FAQ's
1. What is a Extended Service Contract? This is also know as Vehicle Service Contracts & Extended Warranty. This is an agreement between the policy holder and an administrator to pay for all covered repairs, labor, and parts.
2. Is a Extended Service Contract insurance? In order to be insurance, there are several requirements and in most states extended service contracts are not Insurance. In order to be Insurance, the administrator or Insurance company backing the plan have to file the rates and product with the state Insurance commission. However vehicle service contracts administrators are insured by Insurance companies agains insolvency. This means that if a plan is re-insured, the and the company goes out of business the policy or agreeemnt is still valid and will be honored by the reinsuer.
3. Should I buy a service agreement from my Auto Dealer or online? Typically, buying online is better as the rates are not as marked up as through the dealership.
4. What is an Administrator and Reinsuer? This is really the question that we field the most via email. The Administrator is an organization that creates a product and plans, determines the rates and then markets the plans through various distribution channels.(These include Dealer Agencies and Online sites.) The Administrator then "administers" the claims on all the plans that are sold. This means that if a claim arises, they will handle the processing and payment to the repair facility. The re-Insuer is the entity behind the administrator that insures that in the event of failure to continue operations, the policy holders are still able to make claims.
5. What is the difference between one company and the next? The actuarial science on rating a vehicle for a mechanical breakdown is the same across all companies. Actuarial science is the ranking of an group assets and determining the likelihood of a claim. We all know some vehicles are not made as well as others. With that said, the difference between companies really becomes evident when looking at pricing, customer service, and claims handling process. For the most part you kind find public information on how they operate, i.e. BBB rankings etc...but really before you buy you should follow the 5 do's and don'ts we pointed out in this site.