Warranty Headquarters - Dealership vs. Online Plans

Dealership Plans v. Online Plans

Dealership extended warranty plans are often backed by the SAME companies that online providers use. In the case of Warranty Headquarters, we have sought out the best coverage possible – perhaps even more comprehensive than the plans provided by the dealership.

To make our point, we have isolated sample contract sections from a dealer policy and from online policies. Note that your Warranty Headquarters policy may differ from the coverage shown below.

As you can see below, warranties from dealers often contain the EXACT same coverage language, yet extended warranties from dealers can cost twice as much.

Dealer Warranty

Sample Online Warranty

Engine:
Crankshaft and bearings, oil pump, internal timing gears, timing chain, camshaft, camshaft bearings, valve lifters, rocker arm assemblies and push rods, pistons and rings, wrist pins, cylinders, connecting rods, distributor drive gear, all internal components of engine block and cylinder heads, if damage is caused by mechanical failure of an internally lubricated part. Gaskets and external seals will be covered if their replacement is necessary to complete an otherwise authorized repair. Broken crankshaft is covered if break is caused by either bearings or piston failure. Valve guides are covered only when guide sleeves have not slipped below original Position.
Transmission/Transaxle:
The internal components of the automatic transmission or manual transmission, drive chain, drive chain gears, carrier bearings, internal transaxle seal. The manual transmission case and automatic transmission case and torque converter are covered, if damaged by the failure of internally lubricated parts.
Differential Assembly Components (2 & 4 wheel drive):
Front and rear differential housing including pinion bearings, side carrier bearings, ring and pinion box and pump housings if damaged by the failure of internally lubricated parts.
Timing Belt:
If contract holder has followed manufacturer's recommended maintenance intervals for replacement.
CV Joints:
CV boots must not be torn at the time of failure. Lubricated joint failure only. Universal Joint (U joint) is not included.
Steering:
Internally lubricated parts contained within the steering box and pump housing, including rack and pinion, control calves, internal oil seals, bearings and shafts, steering box and pump housings if damaged by the failure of internally lubricated parts.
Electrical:
Alternator, starter motor, front wiper motor, cooling fan motor, heater blower motor, electric horn, clock, switches for the following: neutral safety, overdrive, reverse indicator, power windows, power door locks.
Seals and Gaskets:
Head gasket and intake manifold gaskets arc covered for coolant leaks only on vehicles up to 100,000 miles.
Air Conditioning:
Compressor, however if the damaged or malfunctioning compressor causes damage to the expansion valve, or receiver dryer, the damaged component(s) will he replaced. Coverage applies to factory installed, non-retrofitted units only.
Cooling System:
Water pump, thermostat, mixture control valve, overflow reservoir.
Fuel System:
Fuel pump, pressure regulator, metering valve, fuel injectors, vacuum pump, metal fuel delivery lines, fuel tank, fuel injector.
Turbo Charger/Supercharger:
All internally lubricated parts due to mechanical failure.
Brake System:
Master cylinder, wheel cylinders, disc brake calipers, ABS master cylinder, vacuum booster, hydraulic lines and fittings, pressure modulator valve, isolation dump valve, accumulator, wheel speed sensors.

Engine:
Crankshaft and bearings, oil pump, internal timing gears, timing chain, camshaft, camshaft bearings, valve lifters, rocker arm assemblies and push rods, pistons and rings, wrist pins, cylinders, connecting rods, distributor drive gear, all internal components of engine block and cylinder heads, if damage is caused by mechanical failure of an internally lubricated part. Gaskets and external seals will be covered if their replacement is necessary to complete an otherwise authorized repair. Broken crankshaft is covered if break is caused by either bearings or piston failure. Valve guides are covered only when guide sleeves have not slipped below original Position.
Transmission/Transaxle:
The internal components of the automatic transmission or manual transmission, drive chain, drive chain gears, carrier bearings, internal transaxle seal. The manual transmission case and automatic transmission case and torque converter are covered, if damaged by the failure of internally lubricated parts.
Differential Assembly Components (2 & 4 wheel drive):
Front and rear differential housing including pinion bearings, side carrier bearings, ring and pinion box and pump housings if damaged by the failure of internally lubricated parts.
Timing Belt:
If contract holder has followed manufacturer's recommended maintenance intervals for replacement.
CV Joints:
CV boots must not be torn at the time of failure. Lubricated joint failure only. Universal Joint (U joint) is not included.
Steering:
Internally lubricated parts contained within the steering box and pump housing, including rack and pinion, control calves, internal oil seals, bearings and shafts, steering box and pump housings if damaged by the failure of internally lubricated parts.
Electrical:
Alternator, starter motor, front wiper motor, cooling fan motor, heater blower motor, electric horn, clock, switches for the following: neutral safety, overdrive, reverse indicator, power windows, power door locks.
Seals and Gaskets:
Head gasket and intake manifold gaskets arc covered for coolant leaks only on vehicles up to 100,000 miles.
Air Conditioning:
Compressor, however if the damaged or malfunctioning compressor causes damage to the expansion valve, or receiver dryer, the damaged component(s) will he replaced. Coverage applies to factory installed, non-retrofitted units only.
Cooling System:
Water pump, thermostat, mixture control valve, overflow reservoir.
Fuel System:
Fuel pump, pressure regulator, metering valve, fuel injectors, vacuum pump, metal fuel delivery lines, fuel tank, fuel injector.
Turbo Charger/Supercharger:
All internally lubricated parts due to mechanical failure.
Brake System:
Master cylinder, wheel cylinders, disc brake calipers, ABS master cylinder, vacuum booster, hydraulic lines and fittings, pressure modulator valve, isolation dump valve, accumulator, wheel speed sensors.

Another sample dealer warranty

Another sample online warranty

Engine:

The following internal lubricated parts: pistons; piston rings and pins; crankshaft and main bearings; connection rods and rod bearings; camshaft and bearings; timing chain; gears and/or belt; flywheel; rocker arms; valves; valve springs; guides and seats; valve push rods and lifters; oil pump; valve stem oil seals.
Engine head (s); engine block and cylinder barrel if damaged as a result of mechanical failure of an internal lubricated part or component named above.
Diesel injector pump; turbocharger; rotary engine housings; fuel pump; water pump; head gaskets; timing cover seals; rear main seals; intake gasket; valve covers; oil pan; timing cover seals; rear main seals; intake gasket; valve covers; oil pan; timing covers; manifolds (broken or deteriorated manifold studs are not covered). Harmonic balancer; engine mounts; supercharger.

Automatic or Standard Transmissions:

All internal lubricated parts contained within the transmission case and/or torque converter case; transmission case and torque converter case if damaged by the failure of an internal lubricated part; propeller shaft; universal joints; modulator; governor; transfer cases and all internal lubricated parts thereof; front pump seal; converter hub seal; extension housing seal; transmission mounts; flexplate; transmission cooler; flywheel; transfer case.

Drive Axle Assembly:

All internal lubricated parts contained within the drive axle housing; drive axle housing if damaged by failure of any internal lubricated part; drive axles; wheel bearings and axle grease seals; inner axle differential seal; pinion seal; C.V. joints; drive axle case; locking hubs.

Brakes:

Master cylinder; power brake unit; wheel cylinder; hydraulic lines and fittings; disc brake calipers; combination valve; ABS system including electronic control processor; wheel speed sensors; pressure modulator valve; dump valve; accumulator.

Front suspension:

Upper and lower control arms; control arm shafts and bearings or bushings: upper and lower ball joints; king pins and bushings; spindle and spindle support; wheel bearings; strut bearing and plate assembly; radius arm and bushings; torsion bars and mounts or bushings stabilizer bar links and bushings; struts; variable dampening suspension including compressor control module; actuator; solenoid; height sensor; mode selector switch; seals and gaskets.

Steering:

All internal lubricated parts contained within steering box and rack and pinion component; steering box if damaged by the failure of any internal lubricated part; power steering pump; power cylinder assembly; steering knuckle; idler arm and relay rod; control valve; power steering hoses; pitman arm; tie rod ends; upper and lower steering column shafts and couplings; internal tilt-wheel mechanism; steering box and rack and pinion gear housing; seals and gaskets.

Air Conditioning:

Condenser; compressor; evaporator; accumulator and orifice tube, if factory installed or approved. Compressor clutch and pulley; high/low compressor cut-off switch; expansion valve; pressure cycling switch; receiver dryer; seals and gaskets.

Electrical:

Alternator; voltage regulator; starter motor; windshield and rear mounted wiper motor; manually operated switches; electronic ignition module; starter solenoid; lean burn computer; electronic ignition control box; starter drive; engine compartment wiring harness; computerized timing control unit; crank angle sensor; knock sensor ignition switch; ignition switch lock cylinder; washer pump and switch; stop lamp switch; headlight switch; turn signal switch; heater/AC blower speed switch; horns; manual heater/AC control assembly; automatic climate control programmer; electronic instrument cluster; mileage computer; distributor ignition coil; electronic combination entry system (does not include transmitters, receivers, or remote locks); cruise control module; transducer; servo and amplifier; powertrain control module; headlamp motors; power window motor; power seat motor; power mirror motor; power antenna motor/mast assembly; convertible top motor; power sunroof motor; power window switch; cruise control engagement switch; power seat switch; power mirror motor switch; rear defogger switch; power door lock actuator and switch.

Fuel delivery:

Fuel pump; fuel injection pump and injectors; vacuum pump; fuel tank sending unit; metal fuel delivery lines.

Engine:

The following internal lubricated parts: pistons; piston rings and pins; crankshaft and main bearings; connection rods and rod bearings; camshaft and bearings; timing chain; gears and/or belt; flywheel; rocker arms; valves; valve springs; guides and seats; valve push rods and lifters; oil pump; valve stem oil seals.
Engine head (s); engine block and cylinder barrel if damaged as a result of mechanical failure of an internal lubricated part or component named above.
Diesel injector pump; turbocharger; rotary engine housings; fuel pump; water pump; head gaskets; timing cover seals; rear main seals; intake gasket; valve covers; oil pan; timing cover seals; rear main seals; intake gasket; valve covers; oil pan; timing covers; manifolds (broken or deteriorated manifold studs are not covered). Harmonic balancer; engine mounts; supercharger.

Automatic or Standard Transmissions:

Drive Axle Assembly:

Brakes:

Front suspension:

Steering:

Air Conditioning:

Electrical:

Fuel delivery:

Fuel pump; fuel injection pump and injectors; vacuum pump; fuel tank sending unit; metal fuel delivery lines.

Important Contract Sections
It is important that you read the extended warranty contract and understand a few basic sections. They are:

Claim Reimbursement
Do you need prior approval before having work completed?

Do you have to pay for repairs and then get reimbursed OR is the repair facility paid directly by the warranty company?

Vehicle Maintenance

What do you need to do in order to keep your warranty intact from a maintenance standpoint?
Usually, you must maintain your vehicle per manufacturer specifications. This includes scheduled maintenance, oil changes, etc.

What paperwork should you retain, such as maintenance work, smog checks, oil changes?
Better safe than sorry. Keep proof of all maintenance work. This is not only a good idea for your extended warranty, but will also be useful should you decide to sell your car. One sample extended warranty states:

“ It is required that You retain “Proof” of maintenance for the service and/or repair work performed on Your Vehicle, regardless if work was performed by You or a repair facility. “Proof” means repair orders from a Licensed Repair Facility and/or a self-maintained maintenance log that has corresponding “purchase receipts” for oil and filter, coolant and brake system flush, etc. Pertinent information must be furnished to identify the Vehicle and the repairs performed, such as the Vehicle Identification Number (VIN #), date, mileage, parts and labor. “

Breakdown of Covered Parts

Does your warranty cover BOTH breakdowns AND wear & tear?
Some warranties exclude “wear & tear” items. Here is a sample from a competitor’s warranty which highlights a few extended warranty surprises:

The Administrator will reimburse you for reasonable costs to repair or replace any of the covered parts listed in the Agreement if required due to a mechanical breakdown, hereafter referred to as a loss. A “loss” is defined as the failure of a defective covered part or faulty workmanship of a covered part as originally supplied by the manufacturer. It does not include gradual reduction in operating performance due to wear and tear. Damaged parts may be replaced, depending upon availability, with like quality, used, rebuilt, remanufactured, or new parts. When the cost of a repair for both parts and labor exceeds the cost of replacing the damaged unit with a used, rebuilt, or remanufactured unit, the Administrator reserves the right to select the method of repair. Dollar amounts of authorization will be based on selected method of repair.

If your vehicle breaks down, you must pay, to the repairing facility, the deductible stated in the Declaration section per visit.

What does this mean? It means that wear & tear would NOT be covered by this competitor’s warranty. It also means (see the first sentence) that you have to pay and then get reimbursed.

This next section of a competitor’s warranty is also tricky. It does NOT say that all labor is covered. It says that they will pay labor costs that they see fit based on statistics.

Labor: Labor costs for authorized repairs will be based on the average costs for similar repairs, or as nationally published. Labor time capsules will be determined by a current nationally published flat-rate manual.

Electronic – Be sure that your contract covers electronic components such as: Compact Disc Player, Cassette Player, Speakers, Video Cassette Player/Recorder, Auxiliary Light Switches, and Captain Chair Motor and Switch.

What is Not Covered

Often, the most important section of a service contract is the “What is not covered” section. The section below represents a typical contract as sold by our competitors:

1. ANY REPAIR OR REPLACEMENT MADE WITHOUT PRIOR AUTHORIZATION FROM THE ADMINISTRATOR TO THE REPAIR FACILITY.

2. Any parts not listed under covered parts. Examples of parts not covered are: battery, brake drums, disc brake rotors, brake linings and disc brake caliper pads, shock absorbers, bolts, nuts, fasteners, standard transmission clutch assembly, and manual and hydraulic linkages.

3. Any breakdown caused by collision, fire, theft, vandalism, riot, explosion, lightning, earthquake, overheating, freezing, rust or corrosion, windstorm, hail, water, or flood.

4. Any breakdown caused by misuse, abuse, negligence, lack of normal maintenance (adjustments, alignments, tune-ups, etc.), failure to protect Your Vehicle from further damage when a breakdown has occurred, failure to maintain proper levels of lubricants and/or coolants, or if Your Vehicle has been used for racing or any other forms of competitive driving, plowing snow, or for towing a trailer weighing in excess of 2,000 pounds or any vehicle or object unless Your Vehicle is equipped with a factory-installed or authorized tow package.

5. The repair of valves and/or bearings that are within the manufacturer’s acceptable specification limits or if the purpose of such is simply to raise the engines compression when a mechanical breakdown caused by the failure of a covered part has not occurred. This is considered normal wear and tear, and not a mechanical breakdown. Also, no benefit is provided for a condition known to YOU, which existed when YOU purchased YOUR Vehicle or for a mechanical breakdown which occurred before You purchased Your Vehicle. Repair or replacement of any covered part if a breakdown has not occurred.

6. Any alterations which have been made to Your Vehicle, or You are using or have used Your Vehicle in a manner which is not recommended by the manufacturer, including the failure of any custom or add-on part.

7. INELIGIBLE VEHICLES: Any vehicle not expressly listed on the current contract rate card: Vehicles with True Mileage Unknown (TMU), any vehicle that is flood damaged, Trucks over 1 ton classification, taxis, buses, and city and state owned vehicles, vehicles used for commercial purposes, vehicles used for racing competition, time trials or rallies, vehicles modified from manufacturer’s specifications, vehicles not purchased or authorized through a licensed authorized agent, vehicles with fifth wheel or a snow plow attachment, and vehicles purchased by a minor.

8. Repairs for which the responsibility is covered by any warranty of the manufacturer such as extended drive train coverage, or a repairer’s guarantee. Further, coverage under this Agreement is similarly limited in the event of a breakdown if the manufacturer has announced its responsibility through any means including public recalls and factory service bulletins.

9. Any breakdown caused by contamination of fluids, fuels, coolants, lubricants, rust or corrosion.

10 . Liability for damage to property, or for injury or death arising out of operation, maintenance or use of your vehicle described in this Agreement, whether or not related to the part covered.

11 . Any loss caused by lack of proper and necessary amount of coolants or lubricants.

12 . Maintenance services and Parts described in your vehicle’s owner’s manual as supplied by the manufacturer. These include, but are not limited to: filters, lubricants, coolants, fluids, refrigerants, alignments, tune-ups, spark plugs, hoses, belts, brake pads, wiper blades, light bulbs, exhaust systems, trim holdings, upholstery, carpet and paint.

Transfer of Agreement

It is important that you make sure your extended warranty is transferable. You also need to check what the requirements are for transferring the warranty, if a fee is required and any other requirements such as having the new owner confirm the transfer.

Cancellation of Agreement

Check on the cancellation requirements and terms. Most warranty companies allow you to cancel your contract at any time. The one exception is if a claim is pending or has been paid.