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Extended Warranties: When They Actually Make Sense (cont.)

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You also should determine who is allowed to perform repairs. Federal Trade Commission suggests that you ask this upfront. In the case of automobiles, Timmerman agrees. “Be aware of any restrictions regarding where you can take your vehicle for repairs,” he tells Consumers Digest.

FINE PRINT. Extended warranties for automobiles often include limitations in coverage that might leave you on the hook for the cost of repairs.

FINE PRINT. Extended warranties for automobiles often include limitations in coverage that might leave you on the hook for the cost of repairs.

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Automobile dealers and cellphone-service providers, for example, tend to do their repairs on-site, and cellphone manufacturers do so through the mail. So if you have a favorite automobile mechanic, you might not be able to use him/her, and consumers might be penalized if they use a third-party cellphone-repair shop. Large appliances require in-home repairs, which often means that you have to use a repair company that’s predetermined by the extended-warranty provider. Depending on where you live, you might have a long wait for repairs instead of being able to use someone who is closer to your home and has time to schedule a repair that’s more convenient for you.

It also is important for you to find out the types of repairs that are covered by an extended warranty, which is something that all contracts should specify. John Butcher, who worked as a technician and warranty adjuster at two different automobile dealerships, says he frequently dealt with customers who expected repairs to be covered under their extended warranty, only to be informed about multiple loopholes that never were mentioned, such as requiring documentation on previous maintenance. Although Butcher mostly worked with automobiles, his experience with the extended-warranty-claims process taught him that it’s important for a consumer to ask whether product replacement is included in the extended warranty in case the product can’t be fixed.

SPECIALIZATION RULES. Automakers’ warranties typically span 3 years or 36,000 miles, but a few automakers cover their vehicles for a longer period. These longer and more comprehensive warranties cover additional repairs, which has caused automobile dealerships and the companies that underwrite extended warranties to be more creative with the items that are covered, Fabris says. Today, automobile extended warranties increasingly include add-on warranties that cover only one or a few related parts. In other words, you now might purchase an extended warranty on the vehicle, one on its tires and wheels and even one on its key fob, if the vehicle has one.

Automobile extended warranties now even address local issues, says Tim Meenan of Service Contract Industry Council, which is a trade association. For example, in Florida, you can get an extended warranty for appearance care that’s targeted to the May and September “lovebug” seasons. The acidity that’s in a lovebug carcass can pit an automobile’s paint if the bug isn’t washed off it quickly, according to University of Florida. General Motors charges $595 for a 5-year vehicle-appearance extended warranty that covers exterior paint. When we shopped online for an economy paint job, we found that it costs about $300–$500. However, a high-quality paint job costs $1,000–$5,000.

CRACKED COVERAGE. You now can buy an extended warranty that covers cracked cellphone screens, but you typically have to pay at least some of the cost of the repairs.

CRACKED COVERAGE. You now can buy an extended warranty that covers cracked cellphone screens, but you typically have to pay at least some of the cost of the repairs.

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Within the past 3 years, automobile extended warranties also emerged for key-fob replacement, because it can cost you up to $700 to replace one, Meenan says. New vehicles typically use a smaller fob that has an embedded computer chip and isn’t inserted into an ignition slot, as is a metal key or a larger fob, and these have proved to be easier to lose. Key-fob-protection extended warranties typically range from $240 to $299 for 5 years of coverage. However, our research found that if your key isn’t the latest chip-embedded fob, replacement costs run from $70 to $250, which makes an extended warranty unnecessary.

Another typical automobile extended warranty is for chips in the windshield. However, you should check your automobile insurance first and your state’s laws before you buy an extended warranty to cover a vehicle’s windshield, Meenan says. For example, if you live in Florida, the law requires a standard automobile insurance policy to cover windshield repairs at no cost. In other states, some automobile insurance policies add windshield protection for as little as $2 per month per vehicle.

Otherwise, your cost to fix a windshield typically is less than what the deductible is for an automobile insurance policy, so you end up footing the bill. For example, we found in June 2017 that a windshield repair for a 2017 Honda Civic sedan cost $295 via Glass.net, while the standard automobile-insurance deductible was $500, according to the financial-education website Thismatter.com. Experts say that, despite this gap, it makes more sense to add windshield coverage to your automobile insurance policy than it does to buy an extended warranty that covers glass, because the extended warranty will cost more than does the repair. At press time, no extended-warranty company would divulge the price of a windshield extended warranty, because they say dealers set the prices, and they weren’t willing to tell us the price that they give to dealers.

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