they have the reputation they do. For example, companies like Hammacher Schlemmer, Otterbox, L.L. Bean and many others are famous for going above and beyond to stand behind their products.

When you buy a product with a “lifetime warranty”, it’s important to understand what this means. In the case of Buck and other companies I’ve mentioned, it usually means the company will repair or replace the item. However, consumers are often confused by the term, as it’s used with varying degrees of truth and meaning. For example, whose life is it talking about? Is it your life? The life of your home or car? Many products, such as roofing shingles, come with a lifetime warranty, but in the fine print, the company may disclose that the warranty is not transferable when you sell your home.

There is longstanding point in federal law about lifetime warranties that reads, “If an advertisement uses ‘‘lifetime,’’ “life,” or similar representations to describe the duration of a warranty or guarantee, then the advertisement should disclose, with such clarity and prominence as will be noticed and understood by prospective purchasers, the life to which the representation refers.”

So, I’d like to hear your stories about outstanding service on lifetime warranties, or perhaps cases in which they didn’t quite live up to your expectations.Drop me an email or use the comments section.

This story and others show that there are still great companies out there, standing behind their products. To Buck, I say “kudos; you’ve made me a very happy customer.” But if you’re depending on that lifetime warranty –especially for products with a big investment involved — you should read the fine print, and when in doubt, check it out.

Beware car warranty solicitations

The other day, I got an official-looking piece of mail. It was one of those pieces that has perforated edges which are very difficult to tear off without tearing up the document. On the front, it had the make and model of my vehicle, along with an 800 number. On the center, in bold capital letters, it warned, “Request for Action – Important Vehicle Information Enclosed. Warning: $2000 fine, 5 years imprisonment, or both for any person interfering or obstructing with delivery of this letter. U.S. Mail TTT, 18 U.S. Code”. (Sure sounds scary enough…) I have had dozens of these pieces delivered to me over the years. Usually, I just shred them, but today I did some sleuthing. I found out that this solicitation, which is from the “Vehicle Protection Center”, is actually from a company called National Dealers Warranty Inc., out of St. Peters, Missouri.

When you get a solicitation like this — before you feed it to the worms — it is interesting to see just what’s behind it. It turns out that National Dealers Warranty (now known as Stop Repair Bills) has garnered an “F” rating from the Better Business Bureau in St. Louis. There have been 464 complaints about the company, including allegations of misleading and high-pressure sales tactics, poor customer service, improper billing procedures and other issues. In 2009, according to Missouri Attorney General Chris Koster’s website, Koster sued National Dealers Warranty/Stop Repair Bills and five other similar companies for various practices including luring “vulnerable consumers into purchasing ‘auto warranties,’ and then switched to sell them into service contracts and auto additive warranties with inferior or negligible repair coverage, while making it almost impossible for the consumers to cancel the contract or get refunds.”

On Sept. 25, Koster announced a $22,500 settlement against Carsafe, the new name of Dealer Preferred Warranties, to correct issues in complaints. Perhaps the most famous of these companies is U.S. Fidelis, whose owner was sentenced this week to 4 years in prison, added to 40 months to which he’d already been sentenced. His brother, Darian Atkinson, last week was sentenced to eight years. The Atkinson brothers were convicted of using corporate funds for personal expenses.

The bottom line on car “warranties”: it’s best to just put that money into a savings account instead of giving it to a “warranty” company. If you need a warranty, check with your manufacturer or dealer. Remember, most cars today will not need major repairs during the early life of the vehicle, and factory coverage is pretty good for most new cars. Remember, if it seems too good to be true…(come on, say it with me)…it probably is.

For the complete BBB report on National Dealers Warranty, go to