Extended Car Warranty Terminology Explained

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Deductible
Your deductible is the amount that you are required to pay out of pocket per claim as part of a repair that qualifies as a claim. Keep in mind that depending on your terms of the agreement, deductible may trigger multiple times depending on the issue at hand and the amount of visits that is required to fix the vehicle.

Administrator
The stated administrator on the contract is the company who is responsible for paying for repairs that qualify under the extended warranty agreement. There are third party companies that sell warranties that may not be on the hook for the compensation, so be wary of who is stated as the administrator of the Extended Warranty contract.

Certified Car
Car that are sold CPO or certified pre-owned are sold used or off lease by a manufacturer. The badge of CPO typically means that it has gone through extensive inspection prior to sale. However, because the certification is not official and doesn’t come with guarantees, it is largely still up to the purchaser to complete due diligence on a vehicle.

Transferability
Some warranties are transferrable, which provides you an incredible resale value opportunity as the next buyer can purchase the vehicle with confidence. This term is also beneficial if you do not want to keep the vehicle for too long and want to ensure that resale won’t be difficult.

Power Train
The power train specifically refers to the parts in the vehicle that provide the force that moves the wheels. The parts that is covers includes, but not limited to, parts such as the engine, drive shafts, differentials and transmission.

Corrosion Warranty
Covers the perforation of sheet metal. Be careful here and read the terms of what constitutes perforation of sheet metal and the extent of corrosion required to become a claimable repair.

Wear and Tear Warranty
Typically wear and tear is also the most difficult to claim because the term of wear and tear is subjective in nature. This is the most comprehensive form of insurance covering as many parts as the contract would state. The added difficulty to making a claim to wear and tear is that companies sometimes try to get away from the issue by saying that the vehicle had the issue prior to accepting wear and tear warranty.

Exclusionary Coverage
This type of warranty is traditionally a complete bumper to bumper warranty. Essentially covers everything but comes at a big cost. This warranty type generally isn’t really necessary but is a quality of life purchase.

Inclusionary Coverage
See named component coverage.

Mechanical Breakdown
The concept of mechanical breakdown is an important exclusion that needs to be considered when purchasing extended warranty. By definition, mechanical breakdown is when a specific part in the vehicle can no longer do its job. Whether or not it was faulty in design or due to age, mechanical breakdown of a part is not typically covered as it is considered a wear and tear. Of course if your coverage includes wear or tear or complete bumper to bumper than you would be covered.

Named Component Coverage
Component coverage by name is often clear cut. Whatever is in the contract will be covered, anything else will be omitted and cannot be claimed on your extended warranty.

In-Service Date
This is the date the vehicle title was officially changed over to the original owner of the vehicle and the same day he drove it off the lot. This can also be the date that the car was first used, possible for a demo or rental.

Maintenance Guidelines
Often extended warranties come with maintenance guidelines that must be followed for the extended warranty to be valid. It is very important to read this in detail as some extended warranties require that you complete your maintenance at a registered dealers or by a branded dealers.

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