Extended warranty substitutes for car guarantees

The probability of getting into a vehicular accident is 50 percent, but the probability of an auto breakdown is a hundred.

With 30,000 or so parts in a vehicle, some things are sure to give. Bad driving habits, like not slowing down on humps, bumps and potholes, can result in costly tire rod and suspension repairs.

The Philippines’ tough road conditions accelerate wear and tear, yet the average Pinoy keeps his car longer than the Americans and Europeans do.

That is why it is important that automobiles are covered by an extended warranty policy.

“An extended warranty program is a protection plan covering the vehicle for a specific period of time and/or mileage, where containment of the cost of ownership is achieved after the manufacturer’s warranty expires,” Sharon Camesa, business development manager (Asia Pacific) of Asia Warranty Services, said.

Covering costs related to mechanical, electrical, and electronic breakdowns, these warranties range from specifically named components to literally every component of a vehicle. They’re sold primarily by franchised and independent dealers, leasing companies, service and repair facilities, retail stores and financial institutions.

If, for example, the auto does not start and the manufacturer’s warranty has expired, that when the extended warranty comes in handy.

An automobile extended warranty lifts that burden off your shoulders because when your vehicle is covered from the get-go, it’s in effect as soon as the usual manufacturer’s warranty expires. That’s usually within three years or 100,000 kilometers, whichever comes first.

A good extended warranty program has no limit to the number of claims one can make on a policy, Camesa pointed out.

There are also no deductibles, which means that the policyholder does not have to shell out that first P5,000. “There are no high out-of-pocket expenses, nor waiting time for reimbursements because claims are paid up front for all covered repairs directly to the service or repair center,” she added.

The role of the car manufacturers or dealers in securing an extended warranty for a new vehicle is pivotal to the AWS system. It’s cost-effective since the manufacturers or dealers get better deals due to economies of scale.

Camesa reveals that AWS re-insures only with top-rating companies based on S&P assessment. That is, only the best and most respected global insurance and re-insurance companies.

Many factors must be considered when getting an extended warranty. Price and quality are two of the most important. Remember, if the price looks too good to be true, it probably is. The vendor may not be allocating enough money to ensure that your claim gets paid pronto.

It might also mean that that company is dealing with risk retention groups instead of a solid insurance company that’s experienced with claims and strictly guided by government policies protecting the Filipino consumer.

So, if you’re shopping for a car, be it brand new or pre-owned, go ahead and give in to that irresistible temptation to kick the tires. Just make sure that you also ask whether the unit carries an automobile extended warranty.