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The major catch with many extended auto warranties

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Posted at 9:24 AM, Apr 08, 2022

With new cars in short supply, and used cars selling for a premium, millions of drivers now spend thousands of dollars for extended warranties for their car.

But many learn that the warranties sometimes don't pay when you need them most.

Ashley Ziegler opened the hood of her Ford Explorer that she says she has babied since buying it new in 2017.

"I just had the oil changed," she said, while pulling the dipstick to show it's covered with clean oil.

But that apparently wasn't enough for her extended warranty company.

Despite paying over $3,000 for protection for up to 100,000 miles, she had to shell out almost $5,000 more for a repair to a failed turbocharger.

"They denied the entire claim," she said. "They said there was not enough proof of oil changes because we don't always have the oil changes done at the dealership."

She had taken it to various shops for oil changes.

"They came back and said that's not good enough and we need every single receipt for every single oil purchase and filter purchase from 2017," she said.

Her story is not unusual. If you check the Better Business Bureau's report on many extended warranty companies, many customers state that their claims were denied.

What to ask before you buy

A report in the car blog The Drive says before you buy an extended warranty, find out:

  • What does it exclude? Many will not cover worn suspension parts, interior parts, and other items that commonly fail.
  • What things can void the warranty?
  • What maintenance is absolutely required?
  • What if you don't have it serviced at the dealership? (This should not be an issue, due to a federal law called the Magnuson Moss Act,that says servicing your car at an independent shop cannot void a warranty)

Ziegler's dealership said it was unable to convince the warranty company to pay for the repair.

"Since she was unable to produce satisfactory records, they declined to cover her repairs," a spokesperson said.

The warranty company has not provided a comment about Ziegler's situation.

However, the dealership said the warranty company will cover future issues that don't require oil change evidence.

Ziegler is still out over $4,000 for a turbocharger replacement.

"I think it's a bunch of junk," she said, "because I have been paying for an extended warranty since I've owned the car, expecting they would cover the cost if something goes wrong with the car."

So read the fine print, so you don't waste your money.

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