Vehicle Service Contracts

A vehicle service contract is an optional plan from a third-party company that covers specific repairs and breakdowns after your factory warranty expires. These plans are also called extended warranties, though the manufacturer is the only company that can officially extend your new-car warranty. VSCs always cost extra, and some come with other benefits like roadside assistance.

A vehicle service contract can be worth it if you clearly understand what’s covered and get a good price. Some vehicle makes and models are more prone to breakdowns as they age, so it’s a good idea to check out reliability rankings for your car from resources like RepairPal or Edmunds.com.

Compare the estimated repair costs for your car over the next few years with the cost of an extended warranty to see if it’s worth it.

There are two main types of VSCs: exclusionary and stated component. Bumper-to-bumper warranties are exclusionary contracts, which means they provide comprehensive coverage for any mechanical failure unless it’s explicitly excluded in the contract.

Anything below bumper-to-bumper coverage is a stated-component contract. A powertrain warranty, for example, covers a list of components in the engine, transmission, and drivetrain. All the components covered are stated in the contract. There are also plans that cover more than the powertrain and may include steering, brakes, and more.

As an example, below are the details of the five plans under the Carchex Care by Royal contract. Here’s what each warranty covers:

What Is Excluded From A Vehicle Service Contract?

No vehicle service contract covers everything that could break or wear out on your car. A service contract requires a company to cover exactly what’s written inside–nothing more. Below are some example components and situations that are usually excluded from coverage:

• Cosmetic items like paint, upholstery, and trim
• Wear-and-tear items like tires and wiper blades
• Routine maintenance services
• Parts that haven’t failed beyond manufacturer tolerances
• Upgraded parts
• Environmental damage
• Damage from misuse
• Damage from lack of maintenance
• Aftermarket components
• Pre-existing conditions
• Select emissions components
• Teardown and diagnostic costs

Other Conditions Of VSCs

There are other conditions you need to meet to keep your VSC valid. Usually, you’ll need to:

• Keep all maintenance records.
• Follow all maintenance recommendations from the manufacturer.
• Use only mechanics certified by the National Institute for Automotive Service Excellence (ASE^Ⓡ).
• Get authorization from the vehicle service contract company before having repairs done (except in emergency situations).

Extra Perks

Vehicle service contracts often come with extra perks. These make the experience of a breakdown a bit less stressful and add value to the contract. Some examples of perks include:

• Roadside assistance: Provides help with tire changes, lockout assistance, and more
• Rental car coverage: Reimburses you for a rental car while yours is in the shop because of a mechanical breakdown
• Trip-interruption benefit: Reimburses you for food and lodging costs if your car breaks down, usually 100 or more miles away from home

With trip-interruption benefits and rental car reimbursement, there are always limits to the amount of money you’re given per day and the number of days the service will apply.

Since a vehicle service contract is administered by a company separate from your car’s manufacturer, there are extra steps involved in using one. Below is the basic process.

1. Take your car to a licensed mechanic (it can be your dealership).
2. Give the technician your service contract information.
3. The technician contacts your plan administrator.
4. You may need to authorize a teardown diagnosis, which the warranty likely won’t cover.
5. The repair shop tells your plan administrator about the required services, and the administrator then approves or denies the claim.
6. The repair shop completes the repair if the claim is approved.
7. Pay your deductible to the repair facility, and the administrator pays the rest to the shop.

Some companies–like Carchex and Protect My Car–sell service contracts that are administered by other companies, like American Auto Shield. Other providers, like Endurance, are direct warranty companies and administer their own contracts.

How Long Does Coverage Last?

Vehicle service contracts almost always have a specified end date. This is usually a mileage on your odometer or a number of years from the beginning of the contract. All contracts include limits for both, and whichever limit you hit first will end the service. The mileage may be counted from the beginning of the contract.

For example, a quote we received for a Titanium plan from Carchex would last for 7 years/125,000 miles. The car already had 30,000 miles, so the contract would expire at 155,000 miles or seven years from the contract start date. Note that the contract doesn’t end specifically when the car becomes seven years old, but when the contract hits seven years.

You may have several term lengths to choose from with each protection plan. Some companies, like CarShield, offer unlimited month-to-month contracts. However, it may not be cost effective to make a monthly payment for six or seven years. Compare total costs from time-restricted contracts with unlimited plans to see which makes more sense to you.

Can You Cancel A Vehicle Service Contract?

Reputable VSC companies will allow you to cancel a contract at any time. Cancellation policies differ by provider, but you usually have to provide a written odometer statement showing the current mileage of your car. You may also have to get this statement notarized.

You can also typically get a full refund within 30 days if you haven’t used the coverage. After that point, you’ll typically get a prorated refund based on the time and coverage used. If you’re selling your car, most companies allow you to transfer coverage to the next owner for a fee. This can increase the value of your car since buyers may appreciate the extra coverage.

Where To Get A Vehicle Service Contract

You can get vehicle service contracts from third-party providers like Carchex or Endurance. You can also find plans from dealerships, and some manufacturers offer VSCs separately from their extended warranty coverage. Some insurance companies also offer repair coverage similar to a VSC. Geico’s mechanical breakdown insurance is one example.

According to quotes we’ve received, total vehicle service contract costs range from about $1,500 to $3,500 or more depending on the provider and plan. In general, plans that cover more systems or more mileage and time cost more. On the other hand, you’ll save some money if you buy a plan earlier in the life of your vehicle.

Vehicle Service Contract Quotes

Below are a few sample quotes for different types of plans from a variety of providers. They apply to a 2018 Honda Civic with 30,000 miles or a 2012 Subaru Outback with 88,000 miles. All plans include a $100 deductible. Costs are rounded to the nearest dollar.

Deductible Options

With a vehicle service contract, you usually have to pay a deductible out of pocket for each visit to the repair shop. This is often $100, though some providers may offer $0 or $200 deductibles as well. If you have a choice, choosing a lower deductible will increase the overall cost of the plan slightly and vice versa.

Shop Smart To Avoid Scams

Not all extended warranty companies are genuine or offer good service. Before you make a purchase, thoroughly read through the fine print of a sample contract. Also investigate the company to see how customers rate it on the Better Business Bureau (BBB) site and Trustpilot. Always ask about exclusions, because a VSC won’t cover 100 percent of every single breakdown.

This article reviewed a vehicle service contract’s cost, coverage, and benefits. A vehicle service contract is worth it for the right price, but you need to know what you are signing up for.

Top Recommendations For Vehicle Service Contracts

We’ve compared the best extended warranty companies on the market to help drivers shop from reputable service contract providers. Our top picks are Endurance, Carchex, and Protect My Car.

Endurance: Best Coverage

Endurance is our top pick overall because it offers the best coverage selection and has a great customer service reputation. The company offers six coverage plans, including one with maintenance benefits for oil changes, tire rotations, and annual services. It also includes one-time benefits for cooling-system maintenance and brake pad and battery replacements.

Endurance has a 4.1-star rating out of 5.0 from over 5,300 customer reviews on Trustpilot.

Keep reading: Endurance warranty review

Carchex: Best For Used Cars

Founded in 1999, Carchex has a strong reputation today with an A+ rating and accreditation from the BBB. Carchex can cover vehicles up to 250,000 miles, which makes it a great option for used cars. Drivers can pick from five plans ranging from basic powertrain coverage to factory-level protection.

Keep reading: Carchex review

Protect My Car: Best Customer Service

Protect My Car is another reputable extended car warranty company. The provider has an A+ rating from the BBB and a 4.5-star rating from over 3,200 reviewers on Trustpilot. Protect My Car offers three standard plans, plus two Ambassador plans that cover a portion of all car repairs along with some maintenance items up to 299,999 miles.

Keep reading: Protect My Car review

Our review process aims to deliver consistent and unbiased   assessments of extended auto warranty providers. While there are multiple qualities that make a warranty company successful, our review team focuses on those we believe are the most important for consumers:

• Cost: Cost can be difficult to compare between providers because so many factors impact vehicle service contract pricing. To determine our cost score, we perform a secret shopper analysis for a variety of vehicles and plans and consider available deductibles.
• Coverage: Our team of experts looks at the number of extended warranty plans available, as well as term limits, exclusions, and added benefits like roadside assistance. Ratings also take into account the availability of maintenance coverage.
• Reputation: It’s important that an extended car warranty company is able to meet its claims obligations. Companies with a strong rating from the Better Business Bureau (BBB) score well in this category. Established providers with a long history of reliable service also receive positive marks.
• Customer Experience: We listen to real customer sales calls and comb through reviews on sites like the BBB to learn about customer experiences. Warranty companies with a low volume of complaints score well in this area. We also consider the availability of mobile apps and chat features.

*Data accurate at time of publication.