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Extended Warranty Experience, From the Shop Side

Haven’t been here much lately, been busy, but the posting about the 5 best extended warranties coupled with 2 cars we recently had at the shop made me want to post this. Just like anything else, as far as warranty companies there are good ones and bad ones. Sorry if this is long.

2005 Tahoe, customer brought in for an alignment and front end check, complaint was a vibration at 40-50mph. The alignment/chassis guy drove it and said it felt like a powertrain issue, kicked it over for a proper diagnosis. I drove the truck while watching engine and trans data with a scan tool, verified a torque converter shudder. Trans fluid full and clean. I write it up as needs a torque converter, but with no warranty on the job since the truck has 170,000 miles. I recommended a complete trans overhaul for a proper repair.

The front office put together estimates for torque converter only and complete trans replacement with reman unit. Customer says he has an extended warranty, contract is in the glovebox. Office calls warranty company, they agree that replacing the converter only is an incomplete repair and they authorize complete trans replacement. They pay our full labor rate, regular markup on the trans, and customer only pays the diagnostic charge of $114.00. A quick, easy, painless transaction for all parties. Well worth the cost of the coverage.

2012 Jeep Liberty is towed in, customer states car overheated then engine died and would not start after cooling down. I grab the keys, check the oil and coolant, radiator is low. Turn the key and nothing but a loud clunk and the sound of a starter straining to turn. I get a breaker bar and with my 265 lbs on the end of a pipe the engine still will not turn. Write it up as needing a used or reman engine. Front office puts together 2 estimates and calls the customer. Customer says she has extended warranty and asks us to contact them.

Warranty company refuses any coverage without a proper diagnostic which the customer must pay for. I wasn’t going to charge any labor time for finding a blown engine, but now since we’re pushing the car in it’s $114 to start off. I scan for fault codes and data. I find the engine will turn backwards almost 1 revolution and lock up, then forward the same before it locks again. I fill the radiator, pull all the spark plugs, find water in cyls 3 and 5. I write up a detailed description of finding fault codes for misfires on 2 cylinders, and how the engine ingested water into 2 cylinders and hydrolocked causing irreparable damage to the engine block and pistons. Since the engine is inoperable further testing is not possible.

Warranty company says still not good enough, customer needs to pay for more diagnostic time. Customer now has to pay another $342 for me to pull the oil pan for further inspection. I pull the pan and find pieces of broken piston in there and a connecting rod banging on the cylinder wall. Take pictures and email to warranty company.

Still not good enough. Warranty company needs to document the origin of the engine failure before they will even talk about what they will cover. They want customer to pay for removal of the left cylinder head to inspect the head and gasket for failure. Our service writer has finally had enough, tells warranty company in no uncertain terms that she will not waste any more of the customer’s money or the shop’s time on this, that they can send an inspector out without any further disassembly. Warranty company makes an appointment for inspector to come Wed at 10am.

Inspector comes at 12:30. Takes a couple of picture and asks which cylinder is the bad one. I don’t even look up from my lunch and say “The one with the broken piston.” He asks for the car to be lowered so he can look under the hood. He pulls the dipstick and remarks there’s no oil. I remind him the oil pan is off, he just took a picture, right? Then he asks me to show him where the coolant reservoir is. I point at it and he says “Oh, I thought that was washer fluid.” He takes a picture of the VIN tag and leaves.

Today we hear from the customer, who says the warranty will only pay $80/hour for labor (our rate is $114) and will only pay our wholesale cost for a used engine or ship one to us, and will not pay for fluids, oil, filter, thermostat, hoses, or a new radiator cap. Now the customer has to choose what to do, pay the difference between our estimate and what the warranty will pay or pay us for our time and tow the car to a shop that will do the work for $80/hr.

If this customer was given this extended warranty for free it still wasn’t worth it. If I could name these two companies on a public forum I would.

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That sounds like Car Shield, other warranty company warranties usually go through without a problem, despite what people outside the repair industry post here.

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Shops may have a higher opinion of the value of extended warranties since they never see the majority of people who buy extended warranties because they never have a claim or if they do have, the claim is less than they paid for the warranty.

And I think it’s important to remember here: the extended warranty company already got their money, when you bought the warranty.

Meaning, they have no real incentive to “fix your car under warranty”.

The vast majority of people with homeowners insurance never make a claim either. I bet the people who’s home unfortunately is damaged are glad they do. It’s insurance like any other. It only works if the majority do not have claims. Now if the loss of your car is not a financial hardship for someone, insurance will certainly seem like wasted money. There are lots of people that can’t or don’t want to take that risk. I think the lesson from ase is, if you’re going to pay for insurance, pay a little more to get it from a reputable company that stands behind it.

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We had a derecho blow through town about 10 years ago, with significant damage from wind, tree limbs, and hail. Insurance companies paid a lot, and I didn’t hear anyone complain about claim denials. The next time a big storm occurred, the insurers weren’t nearly as generous. They must have had to dig into principal to pay for the derecho.

New to me word, had to google it.
Guess that’s because I live in the PNW that I’ve never heard it.

You bought warranty. Never used it. Warranty co will pay for 1/2 the cost of replacement motor? They will pay something? That is worth something in my mind.

You know, that’s the way I look at it. I always tell customers that car extended warranty coverage is like dental insurance. You have a deductible. Other than that, the repairs may cost $XXX, your coverage will pay $YYY, and you pay the balance of $ZZZ. The problem is the number of greedy and gullible people out there who come in waving a service contract saying “Oh my warranty will pay for everything.”

I also have had a service contract company tell my customer that we charge too much for our work and recommend another shop that works for less.

My point was not from shop POV.

I never heard of it until we had one, and I’ve live in the Mid-Atlantic for my whole life. An unusual event, or set of events, for sure. The good news was that between the derecho knocking down tree branches and the power company clearing their lines of branches, we didn’t have a power outage for years afterwards. Now power goes out when someone hits the power pole with their car.

Never heard of it either but to save some searching, it’s a fast moving, wide spread wind storm. I guess in the plains, they would call it a dust storm, but we usually just get thunderstorms with damaging winds like right now.

There is a vast difference between the profit margins of auto, homeowners, medical and life insurance companies on one hand and consumer extended warranties on the other. The first are all regulated and competitive and the second , for some reason are not, but perhaps should be,

Consumer Reports a number of years ago stated that consumers got back 12 cents of every dollar that they spent on consumer product warranties. I do not think that figure has changed for the better.

If you change your fluids regularly, check your fluids on a schedule, it is unlikely that you are going to lose an engine or transmission. If you do have the misfortune to get a car where they fail anyway because there are manufacturing defects in a significant number of those cars, it is likely to be covered anyway.

Many people sleep better at night because they bought an expensive warranty and when they do have a claim, the real nightmare begins.

Derecho, never heard of it before and I have always been keenly interested in weather and have traveled widely in the US. As a matter of fact my spellcheck never heard of it either. It seems to be not a new phenomena , just a new name adopted by National Weather Service that used to be called a squall line.

Squall line doesn’t sound very dramatic, they probably get better TV ratings with Derecho!

Wiki says it is a 19th century Spanish term that has long been applied to storms in Africa and Australia.

I recently heard a weatherman refer to a hurricane near Hawaii, when I was growing up all Pacific or Indian ocean storms were Typhoons,

Also when I was growing up , I never hears of black ice. It was glare ice back then, I guess black ice somehow sounds more menacing.

The Buffalo area has windstorms with 50 mph sustained winds almost every year, last year we had one with 60 mph sustained winds and gusts to 75. We just call them wind storms. Unless they breako;d trees they don’t do much damage, anything that would blow away, has already done so.

Around here, glare ice you could see the shiny stuff but when they started to refer to black ice, it was when the pavement looked normal and not icy but was indeed icy. Mostly caused by car exhaust in very cold weather. I think they have gotten more liberal talking about black ice now, but in the old days, black ice really was menacing because it was a surprise. Hit the brakes and nothing happened except slide. Fun.

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Hey, I have gotten nothing back on 30+ years of homeowners insurance either. But you’re lumping much lower financial risk products into the discussion. A car is likely to be the second most expensive purchase people make.

Again, that’s the nature of insurance, protecting against the unusual unpredicted loss.

There’s a reason it’s called an extended warranty. If you think cars don’t fail outside the standard mfr warranty, well…

Hence the advice to buy from reputable companies.

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I guess we have reached the point where we agree to disagree :slightly_smiling_face:

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The customer should contact the Insurance Commissioner in the state that this occurred and in the company’s domicile state as well. May not help, but it will make the company think twice and anyone checking on that company will see the complaint.

There is a lot more to a vehicle than crankshaft bearings and gears.

Last month I performed an extended warranty repair on an older Lexus that totaled more than $4,000. The repairs included CV boots, HVAC control module, water pump, window motor and air intake boots. Most of this would be considered to be wear items to some people, extended warranty repairs to others.

Was that a Toyota/Lexus extended warranty? I don’t think I have seen any aftermarket warranties that would cover all that.

It seems unlikely that all those items failed at the same time. Would not most warranties want a separate deductible for each item?