Extended Warranty Education - Warranty Advice
Prepare to learn some of the best keep secrets of the warranty industry and advice on how you can get the most for your money.
Click on any of the following or scroll down to see all warranty business secrets.
- Tip #1: Who really owns your warranty? Who really has your money?
- Tip #2: "Vehicle Breakdown" versus "Wear and Tear" (and why you should care to know the difference).
- Tip #3: Deductibles: Some warranty providers would have you pay more than once.
- Tip #4: Vehicle Repair Locations--the hidden clause to watch out for.
- Tip #5: Double Dippers...how dealers get paid twice for one repair.
Tip #1 - Who really owns your warranty?
Who really has your money?
You need to know about the "transfer of risk" associated with warranties. A transfer of risk is when the dealer pays money to an administrator that assumes the risk for the service contract. These monies are used to pay for future repairs. Why is this important?
Some dealers DO NOT pay into the reserve, they do not "transfer the risk". They are gambling with your money. Your warranty is only as good as the financial condition of the dealership. If they hit hard times, your warranty is in jeopardy.
If the dealer hasn't transferred risk to an administrator that maintains an excellent claims paying ability and the dealership is sold or goes out of business, you're out of a warranty, and you're out of the money you paid for that warranty.
Paragon Motor Club is one of the few direct to consumer marketers of extended warranties that are 100% insured by licensed and admitted insurance companies. In fact, we shop between two top rated insurance companies to get you the best price and coverage.
With Paragon, you can feel confident that your extended car warranty is directly insured by an insurance company that has the financial stability to pay claims today...and in the future.
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Tip #2 - "Vehicle Breakdown"
versus "Wear and Tear" (and why
you should care to know the difference).
You should care because you may be covered for one (breakdown) failure and not for another (Wear and Tear) failure with your current warranty.
A failure occurs when a component or part BREAKS. A wear and tear failure occurs when a component breaks AND/OR fails to perform at manufacturer's specifications.
For example, piston rings do not break. They wear out. This is wear and tear failure, not breakdown failure.
Another example: Suspension items normally do not break. They wear out. This is wear and tear failure, not breakdown failure.
This is a critical distinction because many manufacturer's warranties and after market warranties do not cover wear and tear failures.
Your Vehicle Service Contract through Paragon Motor Club covers breakdown AND wear and tear. It does not exclude repairs due to "wear and tear".
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Tip #3 - Deductibles: Some warranty providers would have you pay more than once.
Probably not. You could be under a warranty that has a deductible for EVERY repair, as opposed to one for a single repair visit.
For example: During a repair visit you have the brakes, air-conditioning, and transmission fixed. If you have a deductible for EACH repair under your current warranty, it could take hundreds of dollars out of your pocket.
Your vehicle service contract through Paragon Motor Club has only ONE deductible per repair visit, regardless of the number of components fixed during that visit.
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Tip #4 - Vehicle Repair Locations--the hidden clause to watch out for.
Probably not. Many factory plans require you to go to factory shops.
For example, as of 1999, with a Chrysler warranty you must go to a Chrysler facility.
Many dealer service contract programs (which are different from the manufacturer's warranty), have an unbelievable exclusion: They make it uninviting for non-dealer repair facilities to honor their vehicle service contracts, which means that you end up having the vehicle repaired at your dealer's repair facilities!
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Tip #5 - Double Dippers...how dealers get paid twice from one repair.
Occasionally manufacturers will make exceptions in their warranties to cover special problems or defects with their products. Such exceptions are referred to as "hidden warranties" (as opposed to vehicle "recalls" which are items that relate directly to the safety of a vehicle). An unethical repair facility may charge both the customer and the manufacturer when repairing a defect covered by a "hidden warranty."
For example, a consumer may find a problem with their vehicle, bring it into a dealership for repairs, pay for that repair, and never know that the problem was actually being paid for by the manufacturer of their vehicle at the same time.
One reason this happens is because it is not mandatory in most states that a manufacturer reveal to consumers that their vehicle has additional "hidden warranties" not expressed in their original manufacturer's warranty. The manufacturers know that service facilities "double dip" on occasion. They do little or nothing about this practice because it is in their best interest not to disclose defects, newly covered items, or get repairs done at their expense.
Many service facilities know that consumers are unaware of "hidden warranties" and can take advantage of consumers that have a real defect in their vehicles. A consumer can read their manufacturer's warranty countless times but it will never reveal the "hidden warranties."
When you protect your vehicle with a warranty through Paragon Motor Club and bring it in for a covered repair, the service manager will call the Administrator. On the other end of the phone will be an ASE Certified Mechanic. Our Administrator employs claims staff that are highly trained and experienced mechanics, and no "hidden warranty" will ever get "double-dipped."
Our Administrator pays covered claims with a credit card and is accepted at any reputable repair facility. Ask your service facility if they accept your coverage through Paragon Motor Club coverage and advise them that claims are paid via credit card. If they say "no," be wary - they could be double-dippers!
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