Vehicle service contracts, also called extended warranties, are the source of numerous complaints to Better Business Bureau. The contracts, a form of insurance, aren’t well understood and sometimes aren’t explained well during a sales call. BBB urges consumers to ask lots of questions before committing to purchasing a contract.
Consumers report getting postcards or other contacts implying that their vehicle warranty is about to expire. In some cases, the postcards include the make or model of your car, but more often, they are vague about the brand or warranty details. Some consumers who received solicitations didn’t even own a car. In other cases, consumers said elderly relatives were talked into buying duplicate service contracts for their cars.
Vehicle owners who buy service contracts have reported difficulties canceling them and obtaining refunds for unused portions of the contracts. Others say they’ve had difficulty getting reimbursed for repairs.
As with any contract, it pays to read a service contract carefully before you pay anything to the company offering the contract. Some contracts are written to exclude many common repairs, especially regular maintenance items.