Aftermarket Car Warranties

            I want to talk to you today about aftermarket warranties on your car. Everyone gets those calls…”I’m calling about your car’s expired warranty.” They make it sound great. “Are you tired of paying for auto repairs?”….like they will happily pay them for you. “You have so much more flexibility with our coverage because you can take your vehicle to any ASE Certified auto shop and we will cover your car no matter how many miles it has on it!” As every auto repair shop knows, this may sound good but it seldom works out for your good.

            Read the contract that these warranty companies have you sign when you purchase them. If you do that, you will realize that there is a very specific list of parts that they cover. Once you have a breakdown you will find that if your failed part is not on that list or was caused to fail by a part not on that list, it is absolutely not covered! They may tell you verbally that they will warrant your transmission but when you look at your contract under transmission you will see that they only warrant specific parts that are inside the transmission and unless one of those parts went bad and caused the rest of your transmission to fail, they will not cover it.

            Here is how a typical conversation with a warranty company goes and know that every single time we call them we will wait from 15-45 minutes on hold to actually speak to someone.

Stillwater Auto to Warranty Company, “I am calling about Bobby Bob’s auto warranty and am with Stillwater Automotive. Bobby Bob’s transmission is shot and will not move the vehicle anymore and will need to be replaced.”

Warranty Adjuster, “Well, we will need to find out exactly what caused Bobby Bob’s transmission to fail so we will need you to tear the transmission down completely so that you can determine the cause of the failure. We do not pay for diagnosis so you will need to get authorization from Bobby Bob to pay to tear it down and get a specific cause for the transmission failure.”

Stillwater Automotive, “OK, I’ll call Bobby Bob and let him know.”

SA to Bobby Bob, “Hello Bobby Bob. We have found out that your transmission has failed and will no longer work. We spoke to your warranty company after a 40 minute hold and they say that they do not pay for diagnosis and that the transmission will have to be totally disassembled to find out the exact cause of the failure. This will take several hours and cost you several hundred dollars just to see if they will pay for the repair. How should we proceed?”

BB, “Well I guess go ahead and tear it down and let’s see what caused it.”

We tear the transmission down and find that an internally lubricated bearing failed and caused the break down. The bearing is on their list of parts they replace luckily!

SA to WA, “We tore the transmission down at the customer’s request and found that the rear clutch bearing failed and caused the problem. How should we proceed?”

WA, “We will need to send our adjuster out to look at the transmission to see if your diagnosis is correct. He can be there next Thursday at 2pm. Will that work for your schedule?”

SA to BB, “Sorry to tell you but the warranty company wants to send their adjuster out to look at your transmission and it is going to be next Thursday before he can come and make a decision.”

In the mean time, we have the transmission in 200 pieces scattered out on a work bench that we can not utilize for our work until the adjuster makes his decision.

Adjuster on next Thursday, “Looks like you were correct and that bearing did fail but it could have failed because of lack of maintenance and old transmission fluid. I need to see all Bobby Bob’s transmission maintenance records.”

Adjuster after seeing records, “You know, we have our own maintenance schedule that is in our contract and it differs significantly from the factory recommended maintenance but looks like Bobby Bob still met our standards so this repair should be covered. You will hear back from our warranty adjuster on the phone within 4 days.”

4 days later call from Warranty Adjuster, “We are going to cover the repair on Bobby Bob’s transmission. Here is what we will pay. We do not pay your shop labor rate but have a maximum rate we pay that is 60% of your labor. We also furnish our own parts and we have found a used transmission with the same mileage or slightly less than was on Bobby Bob’s vehicle and we are going to have it shipped to you from Michigan. Our cost on the used transmission is $100. Our book says the transmission swap will take 4 hours. We will pay you those hours at $60 per hour and furnish the transmission and you will need to provide the customer with a 1 year parts and labor warranty from your shop for this repair. So the customer can choose to take a check from us for $340 for his repairs and have that to put toward your charges for him or we can get this transmission coming to you within a week.”

SA to WA, “Sorry but we do not offer any warranty on used parts or parts that we do not provide and we do not accept your offer of 60% of our labor.”

SA to BB, “Bobby Bob, I have good news and bad news. The good is that your transmission is covered by the warranty company.”

BB, “That is awesome news!”

SA, “ Sorry but not really. The warranty company wants to send us a used transmission that costs $100 and pay us $240 in labor. You diagnosis fee is already more than that. The company is also demanding that we warrant the used part they are providing for 1 year and we cannot do that. The will give you $340 toward what it will cost you to have your transmission replaced with a good rebuilt unit that we can warrant for 3 years or 36,000 miles, which is our standard warranty. At this point you have waited 3 weeks on the warranty company and will end up paying more to get the work done than if you would have told us to complete the repair immediately after you came in. It could have been finished in 3 days. Sorry for this kind of news.”

BB, “I’m calling those $%&!!! and getting them straightened out!”

BB to SA, “I talked to the warranty company and they told me to read my contract and I would see that they are meeting all the requirements in it. Looks like there is nothing I can do but have it fixed and accept what they are offering.”

At Stillwater Automotive, we have been down this road 100 times and know exactly how these companies work so I always give our customers an explanation of this process in the very beginning. That way no one is surprised.

These policies are just an insurance policy and if you have one, my advice would be to call and have it canceled and get the money back for the unused time on the policy and save it toward future repairs. This is just one example of how they scam people but there are bunches of them. You may have kept up with your maintenance just as your factory owner’s manual says to and it may not meet their standards. They never cover seals and gaskets and may decide that there was a leak in your vehicle that caused the part to fail from lack of fluid and since they don’t cover seals or gaskets…they don’t have to cover the part failure! There may be a very common failure issue with your specific model of car and you can bet that they have made an exclusion for that issue. They also seem to try to make it so difficult to talk to them that you give up…like hanging up on you after you have waited on hold for 45 minutes.

Sadly, these companies, like Car Shield, seem to prey on elderly and low income because they assure them they will cover all their expensive car repairs. THEY ABSOLUTELY WILL NOT AND ARE A TOTAL SCAM!  When you buy a used car and the car dealer tries to sell you one of these warranties, understand that the dealer is getting ½ or more of the fee for selling it. You are not likely to ever win. Last year we decided at Stillwater Automotive that we would no longer accept any aftermarket warranty work. They waste too much of our time and it is never a good experience for us or the customer.

 Good luck and I hope this helps someone!

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