Extended Auto Warranty Glossary
A Rated: An industry term used as a business rating reference. "A” rated is the highest rating a business can receive.
Administrator: A company that authorizes and pays the repair facility for covered repair work to your vehicle. The administrator works with the repair facility to insure your claim is repaired properly according to your extended warranty coverage plan.
A.M. Best & Co: A.M. Best Company is the leading source for insurance company analysis and ratings. It offers analysis on more than 7,000 insurance companies. A.M. Best & Co. is over 100 years old and their rating system has become the industry's standard measurement of an insurance company's financial condition.
Authorization: The official approval issued by the extended warranty administrator before repairs are started.
Auto Warranty: A policy that covers a vehicle against mechanical failures and breakdowns. Also know as a Vehicle Service Agreement, Extended Service Agreement, Mechanical Breakdown Agreement, or Extended Warranty. This type of extended warranty will pay for your vehicle's covered repairs based on the terms of the warranty agreement.
Better Business Bureau: The BBB is an independent monitor of a company’s complaint handling record. A warranty company or warranty broker that participates in the BBB Online Reliability Program agrees to abide by the BBB Code of Online Business Practices and agrees to dispute resolution with the BBB and customer. The majority of the companies who participate in this program value their standing and reputation and tend to do a better job at handling complaints.
Bumper to Bumper: Otherwise known as an “exclusionary” policy. This is the most comprehensive extended auto warranty available. It covers so many parts and components of your vehicle that the policy only lists the items that are not covered under the warranty. If a particular part or component is not listed it is covered under a bumper to bumper policy.
Cancellation: A cancellation clause allows the extended auto warranty holder to cancel the policy and receive a refund. Most extended auto warranties have a 30 day full refund cancellation clause, providing no claims have been filed. Typically, cancellation refunds are prorated based on the length of time and mileage driven while the policy was in force.
Corrosion Warranty: A corrosion warranty is typically a manufacturer’s warranty that covers rust and perforation on the metal body of the vehicle. These can also be purchased as an aftermarket policy. Some anti-corrosion products include a product warranty or guarantee.
Deductible: The amount stated in your extended auto warranty policy that you must pay the repair facility for each covered repair done to your vehicle. The warranty company pays the balance of the covered repair. Typical deductibles range from $0 to $200 and the lower deductibles are usually options you can purchase for a small surcharge.
Diagnostics: The exploration the repair facility performs to your vehicle in order to determine the required repairs. Most auto warranty plans typically do not cover diagnostics.
Eligibility: The amount of extended warranty coverage available on a particular vehicle based on specific characteristics and usage. Eligibility is typically based on age, mileage, make and model of the vehicle including components such as four-wheel-drive, turbo/super chargers, number of cylinders. History and usage are also taken into consideration, for example a salvaged title or the commercial use of the vehicle. Each extended auto warranty plan has its own specific set of eligibility requirements. Some extended warranty plans offer riders, or surcharges, for certain components.
Exclusionary Policy: Also known as a Bumper to Bumper warranty. This is the most comprehensive extended auto warranty available. It covers so many parts and components of your vehicle that the policy only lists the items that are not covered under the warranty. If a particular part or component is not listed, it is covered under this type of extended warranty.
Extended Auto Warranty: A policy that covers a vehicle against mechanical failures and breakdowns. Also know as a Vehicle Service Agreement, Extended Service Agreement, Mechanical Breakdown Agreement, or Auto Warranty. This type of warranty will pay for your vehicle's covered repairs based on the terms of the warranty agreement.
In-Service Date: The date the vehicle was purchased by the original owner. Also, the date the vehicle was first placed in use for rental, demonstration, or other purposes.
Inclusionary Policy: Also known as a “Stated Component Coverage” extended warranty policy. Inclusionary policies list all of the vehicle’s parts and components that are covered by the extended warranty. If the component or part is not listed then it is not covered.
Inspection: The examination of your vehicle's components by a certified mechanic. A pre-warranty inspection is when a certified mechanic attests to the proper working condition of all components of your vehicle. Inspections are required by some auto warranty plans for higher mileage or older vehicles.
Insurer: Also known as re-insurers, the insurance company that issues a policy and guarantees the obligations and performance of the extended auto warranty plan administrator. Most reputable auto warranty companies are backed by, or insured by, another insurance company to guarantee payment of policy claims should the original auto warranty company default on the policy.
Make: The make of your vehicle is the vehicle’s manufacturer.
Manufacturer: The manufacturer is the company that built your vehicle.
Manufacturer's Recommended Maintenance Guidelines: These are the vehicle’s manufacturer’s guidelines for routine maintenance to keep your vehicle in safe and optimal operating condition. Typical maintenance guidelines would include how often to change the engine oil, checking proper fluid levels, perform tire rotations, and replacement of certain parts at specific intervals. Not following the manufacturer’s recommended maintenance schedule may void your auto warranty agreement.
Manufacturer's Warranty: This is the vehicle's manufacturers stated warranty to repair your vehicle for a specified period of time and/or mileage. Manufacturer’s warranties typically are not all inclusive and cover only specific components of your vehicle. Review your manufacturer's warranty agreement for coverage details and specifics.
Model: The model is the specific type of vehicle that was made by a particular manufacturer.
New Vehicle: As applied to extended auto warranties, the term new vehicle refers to a vehicle that is still covered by the original manufacturer's bumper to bumper warranty. This term does not mean that the vehicle was purchased “brand new” or you are the first owner, simply that the vehicle is still covered by the original manufacturer’s bumper to bumper warranty.
Odometer Miles: The actual miles the vehicle has traveled as displayed on the vehicle’s odometer. Failure of the odometer or removal will void an auto warranty agreement unless the replacement of the new functioning odometer has been certified by the repair facility and documented to the extended warranty company.
Plan Expiration: This is the date or odometer mileage when the extended auto warranty policy will no longer be in effect. For example, a 3 year / 75,000 mile extended warranty will expire 3 years from the date that you enroll your vehicle or when the odometer reads 75,000 miles. Another example would be a 24 month / 24,000 miles extended warranty which would expire 24 months or 24,000 additional miles on the odometer after you have enrolled your vehicle. The specific plan expiration is stated in the extended warranty agreement.
Plan Mileage: The total mileage that the extended auto warranty policy covers your vehicle. Typically this is the mileage on the vehicle’s odometer, but can also be additional mileage from the beginning of coverage, or unlimited mileage based on the extended warranty plan coverage expiration statement.
Plan Term: The amount of time in years or months and/or the total mileage that your extended auto warranty policy will cover your vehicle.
Powertrain Coverage: This is a limited extended auto warranty that only covers certain parts of your vehicle’s engine, transmission, and drive train. A powertrain policy typically covers only the most extensive to repair components on your vehicle.
Product Warranty: Product warranties generally cover fewer parts than an extended warranty, service contract, or mechanical breakdown insurance policy. A product warranty is only allowed by law to cover parts that are in direct contact with the product or parts that are mechanically connected to those parts. For example, a manufacturer of an engine oil may warrant that by using their product the engine will not break. However, the maker of the oil is not allowed to warrant that the car horn won’t break, since a car horn is not in direct contact with oil and is not mechanically connected to a part in contact with oil
A product warranty may not be sold for a separate price and must be provided free of charge. Product warranties usually limit how much you can recover for parts that need repairs. Unlike extended warranties, product warranties are usually not guaranteed by an insurance company.
Ratings: Ratings are independent benchmarks for determining a company’s financial strength. (see A.M. Best & Co. and A Rated.)
Re-insurer: Also known as a Re-insurance Company. An insurance company that issues a policy to guarantee, or re-insure, the obligations of the extended auto warranty provider.
Rental Benefit: The amount you will be reimbursed for actual expenses incurred for substitute transportation while your vehicle is being repaired. Rental benefits are only reimbursed if the breakdown was caused by a covered part or component. Certain exclusions are defined in the extended warranty plan that typically cover benefits if labor exceeds a specific number of hours, or limit reimbursements to a specific dollar amount per day, or for a maximum number of days.
Repair Facility: An authorized licensed auto repair facility as described in your specific extended auto warranty plan. This includes, but is not limited to your dealership, local mechanic, or national repair center.
Roadside Assistance: An additional auto warranty plan benefit that provides roadside assistance such as towing, battery jump, flat tire repair, fuel and fluid delivery, or help for an emergency lock out. These benefits will include a toll free telephone number to call for service 24 hours a day 365 days a year.
Stated Component Coverage: Also known as an “Inclusionary“ extended auto warranty policy. Stated Component policies list the vehicle’s parts and components that are covered by the extended warranty. If the component or part is not listed then it is not covered.
Transfer: A vehicle with a transferable extended auto warranty can have the warranty transferred to the new owner if the vehicle is sold privately. Sometimes a small fee is required.
Travel Interruption Benefits: Reimbursement for lodging and restaurant expenses due to mechanical breakdown of your vehicle during a trip. Travel is typically defined as over 100 miles from your home.
Used Vehicle: As applied to extended auto warranties, the term used vehicle means a vehicle whose original manufacturer's bumper to bumper warranty has expired. This term does not mean that the vehicle was not purchased “brand new” or you are not first owner, simply that the vehicle’s original manufacturer’s bumper to bumper warranty has expired.
Vehicle Identification Number (VIN): Each vehicle has a unique Vehicle Identification Number established by the manufacturer which codes the vehicle’s individual characteristics at the time of manufacture. The VIN number can be found in several places, the most common being:
1. The vehicle title
2. The vehicle registration
3. The vehicle insurance card
4. A plaque on the driver-side dashboard of the vehicle
Wear and Tear: Additional auto warranty coverage for parts that have worn out beyond what the manufacturer terms “normal tolerances”, as opposed to simply breaking. This is a much broader coverage of parts than a standard extended warranty. Normal maintenance items are not covered, for example brake pads/shoes, rotors/drums, clutch plates, wiper blades, and fan belts.
