What's a Vehicle Service Contract?

Most new vehicles purchased these days come with a warranty - this is an agreement between the manufacturer and the customer that should anything break, malfunction, or otherwise go wrong with the vehicle within a certain period of time (typically 3 years or 36,000 miles, whichever comes first), then the manufacturer will repair or replace the component at no cost to the customer.

A vehicle service contract is designed to offer similar peace of mind by literally extending the length of time a customer can expect to receive such coverage.

Buying a Vehicle Service Contract -

What Everyone Should Know

Just because a company claims to offer a vehicle service contract doesn't mean that you can expect complete bumper-to-bumper coverage. Some plans available in the market cover only catastrophic failures, or only certain systems. By being informed about vehicle service plans and reputable companies, you'll be better prepared to make the right decision for your needs. A few things you should always try to find out include:

Who takes care of the claims?

A lot of businesses simply sell some other companies' vehicle service contracts. Those companies that sell and manage their own plans (like Provida Group) are better equipped to provide reliable service and support.

Is it an exclusionary plan?

Manufacturer warranties are called exclusionary plans because it takes less time to mention what's not covered than it does to go through all the thousands of things that are. This is a sign that you're receiving the maximum amount of coverage available. Plans that list only those items which are covered may not be full coverage plans; they may be supplement or partial plans only. The majority of Provida Group’s plans are exclusionary plans.

Ask about parts, labor, and other expenses?

Never assume that a service contract includes parts and labor costs. If it doesn't say so specifically, you could end up paying for the time the mechanics spent repairing your vehicle. Considering that hourly rates can be between $70 and $100 or more per hour, these costs can quickly add up. Additionally, think about what other expenses you may incur if your vehicle is in the shop for a while. Car rental fees are another expense that can be costly unless covered by your contract.

Know Who You're Working With

When you purchase a vehicle service contract, you're making a contract between you and a provider. Just like any contract, you need to feel certain that the provider is going to hold up their end of the deal. After all, you're going to hold up your end by paying for the plan. Look at the financial strength of the company. Will they be able to pay your claim when you make it? What's their track record when it comes to customer service? Are they properly licensed and registered to do business in your state? A variety of resources can be helpful in this respect, including the Better Business Bureau, and Dun & Bradstreet, to name a few.

How will the company handle claims?

Let's be honest, a vehicle service contract that can only be used in certain places, or that makes you pay for the repair and then file for reimbursement doesn't offer peace of mind; it makes things more difficult. Make sure you know what you'll need to do in order to reap the benefits of your plan. Nationwide coverage, the ability to choose the repair facility of your choice, and direct payment to repair facilities are all options that make Provida Group’s plans truly valuable.

Dollars and Sense

Like so many other things in life, extended vehicle service contracts fall into that category of "you get what you pay for" - so shop smart. Don't let sticker price be your deciding factor. Look at what you actually get for the money and factor in the possible out-of-pocket costs that are likely to come along with a "bargain basement" plan.