This article examines the qualities of the worst extended auto warranty companies, focusing on what characteristics make the worst car warranty.
Worst Car Warranty Companies
If you’ve purchased a new or certified used car, you’ve had a car warranty. Some warranties are better than others and other warranties are so bad that we can barely see any point to having them. This article will go over ways to help a person spot which warranty isn’t worth buying
What Is A Car Warranty?
A factory warranty is a promise made by the auto manufacturer to pay for covered repairs and replacement parts during the timeframe specified in the warranty. For new and certified pre-owned vehicles, the price of a car warranty is part of the overall initial cost of the vehicle.
First, warranties simply guarantee vehicle owners protection against high-cost car repairs. For extended warranties or vehicle service contracts, you pay a certain amount of money to the warranty company, which covers the costs of an unexpected mechanical breakdown in the event of a needed covered repair
Reasons Warranty Companies Don’t Pay
Warranties are helpful in preventing car owners from having to shell out large sums of money to have your car fixed. However, some companies sell warranties make excuses in order to avoid having to pay claims. For this reason, it’s always a good idea to take the time to read the warranty and understand the coverage provided in your contract before agreeing to terms. Also, make sure to do research the warranty provider before deciding to shell out your hard-earned money for vehicle protection. Below are reasons extended warranty companies will deny claims:
- Wrong policy: Some warranty firms use this as a justification after a customer has purchased a warranty. Due to a failure to read the tiny print, a person may wind up with useless warranty coverage. When purchasing a car warranty, the best option a person can do is read the entire policy and understand what the guarantee covers.
- Exclusions: Again this is one of those times when the vehicle owner needs to know the full policy of what their warranty covers. For example, the part you may need fixing seems like a no-brainer and included in your warranty. This may be the case for you but your warranty may not think so as they have a list of things that will not be fixed on your vehicles such as a 12-volt battery or headlights.
- Incorrect Records: Before honoring your warranty, warranty firms may wish to review your maintenance records. These businesses may reject your claim if they discover that your records are not perfectly kept or you didn’t perfectly follow the recommended manufacturer maintenance schedule. Individuals may usually verify their car history record by marking yes or no on the policy. When the car owner checks the yes box and anything goes wrong with the engine, and the owner can’t produce documentation of oil changes, the warranty company is unlikely to pay up.
- Out of Business: This one of course is a no-brainer when a company closes and can no longer honor its policy. Unfortunately, fly-by-night companies aren’t uncommon in the extended warranty industry.
Signs of natural disasters. Many warranty companies won’t pay for disasters caused by Mother Nature. - Odometer Tampering. This is another no-no for warranty companies. They won’t honor a vehicle repair if they believe the odometer is incorrect.
- Too Many Repairs. Be aware that some mechanics will attempt to get you to make repairs that aren’t necessary. This may cause you problems down the road and your warranty may not agree to pay for all those repairs.
Signs Of A Rip-off
There are several red flags warranty that are important to be able to identify when deciding on an extended warranty. Below are signs you may be ripped off:
- Aggressive Sales Tactics
- Taking Too Long To Reply
- Cosmetic Repairs Only
- Slow To Pay Claims
- Undisclosed Fees
- Too Many Coverage Limits
- Poor Contractors
Worst Extended Auto Warranty Companies
The list below contains signs to look out for in the worst extended warranty companies:
- 1. Vehicle owners can avoid getting into the worst car warranty by knowing something about a company and finding out about the history of a company not refusing covered claims.
- 2. Others have complained about the company’s track record.
- 3. The Better Business Bureau gives them a negative review in addition to many complaints by customers.
- 4. The warranty terms are convoluted and don’t make sense.
- 5. Dishonest business practices.
- 6. Some car warranty scammers will try to get car owners to buy a warranty by calling them on the phone or sending out letters. Use extra caution and don’t fall for the scam. Warranty scammers are on the rise and use robocalls to part car owners from their money.
How To Keep Car Warranty Scammers From Calling
YouMail reported Americans received over 4.6 billion robocalls in February 2021 with many of them being warranty car extended calls. The best way an individual can protect themselves against these calls is to identify the caller. Another sign that you are being scammed by dishonest warranty callers is when they offer an unfamiliar insurance policy or warranty that doesn’t seem to have anything specific.
Something else a person should look out for is when they ask for personal identification before they allow you to speak to someone in charge. This is a definite indicator that the owner of the car is being conned. Personal information such as social security numbers, credit card numbers, and bank account numbers should never be shared.
Another rule of thumb is to never give out any personal information and stop the discussion. These warranty fraudsters are on the lookout for new ways to take money as soon as possible.
Look out for fraud if a salesperson pressures you to acquire the warranty. Hang up if this happens.
Examples Of The Worst Providers
It’s not hard to find examples of auto warranty companies with poor business practices. Schemes have run the gamut from failing to provide refunds to forcing customers into contracts they don’t need.
Here are a couple examples of companies that were caught deceiving consumers:
Direct Buy Auto Warranty
After resuing to pay a customer for repairs, Direct Buy Auto warranty paid a 810,000 to the state of New Jersey. The company was also forced to end business operations in New Jersey as a result of the settlement.
The company falsely advertised that it’s extended warranties would pay for all repairs when the contracts had numerous exclusions that forced customers to pay for the costs. As a result of the settlement, the company filed for bankruptcy.
US Fidelis
In 2012, Darain Atkinson, one of the leaders of this company plead guilty to felony charges for filing false tax returns and conspiracy to commit mail and wire fraud. After Darain received an 8 year sentence, his brother Cory was sentenced to 40 months in prison for similar white collar crimes. Both brothers were ordered to pay fines in excess of $4 million.
According to the St. Louis Post-Dispatch, the investigation alleged that US Fedelis deceived customers with dishonest marketing campaigns by telling them the comprehensive extended car warranties they sold were backed by automakers. Mailers were cited by the FBI as the means for conducting these shady tactics.
What To Do If You’ve Been Scammed By A Warranty Company
Sometimes it’s not so easy to tell if an extended warranty company is legitimate. If you are a vehicle owner who fell prey to an extended auto warranty scam, you have a few options:
Contact The Company
The first place to start is seeing what the company can do for you. If you can cancel your warranty contract and get a refund, great. If the company won’t budge or claims you’re locked into payments for some administrative reason, that’s when you should start considering other options.
File A Complaint
If you find the company’s customer service to be less than satisfactory, consider making a complaint. Customers often post their experiences with companies on consumer review sites like the BBB or Trustpilot.
If that doesn’t get the company’s attention, you can file a complaint with the FTC, which protects consumers across all industries. The Federal Communications Commission (FCC) also fields reports of scam calls if consumers feel like they’ve been scammed via phone.
Make Some Calls
In the event of being scammed, you want to make sure your personal information is protected. Here’s a list of information scammers often ask for:
- Credit card numbers
- Computer passwords
- Social Security number
If you did give out some of this information, call your bank to cancel your cards and protect your bank account. The Social Security Administration (SSA) can also assist if you’re worried about your Social Security number being used for fraud.
Take Legal Action If Needed
When all else fails, you have the option to pursue damages in court. Keep in mind that hiring a lawyer and levying a suit in civil claims court may exceed the amount of money the scammer obtained.
Why You Shouldn’t Buy A Car Warranty
There are several reasons why vehicle owners shouldn’t buy an extended car warranty. Many are overpriced and much of the money goes to comissions and marketing, not covering your vehicle.
Another reason why vehicle owners shouldn’t get a car extended warranty has to do with the fact that the vehicle may not be worth the cost of the warranty in the first place.
How To Find The Best Extended Auto Warranty Companies
If you’re considering extended warranty coverage but have worries about a potential provider making negative headlines, here are a few tips to find reputable companies:
Company Structure And Financials
It’s also common for a provider to broker warranty services from other companies, which means it’s not the true administrator of your contract. Also, make sure to research what insurance company backs your warranty. Finally, look for the company’s AM Best financial strength rating. This can be heavy indication of whether or not the company will have the money to cover your claim.
Customer Reviews
One of the best ways to identify reputable extended car warranty companies is to read reviews. For many companies, the Better Business Bureau and Trustpilot have thousands of reviews. The BBB has a systematic scoring system and that provides a letter grade based on factors like business ethics, customer service, and claims processing.
Review The Payment Policy
Before you make a purchase, make sure to price out your warranty. It’s common for some providers to ask for the entire cost upfront, although most offer monthly payment plans. If you choose a monthly installment plan, what out for added interest charges.
Price out your warranty before you commit to making a purchase. It’s not uncommon for an extended auto warranty company to ask for the entire warranty cost up front, but many offer monthly payment plans. Keep an eye out for potential interest charges, as well.
Be Familiar With The Claims Process
In order to get the most out of an extended warranty, you need to know how claims are approved and when you are entitled to file a claim. It is the customer’s responsibility to make sure the provider has all the information it needs to file a claim. Additionally, make sure you are aware of out of pocket expenses you are responsible for, including additional fees and deductibles.
Understand The Contract
Most extended car warranty companies provide contracts online. Reviewing the contract is helpful because it allows you to delineate what is covered and what is the car owner is responsible for. Along with info about your coverage, sample contracts also include:
- Deductible and Additional Fee Info
- Eligible Repair Facilities
- Cancellation Policies
- Transfer Policies
- Exclusions and Restrictions
Extended Car Warranty Companies We Recommend
Endurance is one of the largest extended warranty companies and our pick for best provider. The company is ranked on the 2019 Inc. 5000 list of most successful US companies, is certified by the Vehicle Protection Association, and has an A+ from credit rating agency AM Best. The direct provider offers a wide variety of plans.
CARCHEX is one of the best extended warranty providers and has been in the industry for over 20 years. CARCHEX has a score of a perfect 10 on ThoroughlyReviewed and an A+ Grade from the Better Business Bureau (BBB).
As one of the most affordable providers in the industry, CarShield describes itself as “a company and coverage your budget can count on”. CarShield offers 6 vehicle service contracts and even offers coverage for high tech electronics, motorcycles, and ATVs.
Conclusion
In this article, we reviewed how to identify the characteristics of the worst extended car warranty companies, including ways to spot scams and what to do if you are defrauded.
Worst Extended Auto Warranty Companies: FAQ
Regardless of whether a vehicle owner decides to buy a extended warranty policy, they should always do their homework so that they don't get taken for a ride and get scammed out of their hard-earned money.
How can you identify the worst extended warranty companies?
The worst extended auto warranty companies don’t pay their customers claims for covered repairs and will go through great lengths to shell out money for coverage you paid for.
How do you detect auto warranty scams?
Beware of companies who anonymously ask for your personal information. If you suspect a scam, it is advised to call the Federal Communications Commission.
Methodology
The Detroit Bureau collects data from every major car warranty provider to formulate rankings of the best warranty companies. Our in-depth rating system takes into account coverage, pricing, transparency, customer satisfaction and ratings from industry experts. Each provider is given a weighted score in five categories, as well as an overall score out of 10.0.
We recommend auto warranty companies based on these rankings, but we also encourage you to perform your own research and compare quotes to find the best coverage.
