Auto warranties as a general rule tend to be a larger investment and as such, come with a degree of risk — if you don’t know what you are getting into. That being said, with a little research and the right advice, it’s a great feeling knowing you are protected should your vehicle break down. We’ll be covering a lot of the elements and nuances of the various warranties in future articles. For today, let’s start off by defining exactly what an auto warranty is.

According to our friends over at Auto Warranty Research, an auto warranty is:

“An extended service contract that agrees to pay claims for mechanical failures and breakdowns. Also know as a Vehicle Service Agreement, Extended Service Agreement, Mechanical Breakdown Agreement, or Extended Warranty. This type of policy is intended to protect a consumer from paying for unexpected vehicle expenses.”

As has been previously stated, there are new federal and state laws on the books regarding terminology used in the industry, apparently in an effort to clear things up for unwary consumers.

The following is an excerpt from the FTC website regarding Auto Service Contracts:

“A service contract is a promise to perform (or pay for) certain repairs or services. Sometimes called an “extended warranty,” a service contract is not a warranty as defined by federal law. A service contract may be arranged at any time and always costs extra; a warranty comes with a new car and is included in the original price.

The separate and additional cost distinguishes a service contract from a warranty.”

Regardless of what it’s called, the concept remains the same; you enter into an agreement with a company who agrees to pay for certain repair bills on your vehicle in the future, in return for an investment today. Much like auto insurance, by paying a smaller manageable amount up front, you have the peace-of-mind and protection against the possibility of much larger and potentially devastating bills at a later date.

So you’ve found us!  Welcome to the inaugural AA Auto Warranty post.  Please allow us to introduce ourselves…

This site is the brainchild of several auto warranty industry execs.  Actually, we should state up front that a debate is raging as to whether use of the term “warranty” is accurate – or even legal for that matter.  Regardless of what the actual term is, the warranty (or more accurately “Service Contract”) industry seems to be both contracting and expanding at the same time.

If you follow the news even remotely, you’ve probably heard of several long-standing (albeit crooked) companies going out of business and seemingly leaving their customers out in the cold.  Let me state on behalf of our industry – we are truly sorry that these customers suffered at the hands of irresponsible companies.

We also want to say that there are in fact reputable companies still in business, backed by huge insurance companies (in the event the provider falls on hard times and has trouble paying claims) and if you work with the right organization, service contracts continue to be a good investment… protecting vehicle owners against what can be staggering repair bills.

So, here’s our attempt at keeping you – the consumer – informed.  We don’t have all the answers, but as insiders we have a pretty good view of the auto warranty landscape.

Over the coming weeks and months, we’ll introduce you to the terms (glossary) used in the industry, the types of coverage offered and the best resources to help you find the plan that is right for you.

Thanks for visiting AA Auto Warranty!  Please let us know if you have any specific questions.