Warranties in Your State
When you start doing your research in anticipation of buying extended vehicle coverage, you have to dig a bit deeper than just a single, broad explanation of legal terms and such. The fact is, the extended auto warranties in your state may be regulated and controlled in ways quite different than in a neighboring state. If you only have time to read one article (you have to leave in five minutes and the subject just came up), then it should at least be one that covers the specifics for your home state. Auto insurance is not yet on anyone’s short list for nationalization, so there will not be one-size-fits-all federal oversight of these warranties, at least not very soon.
A growing number of states require that companies selling vehicle protection products (like theft deterrents) and services (like extended warranties) have to be registered with state authorities. Some states oversee these through their insurance commissioners, others through their consumer protection agencies and still others with a combination of agencies. This, again, differs both among states and over time, as there have been some wide-ranging changes to how state governments deal with insurance and insurance-related businesses. On the other hand, some states have determined that extended vehicle warranties are not insurance, but pre-paid service plans. Whatever they are called in your state, you need to find out how they are regulated and how best to compare their offers.
State Specific Info
For more state-specific information on several of our most popular states, see below:
Basic Consumer Protection
Even when the extended warranty is considered insurance (which is less and less often), all of the other consumer protection regulations in your state will still apply to the company selling it. That is, you already have the protection of fraud and false advertising laws, so regulators do not need to write additional rules about these issues. Your state government is primarily concerned with ensuring that the firm can pay its claims, so the company may be required to provide financial data, maintain a certain net worth, post a bond and otherwise establish their bona fides.
In addition to disclosing pertinent information about the firm’s assets and operations, the warranty companies may also have to show their various warranty contracts to the state regulators. This step will guarantee that the warranties sold in your state contain the provisions, definitions, terms and information as determined and legislated by your state lawmakers. Typically, the firms that pass scrutiny will be listed with the state’s Attorney General and/or consumer affairs agency. These lists are often available on the state agency Web sites.
All over the nation
Some states that have taken the foregoing approach, to greater or lesser degrees, are Ohio, Texas, Georgia, Tennessee, Michigan, Missouri, Alabama, Maryland, Oregon, Massachusetts, New Jersey, California, Minnesota, Mississippi and Florida. Although registration requirements definitely vary from state to state, you can expect that companies listed by the consumer agency or attorney general have been deemed trustworthy. You will also be given information as to what that means in your particular state, from any security bonds required to the financial status of the warranty firms. In addition, you will get help with the often-confusing vocabulary used by both lawmakers and extended warranty companies, since similar terms may be defined quite differently by the various states.
Terms and Types
There are some terms, however, that mean pretty the same thing in Arizona as they do in Alaska, and they are the ones that describe the different warranty types. Extended warranties differ greatly among these categories, and you need to know what is what if you are to make an informed buying decision. In most every state, a range of warranty types can be purchased (or offered with vehicles at the point of sale), but the main three are bumper-to-bumper, component and powertrain contracts.
Bumper-to-bumper coverage: These warranties are sometimes known as new car warranties, wrap programs or exclusionary policies, and are the most comprehensive policies that you can purchase. The exclusionary term is used because these vehicle policies cover so many parts that it is easier to list items that are specifically excluded than all the ones that are included. Bumper-to-bumper policies often include such niceties as roadside assistance, reimbursement for travel interruptions, wear and tear, audio equipment coverage and seals/gaskets. No warranty covers every single component of your vehicle. You should review each prospective plan in detail so you know the exact coverage.
Component coverage: These contracts are often referred to as inclusionary policies, as they are extended warranties covering most major parts on your vehicle. Per the name, the policies list only the components covered by the warranty. If the component is listed, it is covered, and the plan can also offer other benefits and options.
Powertrain coverage: This is similar to catastrophic health insurance, in that these warranties cover your vehicle’s major powertrain parts. This means transmission, engine, drive shaft and drive axles. It is often possible to extend coverage to include other parts and components. A powertrain warranty covers the major expenses, and is a good value for high-mileage vehicles.
Before you buy, read every word of the policies you are considering, no matter how long it takes. If you find it tough going, get some help (but not from the salesperson). Make sure you understand extended auto warranties in your state, and find out what the procedure is if you run into a problem with the warranty provider. If you do your due diligence and get the right information for where you live, you will find it much easier to understand, compare and buy what you need.