Eligibility is the determination of the level of coverage a particular vehicle qualifies for, and the cost for that coverage. This is based on your vehicle’s age, mileage, make and model, and features such as four-wheel-drive, turbo/super charged, diesel engine, and number of cylinders.
Some vehicle options may require an “optional coverage supplement”, warranty terminology for additional fee. These typically include V10/12 engines, 4 wheel or all-wheel drive, diesel engines, turbo chargers, navigation systems, lift kits or oversized tires or 1 ton trucks.
Vehicle history and usage are also taken into consideration. Commercial or business use will typically add an additional fee to the price of the coverage plan. Also, most companies will not cover vehicles used as snow plows, grey market vehicles, lemon law vehicles, salvaged or branded titles, racing or off road use, police or emergency vehicles, vehicles used as a taxi, dually trucks and trucks exceeding 1 ton. Each warranty has its own specific list of ineligible vehicles and it’s important to discuss this with the warranty company before buying the coverage.
The insider’s tip is to know your vehicle before requesting quotes from warranty companies or agents. It is important to give exact information about your vehicle including exact mileage and any options the vehicle has such as 4 wheel or all-wheel drive or commercial use since they will all have a bearing on the quoted price or eligibility. And if you forgot to mention something like four wheel drive and it breaks, you can be guaranteed it won’t be covered.
Every extended warranty plan has its own specific set of requirements and your agent or a warranty company will quote you plans that match your particular vehicle and use.
Length of Coverage – Months and Miles
Length of 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 / 100,000 miles.
It is important to note that all policies are written in terms of “whichever comes first”. So if you have a 36 month 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, 36, 48, 60, 72, 84 and 120. Expect to pay a hefty additional fee for terms less than one year. The insider’s secret is adding an additional year to your coverage can be very inexpensive, sometimes as little as $50.
Mileage is the most confusing to understand and the most important. Vehicle warranty plans use the term mileage to mean either additional miles above and beyond what is currently on your odometer or once your odometer reaches a certain mileage. 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 another 30,000 miles of driving or until you reach 100,000 on your odometer. If the policy is for 100,000 additional miles, then you are covered for driving an additional 100,000 miles or until you reach 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 powertrain policies use mileage in terms of additional miles above and beyond your current odometer miles. Make sure you understand the mileage term of the plan you are considering or ask your warranty company or agent to explain it before you purchase.
You will also see some “unlimited” mileage plans. Not one major warranty company offers an unlimited mileage plan. Stay away from these.
Additional Reading: Choosing the Right Extended Warranty