Warranty Guide. written by James Ruppert. The Consumer s Guide to Extended Vehicle Warranties and Mechanical Breakdown Insurance

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1 Warranty Guide written by James Ruppert The Consumer s Guide to Extended Vehicle Warranties and Mechanical Breakdown Insurance ESTABLISHED

2 Why do I need a warranty for my car? Once the manufacturer s warranty cover expires, usually after three years, you are on your own. Maybe you will be lucky and your car will never breakdown after this point - ever! However, the chances are that this will unfortunately happen at some time. In fact, it s almost inevitable, as cars get older components will fail. It won t just be the cost of replacing a part, there will be the labour charge for fitting it too - it all mounts up. The need for a warranty is to meet these costs for you, keeping you mobile. You will be buying the insured warranty direct from the people settling your claim. If you buy your warranty from a dealer or another middleman they ll also be taking a cut from your premium

3 What do I need to be really careful about? The Association of British Insurer s (ABI) provide a Voluntary Good Practice Guide for Extended Warranties. You should check that the warranty provider and retailer abide by the ABI s standards. Check also if the warranty is an insurance contract, or a non-insured service contract. Warranties that are insured will give you rights to the Financial Ombudsman Service (FOS) in the event that you need to raise a dispute with the warranty provider and the Financial Services Compensation Scheme (FSCS) which will provide compensation in the event an insurer ceases trading. Insured warranties have to, by law, be designed, sold and have claims administered in ways that comply with the Financial Conduct Authority s (FCA) rules. Warranties that are non-insured do not give you any FOS or FSCS rights and you will be totally reliant on the provider s willingness to cover a claim and their ability to continue trading (if they should cease trading your warranty will probably cease also). Also, the FCA s rules do not apply to these products. Warranty Direct provide insured warranties that meet with the ABI s standards. You can rest safe in the knowledge that, with a Warranty Direct policy, the premium you have paid is fully protected.

4 Surely I can take care of most bills? Can you? Take a look at these average repair bills paid by Warranty Direct last year. Car Repair Bill: Auto Transmission: 1,500 Cylinder head: 1,357 Fuel injection ECU: 893 Gearbox: 1,843 Turbo: 950 ABS accumulator: 1,334 Prop shaft: 739 Flywheel: 708 Oil Pump: 810 Gosh, I wouldn t want to pay for any of those out of my own pocket, so can my car be covered? Good question. If your car is old and it does not have a full service history then you may struggle to get it covered. As some warranty companies only pay a restricted amount, if an older car breaks down too often, you might end up paying more for the warranty than it s worth. Oh yes, and if you have a car that s exotic, sporty or modified then you will have to seek a warranty specialist and you may find it impossible to get cover for it anyway. Owners of older cars (up to 12 years and 120,000 miles) can get cover from Warranty Direct. Their Performance & Prestige cover caters for Ferraris, Bentleys and the like so there isn t much they won t protect. They also offer LuxuryCare cover, which will provide you with an additional 1 to 3 years to follow-on from a manufacturer s 3 year new car warranty and will cover mechanical and electrical parts with some minor exceptions.

5 OK then, I don t own an old car or a modified car, so what will a warranty for mine actually cover? It sounds boring, but you will have to sit down and read the small print. Ideally you need to check that it will cover the major mechanical parts such as the engine; fuel, ignition, cooling and electrical systems; gearbox; transmission; steering; suspension and parts of the clutch and brake systems. Also check that you don t have to pay an additional premium to cover these key components. There are numerous other important terms to check for such as whether a failure due to overheating is covered and whether failures found at MOT & servicing are insured. There are many levels of cover offered and depending on the vehicle s age and mileage these could include in car entertainment systems; alarms and immobilisers; plus airbag and emission systems. Failures due to overheating and repairs identified during MOT & servicing are covered as standard. More to the point then, what won t a warranty cover? The fairly obvious items really such as wheels; tyres; exhausts; catalytic converters; and worn out clutches & brakes. As well as any damage to the bodywork or paintwork; glass and headlights. Also some electrical items may not be covered such as: aerials; batteries; and microphones & loud speakers. Any pre-existing or known faults with the car won t be covered. Also some warranties may not take effect until a certain period has elapsed. You will get cover from day one with sudden and unexpected failures covered from the day your policy starts.

6 What about parts that just wear out? Most of the mechanical components in a car are moving, therefore at some stage in their life they will fail due to general wear & tear. Some warranty companies may exclude wear & tear (sometimes known as normal or gradual deterioration) which would mean realistically that hardly anything would be covered. Policies that only refer to covering normal life expectancy, premature wear and manufacturing defects should be avoided. If gradual wear is covered some companies may require a contribution for the parts and labour cost or just for the parts. Warranty Direct policies protect against failure caused by wear & tear. If you are extending an existing manufacturer s warranty, or if your car is inspected prior to starting cover, wear & tear protection will start from day one - otherwise wear & tear cover will start after the first 90 days. Examples of parts that fail due to wear & tear include shock absorbers, springs, water pumps and turbos.

7 And if I need new parts will I always get them? Some warranty companies will agree to fit new parts but, because a new part would always replace a worn out one, they say you will be better off and you may have to pay for Betterment. The amount you contribute for this can vary considerably and you may not know by how much until after you have actually made a claim. With Warranty Direct cover you will only have to make a contribution to parts costs for older or higher mileage vehicles over 6 years and 60,000 miles. Labour costs are always covered and parts cost contributions that might apply are laid out in an easy to understand table in your policy document. What if a part that isn t covered damages a part that is? Again it depends on the wording of the warranty. This is called Consequential Damage or Loss and some warranties may cover it, others will exclude it. Damage caused by non-insured parts is included. So if a non-insured part fails and damages or breaks an insured part, then Warranty Direct will pay the costs for repair or replacement of the insured part as with any other claim. A common example is an alternator belt failing which leads to a timing belt breakage. This can quickly destroy the whole engine which would be covered by Warranty Direct even though the alternator belt is not an insured item.

8 So what must I do to keep the warranty valid? At the very least you will need to have your car serviced in line with the manufacturer s recommendations. You won t get away with missing a scheduled mileage or due service date by very much, or at all with some warranty companies. You will also need to keep all the paperwork in the event of a claim. Don t even think about using your car to earn any extra pocket money by mini cabbing or teaching people to drive, as it will void a claim. Oh, and don t neglect or abuse the car, or miss any manufacturer recalls. Cars must have been serviced within the last 12 months or in accordance with the manufacturer s service schedule and a leeway of 30 days or 1,000 miles outside of the recommended service interval is allowed. Even in the event that a service is missed and the car has fallen outside the leeway period Warranty Direct will still cover items not checked during servicing. Is there a limit to the number of claims I can make? The warranty terms and conditions will give you the answer but be careful. It may say unlimited, meaning there is no limit to the number of claims you can make, but may restrict individual claims to a small amount, of say 200, so you could end up paying for the majority of repair costs each time you claim. Do warranties have an excess? The majority of claims cost an equal amount to process. To dissuade the number of small and fraudulent claims most insurance companies include an excess as a means of keeping premiums down for consumers. An excess too high will mean that policyholders will not be able to claim on the policy. The removal of an excess often means a substantial increase in premium and claims rejection rate or a reduction in coverage. Warranty Direct policies include a 50 excess. This also helps to keep premium prices down and is in the best interests of our policyholders.

9 Do warranties limit the labour rate paid for repairs and can they specify where repairs are carried out? Yes there may well be limits, with the maximum hourly garage labour rate set by the warranty company. There could also be restrictions on where the car is repaired if the warranty is a non-insured service contract. Garages can also spend many hours diagnosing a problem with a car so it is important to ensure a warranty covers this! You can choose to take your car to either an independent garage or a franchised main dealer for repairs and their full labour rate will be paid by the warranty - the price you pay for your cover will vary according to your preference. Last year the maximum hourly labour rate seen by Warranty Direct was over 200! Your selected garage will call Warranty Direct for immediate claim authorisation and can often invoice them direct for payment. What happens if my car breaks down? Most warranties include a form of roadside breakdown & recovery cover, but you will have to organise this and reclaim the cost of it. However, the amount you can claim may be restricted and, not only that, you will only be reimbursed if the breakdown was the result of the failure of a part covered by the warranty. Their policies include a contribution of up to 250 towards recovery costs for breakdowns due to the failure of an insured part, if you do not have breakdown cover elsewhere. Warranty Direct s BreakdownCare or BreakdownCare Plus can be added to your warranty to fully cover all eventualities, and can be purchased from Warranty Direct at very competitive prices. With Warranty Direct you can take your vehicle to an independent or franchised garage, or take it to one of our network garages and we will settle with them direct.

10 Would it make any difference if I were abroad and my car breaks down? Some warranties cover you in EU countries but exclude the rest of Europe. As with breaking down in the UK there may be limits to the amount the Warranty Company may pay for car hire, emergency travel, vehicle collection and hotel accommodation. Indeed they may not pay for all, or any, of these additional benefits.. Your car is also covered in Europe for up to 100 days per year. When I sell my old car can I pass the warranty onto the buyer? Not all warranties can be transferred, but with ones that can there may well be a high administration charge. Check if a charge applies and how much it will be. An administration charge applies, which you can of course pass on to the buyer of your car.

11 Why Warranty Direct is different As the name suggests you will deal direct with the suppliers of the warranty and not a third party who will be taking commission from your premium. Realistic claim limits - it s the value of your car, per claim or in total per year. Parts and labour costs for sudden failures are covered from day one - exclusion periods are popular with other warranty companies. No limit on labour rates, you can choose to take your car to either an independent garage or a franchised main dealer for repairs A reasonable time for diagnostics is covered within an approved claim Cover against damage caused by wear & tear that some other companies exclude. Damage caused by non-insured parts is included - other companies don t always cover this. There are rolling monthly (continuous), or fixed term, policies lasting up to 3 years. 100 days European Cover. Breakdown Recovery included if needed as a result of the failure of an insured part. Subject to terms and conditions alternative travel, accommodation and car hire can also be claimed. Warranty Direct s BreakdownCare, or BreakdownCare Plus, are available at huge savings compared to what a breakdown company such as the AA or RAC might charge. Warranty Direct provides insured products and are authorised and regulated by the Financial Conduct Authority. Cover for failures identified during routine MOT or servicing.

12 Warranty Direct was founded in 1997 as a business that put the consumer first. We did this by renouncing all the historic get out clauses that warranty companies had and may still have. We keep our policies simple to understand and operate, and these principles help us to control costs and pass the savings on to you without affecting our exemplary service. Take out our cover and you can be absolutely certain that we will be doing everything in our power to deliver complete satisfaction keeping you a happy customer for many years to come. Sales: Fax: info@warrantydirect.co.uk ESTABLISHED Warranty Direct Limited, Quadrant House, 20 Broad Street Mall, Reading, RG1 7QE. Registered Address: Warranty Direct Limited, Pinnacle House, A1 Barnet Way, Borehamwood, Hertfordshire WD6 2XX. Registered in England Authorised and regulated by the Financial Conduct Authority