Things you should know to get the most from your contract

North of the Border: Extended Vehicle Service Contracts

by Pat Mestern

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After 45 years in the automotive repair business as a mechanic, then service manager (1954-1999) my husband has seen, heard and applied his extensive automotive knowledge to hundreds of problems. He began working on 1920's Model T's and retired with a thorough indoctrination in 20th century technology. Here is what Ted has to say about vehicle service contracts:

What does the contract cover? Read the fine print, you might be surprised to find out what it doesn't cover. The cheaper the contract, the less it covers. Buy a cheap contract and you may hear "sorry that part is not covered by the contract" far too often. Check with a mechanic (not a service writer or service manager) who is familiar with your type of vehicle. Ask what the most common types of problems are that one can expect with your make and model of vehicle, and at what mileage/kms they commonly occur. See if the contract covers those problems, within the time frame given by the mechanic.

What voids the contract? Some contracts require that you get your vehicle repaired at the shop where you purchased the agreement. Some require that you have repairs done at specified garages only. Is there a list of these establishments? Contracts may require that you do specific services at certain mileages/kms intervals i.e. oil changes. If you miss a service, your contract may be void. Always keep your receipts as proof of service/repair should any disputes arise.

How much deductible do you have to pay? Usually a deductible is paid per repair visit. This means that every time your vehicle goes into the shop you pay. i.e. If you had a steering problem in the morning and had it repaired that is one visit. If the same day you have an engine problem and go into the shop, you pay again, because that is another repair visit. Are you limited to a certain number of times you can claim on the contract per week, per month, per year? Is there a ceiling on the number of deductibles you pay per year?

Not an auto club member? Compare roadside assistance plans.

It is the responsibility of the repair shop to acquire authorization from the contract seller for repair work. At the time of the call, the seller will inform the repair shop if the repair is covered by the contract - or not. If the repair shop does not get authorization before the work is done, you may have to pay the bill. You cannot authorize a repair shop to do the work and expect reimbursement from the contract service provider.

Check with your vehicle dealer about purchasing an extended warranty for the model and make of vehicle you own. There are many different types of warranties offered by the manufacturer that suit your vehicle and needs. These are not "reseller" service contracts. Who pays for the towing if you break down - close to home, miles away from home? If you are involved in an accident does that void your contract? What happens if your car breaks down on vacation. Can you have it repaired and then personally submit a bill to the contract seller for reimbursement? Do they have a toll free number that you can access? And finally, after working in the business and dealing with contract providers for a number of years, I personally would not purchase a service contract for my vehicle. I might consider a manufacturer's extended warranty.

Periodically Pat Mestern provides us with frugal living tips from a Canadian perspective. You'll find some of her other musings at

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