Auto warranties are like auto insurance contracts, they can be difficult to understand unless you know what to look for. But, with just a little knowledge of the critical parts of a warranty, you can make the right decision and secure the best auto warranty for your vehicle. I can help you shop for a warranty like a seasoned pro, like me.



All auto warranty contracts are divided into several sections and while the format may vary, they all contain the same information. If all the information isn't in the document, it's not likely a contract, but a sales brochure. Make sure you're reviewing the auto warranty contract.

Most auto warranty contacts will have at least the following sections: Definitions, Terms and Conditions, Coverage, Filing a Claim, Service Department Guidelines, Cancellation Procedure, and Exclusions.

Each section is important and you need to be able to determine if a section is favorable or not. After reviewing each section for the critical elements, you can make a decision with full confidence. Avoiding scams and getting the best auto warranty is doable if you are an educated shopper. With an understanding of auto warranty contracts, there's no reason to depend solely on what you're told by a salesman.

One of several sections of the auto warranty contract is the Definitions Section, which I'll discuss here.

In this section you'll find the term "failure" and/or "mechanical breakdown". Warranties providing less coverage only pay for mechanical breakdown . These extended auto warranties define mechanical breakdown as a defect in parts and workmanship of the manufacture's supplied part, or a defect that makes the part unable to perform the function for which it was designed. It's reasonable to believe that if a part was poorly manufactured, it will break within the first few years when the vehicle is still under the factory warranty. The broadest auto warranty coverage will also pay for a failure of a part. Parts needing replacement because they've worn out are covered if your extended auto warranty includes failure coverage. Usually defined as: "a failure will be deemed to have occurred when a covered part has worn beyond the manufacturer's tolerances". Mechanical breakdown extended warranties will not cover repairs needed because a part's performance has gradually deteriorated because of normal wear and tear, unless a mechanical breakdown has occurred first.

Companies that don't offer you an extended auto warranty that includes coverage for a failure are certainly not a major player and others only provide failure coverage to 50,000 miles on the odometer.

Considering as much as 25% of all repairs needed are because of wear-and-tear failures, this auto warranty coverage is important. Extended auto warranties without wear-and-tear coverage are often priced the same as those that include it, so be careful and know what you're getting.

Last year there were 37 new companies selling auto warranties and by the end of the year 28 were no longer in business. How do you protect yourself? First, make sure you are buying from a direct seller rather than a broker or car dealership. There's no reason to pay the increased price or assume the risk of a middleman when you can buy direct from the warranty company. Second, the length of time they've been selling warranties is important. I recommend at least 10 years. There are many things you can do to protect yourself and get the best car warranty, but it starts with these two things.