Warranty Costs - Eligibility and Length of Coverage

Vehicle Eligibility

Eligibility is the determination of coverage available for a particular vehicle and the cost of that coverage. This is based on age, mileage, make and model, and features such as four-wheel-drive, turbo/super charged, diesel engine, and number of cylinders. Vehicle history and usage are also taken into consideration, for example salvaged titles or commercial use. You should expect to pay a small additional fee for each of these features. Every extended warranty plan has its own specific set of requirements and a warranty company or warranty broker will quote you plans that match your particular vehicle.

Some options or vehicle usages will require an “optional coverage supplement”, warranty terminology for additional fee. These include V10/12 engines, vehicles used as snow plows, rear dually, grey market vehicles, salvaged or branded titles, lift kits installed, lemon law vehicles, vehicles used for towing, vehicles exceeding 1 ton gross weight, police or emergency vehicles, or vehicles used as a taxi. Again, each warranty has its own specific optional coverage supplements.

The insider’s tip is know your vehicle before requesting quotes from warranty companies and warranty brokers. It is important to give exact information about your vehicle, items explained above such as all wheel/four wheel drive, four wheel steering, salvaged titles, commercial use all have a bearing on the quoted price. And if you forgot to mention something like four wheel drive, and your four wheel drive breaks, you can be guaranteed you won’t be covered.

Length of Coverage – Months and Miles

Length of vehicle warranty coverage is expressed in terms of months and/or miles. The more months and/or miles the policy covers, the more it will cost. Examples of coverage lengths are 36 months / 36,000 miles, 60 months / 60,000 miles, or 120 months / 120,000 miles.

It is important to note that all policies are written in terms of “which ever comes first”. So if you have a three year 36,000 mile extended warranty and you drive all 36,000 miles in two years, your warranty will expire in two years as soon as you reach the 36,000 miles. The insider’s tip is know your driving habits and always focus more on the policy mileage.

Months are rather straight forward and run from about 3 months up to ten years. Typical month terms are 3, 6, 9, 12, 24, 30, 36, 38, 40, 48, 60, 72, 84, 96, 108, and 120. Expect to pay a hefty additional fee for terms less than one year. The insider’s secret is adding an additional year or two to your coverage can be very inexpensive, sometimes as little as $20.

Mileage is the most confusing to understand and the most important. Vehicle warranty plans use the term mileage to mean either the number of miles on the odometer, or additional miles above and beyond what is currently on the odometer. This can have a big impact on your coverage.

For example if you have a vehicle with 70,000 miles on it and the policy covers 36 months / 100,000 miles on the odometer, you are only covered for 30,000 miles of driving or until you reach 100,000 on your odometer. If the same policy is for 100,000 additional miles, you are covered for driving an additional 100,000 miles or 170,000 on your odometer.

The rule of thumb is most bumper to bumper policies use mileage in terms of miles on the odometer, most stated component and power train policies use mileage in terms of additional miles above and beyond your current odometer miles. You will also see “unlimited” mileage on some of the lower coverage stated component and powertrain warranties. Make sure you understand the mileage term of the policy you are considering or ask your warranty company or warranty broker to explain it before you purchase.