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Common extended warranty industry terms - what do they mean?

Vehicle Service Contracts, commonly called extended car warranties, can have your back by covering your repair bill when an unexpected mechanical breakdown comes up.

In whatever situation you’re currently inwhether your manufacturer’s warranty is close to expiring or you’re thinking about getting a used car extended car warranty planyou’ll repeatedly run across certain words when shopping around. Knowing what the common terminology associated with extended car warranties mean can assist you while deciding on the coverage that’s right for you (as they can often be very confusing).

Here we’d like to guide you through the most common words used while describing extended car warranty coverage to help you through your buying process.

What are the most common extended warranty terms? What do they mean?

A

A-Rated Insurance Company: An independent rating by AM Best credit agency that measures an insurer’s ability to meet its financial obligations to their policyholders. An A-rating is “Excellent”, which means the company has excellent financial strength to pay.

Activation: A set of actions (for example, taking a picture of the vehicle’s VIN number or odometer) required from the service contract holder to send to the provider so that coverage can take effect. The actions may differ depending on the type of coverage the warranty holder signs up for.

Administrator:A partner company that authorizes and pays the repair facility or repair shop for repairs on a vehicle.

Authorization: An approval issued by the administrator on a claim so that repairs and/or replacements can begin.

Auto Warranty: A contract between the owner of the vehicle and the vehicle’s manufacturer or third party to provide vehicle repair coverage. See Extended Car Warranty 

Note: Although the term “warranty” is meant to be used only when referring to coverage provided by a manufacturer, it’s a term that’s widely used for both vehicle manufacturers or third parties.

B

Bumper-to-Bumper Warranty: A type of manufacturer warranty that offers coverage on all parts and systems of a vehicle in case of a mechanical breakdown, excluding wear-and-tear items.

C

Certified Car:A used vehicle that goes through a detailed, multi-point inspection and refurbishing process by the dealer. Also known as a certified pre-owned (CPO) vehicle. Claim A request by the warranty holder for the repair or replacement of vehicle components covered under the extended car warranty or vehicle service contract plan. Components Covered: The vehicle parts that may be covered under an extended car warranty or vehicle service contract (for example, the engine, the transmission, the suspension, the brakes, etc.) Corrosion Warranty:A type of warranty that offers coverage for the premature deterioration of a vehicle’s sheet metal.

D

Deductible: The amount of money the warranty holder pays before the extended car warranty or vehicle service plan begins to pay for the rest of the costs. Drivetrain: The vehicle components that work together to move a vehicle’s wheels. It includes the transmission, the differential, the axles, wheels, CV joints and driveshaft. Unlike the powertrain, it does not include the engine.

E

Extended Car Warranty: A contract between the owner of the vehicle and the vehicle’s manufacturer or third party to provide repair coverage for expensive, unavoidable repairs. It’s a good option for protection once the initial manufacturer’s warranty runs out. See Vehicle Service Contract Note Although the term “warranty” is meant to be used only when referring to coverage provided by a manufacturer, it’s a term that’s widely used for both vehicle manufacturers or third parties. Exclusions: The vehicle components or items that are not covered under the extended car warranty or vehicle service contract.

I

Inclusions: The vehicle components or items that are covered under the extended car warranty or vehicle service contract.

L

Lemon Law:A law that requires a dealer to replace or refund the money to a customer for selling them a “lemon”. A lemon is a vehicle with repeated, unfixable mechanical issues. Laws differ between states. Limit of Liability: The maximum amount of money the extended car warranty or vehicle service contract provider is required to pay when the vehicle requires a repair or replacements of parts.

M

Make and model: A vehicle’s make is the brand of the vehicle (for example, Chevrolet, Ford or Toyota). A vehicle’s model is the name of the specific car product (for example, a Chevrolet Corvette).

Manufacturer’s Warranty: A contract between the owner of the recently purchased vehicle and the vehicle’s manufacturer. The manufacturer promises to repair or replace essential vehicle components affected by factory defects for a certain period of time, usually 3 years or 36,000 miles.

Mechanical Breakdown Insurance (MBI): A type of extended car warranty or vehicle service contract that covers vehicle repairs or replacements due to a mechanical breakdown. It differs in that it’s considered an insurance product and it’s only available for California residents.

P

Powertrain: The vehicle components that work together to move a vehicle’s wheels. It includes the engine, transmission, the differentials, the axles, wheels, CV joints and driveshaft.

Powertrain Warranty: A type of warranty that only includes repairs or replacements on the car’s powertrain (engine, transmission, the driveshaft, differentials and axles).

Product: The specific type of extended car warranty or vehicle service contract the warranty holder has purchased (for example, Vehicle Repair Protection, Key & Fob Replacement or Tire & Wheel Protection).

R

Repair Facility/Shop: A licensed mechanic shop in the United States. This includes the dealership, national (chain) repair shops or a local mechanic.

Road Hazard: A foreign object that’s unintentionally driven over on the road or highway (for example, nails, glass and potholes).

Roadside Assistance: A set of various services that can help a driver in case of a mechanical breakdown on the side of the road, parking lot, at work or at home.

Routine Maintenance: A vehicle maintenance task performed on an ongoing basis to check for, and prevent, mechanical issues before they end up becoming more complicated (for example, oil and filter changes, tire pressure checks, shock and strut inspections).

V

Vehicle Identification Number (VIN): The identification code for a specific vehicle. It’s considered a” fingerprint” because no two vehicles have the same VIN number. It’s composed of 17 characters that include numbers and capital letters. It’s located where the dashboard meets the edge of the windshield, on the driver’s side.

Vehicle Service Contract:A contract between the owner of the vehicle and the vehicle’s manufacturer or third party to provide repair coverage for expensive, unavoidable repairs. It’s a good option for protection once the initial manufacturer’s warranty runs out. It’s commonly referred to as an extended car warranty.

Vehicle Placard: A label located on the driver’s side door, near the door jamb. It includes important vehicle information (for example, the recommended tire pressure and the vehicle load capacity).

W

Wear-and-Tear Items: The items on a vehicle that deteriorate due to normal use (for example, brake pads, windshield wipers, tires, wheels, etc.).

What is Vehicle Repair Protection?

Vehicle Repair Protection is a new kind of extended car warranty. It’s a low-cost monthly subscription that provides benefits you won’t find with any other extended car warranty. 
  • It’s conveniently 100% online.
  • There are no long-term contracts.
  • You’re backed by our best in the industry 90-day money back guarantee.
  • It provides premium vehicle coverage at ⅓ of price on average 
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