Considering how much we're investing a new vehicle, shouldn't trouble-free operation and longer vehicle life be part of the deal? Yes...and in a perfect world, there wouldn't be any pain or suffering or starving people...yada, yada, yada.  I'm not trying to sound cold hearted. Just pointing out (once again) that life sometimes isn't fair. Especially when it comes to your car, so more people are hedging their bets and buying Extended Warranty Contracts (EWCs) to protect their investment.

Question #1: EWCs worth it?

Answer #1: "Think of them as "health insurance policies" for your wheels. The reality of the matter is that EWCs are nothing more than extended service plans-another kind of automobile insurance. You pay money up-front to avoid paying (potentially) a lot more at the time of the repair. Just like any type of insurance, you get what you pay for.

And sometimes paying less means not getting most important coverage you're really gonna need."

Question #2: Do Consumers Really Need Extended Warranties?

Answer #2: "Most auto manufacturers offer at least 3 year/36,000 mile, bumper-to-bumper warranty on new vehicles. Most offer extended warranties on the engine and powertrain components...and many times limited warranties on "certified" used cars. In most cases, these plans offer consumers excellent protection.

But if you drive over 12,000 miles a year, or plan on keeping your vehicle for a longer period of time, then an EWC might make sense.

Keep in mind that it's less expensive to purchase the plan while the vehicle's still covered by the manufacturer's original warranty. If you wait for the (original) bumper-to-bumper warranty to expire before looking into an EWC, you're gonna pay considerably more.

Remember, it's insurance: Since most of these plans are "self-funded" (and insured), the earlier you pay in to the plan, the lower your premium's going to be."

Question #3: So what's the #1 factor when considering the buy vs. "roll the dice" question?

Answer #3: "Investigate the reliability history of the vehicle...something you should be doing, anyway: Some models with higher-than-average repair histories might dictate the purchase of an EWC. Also, consider the cost of parts. Many domestic models have repair costs that are half the cost of imported models, making an EWC even more appealing to owners of foreign models."

Question #4: Who sells these contracts?  

Regardless of the provider you choose, there are a number of key factors to look for, as well as look out for. It's easy to be overwhelmed by the dizzying array of plans available, but if you do a little homework, it's little easier to weed out the good plans from the clunkers.

· Corporate credit card to pay for services
· Ability to choose dealership or independent repair shop
· Warranty is transferable
· Trip-interruption coverage
· Free loaner car
· BBB certified

Signs of a BAD Plan

· Out of pocket to cover repairs
· Specific caps on repair costs
· Large numbers of exclusions
· Dealership pressure to purchase plan
· Non-transferable
· Company lacking strong track record of customer satisfaction

Most plans specify that replacement parts may be either new or re-manufactured...and that the choice of those parts is at the sole discretion of the provider. Don't let 'em get away with this! Shoddy repairs will have to be fixed again sometime in the future so make them do it right the first time. They may try to use the least-expensive part available, but your #1 concern should be returning the vehicle to it's original specifications and less expensive parts rarely accomplish this...so hold your ground."

Question #6: Isn't it pretty important to know who's actually "backing" a contract?

Answer #6: "Absolutely! Always be sure to check then out and verify the quality of the insurance company "writing" the policy. Buying a worthless piece of paper is exactly what some unsuspecting consumers have done in the past, so let's not add you to the victims list.

You need to confirm that "all programs are insured and reinsured, and that the company offering this plan will continue to pay claims for the life of the contract." This is actually the most important thing to look for when selecting an EWC provider. The last thing you need to do is pay for a plan that becomes worthless if the company goes bankrupt.

If you purchase from a dealer or from a third party make sure that you investigate the company you're buying it from. EWC sellers should offer a strong retail history, adequate financial reserves, and should be highly rated by the Better Business Bureau (BBB). Since I already know you're not going to jump through all of the hoops to analyze financial statements, your best bet will be to check with the BBB. And if the company's less than 5 years old, don't touch them."

Question #7: Alright, my head's spinnin'.  Help me select the right/best plan, will ya?

Answer #7: "Want bumper-to-bumper coverage? It's the most expensive up front option, but it offers the most coverage. Everything on the vehicle, minus exclusionary wear-and-tear items, is covered-usually with a minimal deductible. Selecting higher per-repair deductibles (like conventional insurance coverages) can decrease the initial cost of the plan, but if your vehicle ends up being trouble-prone (anyone else out there ever own a Jaguar?), it can be more expensive in the long run. "

Question #8: Any other "land mines" I need to look out for?

Answer #8: "Yes, here's a big one you'd better not overlook: Make sure the plan is renewable and transferable to a new owner.

Question #9: Please tell me you've got some good news or "extras" that can add value to a policy...

Answer #9:  "You're so cynical sometimes, Ben!  Some plans also offer perks like roadside assistance, car rental reimbursement, and travel expenses such as food and lodging if your vehicle becomes disabled while you are on a trip.  These services can come in handy for someone who travels for business or someone who commutes long distances."

Question #10: Any secret, inside scoop you've got for us before we write a check or sign the line for an EWC?

Answer #10: "Call the customer-service number before you buy! See how long the wait time is before you talk to a claims adjuster. Pay attention to their demeanor and their willingness to discuss the plan. Don't lose site of the fact that you're gonna have to (eventually) deal with these people if you do decide to purchase an EWC from them."

Question #11: What else...?

Answer #11: "Like everything else in the world, you get what you pay for, especially when it comes to EWCs. If you bite on the cheapest plans floating around out there, you're probably not going to get the type of coverage you really need.

But pay attention to the flip side of this coin: Paying more isn't necessarily better. Read the fine print and make sure your needs will be met, and feel confident that the plan will be there to protect you when you need it.

Don't be pressured into buying a plan at the dealership: You can always come back and buy the plan another day. Some dealerships force people to take EWCs if they want to get financing. While not illegal, this usually indicates that the dealer's business practices are less than above board. If you find yourself in this type of situation, get out of there and find yourself another dealer.

Remember...Extended Warranty Contracts aren't cheap: Buyers need to be aware of all their options and keep an open mind when shopping. EWCs offer a comfort level that some people don't mind paying for. Just remember that the companies offering EWCs are businesses and wouldn't offer them if they weren't making money on them."