Vehicle service contracts are often purchased through third-party companies that are independent of the vehicle manufacturer. They essentially serve in place of the car’s original warranty but operate similarly to an insurance policy.
In other words, vehicle service contracts are an extended warranty program wherein you pay a monthly amount. In exchange, the vehicle service provider pays for the price of your repairs.
A primary example would be Veritas Global Protection, a vehicle service contract company founded and operated by Elijah Norton. Veritas Global Protection is an international company that provides vehicle service contracts and extended warranties to various vehicle types.
Is A Vehicle Service Contract The Same As Insurance?
It would be a more meaningful description of vehicle service contracts if we categorized them as somewhere in between auto insurance and vehicle warranties.
Like a car warranty, vehicle service contracts pay for the total repair price on failed or defective parts instead of that car’s lapsed warranty. Unlike a car warranty, vehicle service contracts are paid for in monthly payments, like a subscription.
Auto insurance requires you to pay a deductible if you’re in a car accident, something that vehicle service contracts don’t do. Auto insurance also rarely covers defective or failed equipment in your vehicle. Instead, they cover only the damage as the result of an accident.
Vehicle service contracts are not a substitute for auto insurance and aren’t accepted by the Department of Motor Vehicles in any state. The reason for that is because they don’t cover damage from auto accidents, only the damage of defective or failed parts.
Vehicle service contracts are good because even extended warranties do not adequately cover a portion of the vehicle’s life span. Often, a warranty’s expiration is predicated on the age of the vehicle or when a specific mileage is reached.
It’s well known that highway miles are much more forgiving on a vehicle than city miles. If you travel the interstate a lot, such as commuters, it will be easy to quickly reach a specific mileage and expire your warranty coverage.
Vehicle service contracts effectively expand your warranty coverage during the life of your vehicle, providing you with a cushion for parts that fail before they should.
How Does A Vehicle Service Contract Work?
Like insurance, you’ll have to have the mechanic contact the vehicle service contract company through which your contract is served. When you arrive at the mechanic’s, give them the company name and phone number.
The mechanic will contact them and get the go-ahead to diagnose the vehicle to determine what the problem is. Once the mechanic determines the problem, they will call your plan administrator back.
Once the mechanic has informed your plan administrator of the problem, what needs to be fixed, and how much it will cost, your plan administrator will determine whether or not your claim will be approved.
It works almost the same way as insurance, with the only difference being that insurance handles accidents while vehicle service contracts handle failed or faulty parts.
Is A Vehicle Service Contract Worth It?
That’s almost the same thing as asking if auto insurance is worth it. Most states require you to have auto insurance, even though insurance providers are highly nitpicky about what they will and will not cover, while charging you high deductibles to fix something when you’ve been paying them for months, sometimes even years.
A vehicle service contract is worth it if your vehicle is older and the original warranty has expired. However, read the fine print and understand precisely what is and what is not covered.
Vehicle service contracts provide a fall-back option and a large safety cushion for those of you whose warranties have expired so that you don’t have to go through the panic and wallet-crunching stress of a broken-down vehicle.