Eight U.S. states and the District of Columbia are pursuing legal action against vendors of extended car warranties, including U.S. Fidelis, Credexx Corporation and Auto One. At issue are misleading statements that describe service contracts (what these companies are actually selling) as extended warranties. Service contracts have a different legal definition than warranties and do not meet the same standards. What does this mean for the consumer? It’s likely that one of these plans won’t cover every repair you expect it to.
We’ve heard horror stories about claims being denied by these companies, including one instance where a fuel pump replacement wasn’t covered since it was considered an “electrical repair” and not a “mechanical repair”. Their sales tactics can be heavy handed as well, with a “buy it now or lose this promotional pricing” hard sell approach that precludes customers from shopping around (or even understanding exactly what the plan covers).
I’d steer clear of any extended warranty not sold by a manufacturer; if you absolutely, positively must buy one, be sure to read the fine print. If a deal looks too good to be true, trust me – it is.