On car warrantees, drive with caution

Last week’s column on extended auto warranties generated a lot of interest. So we’re taking a second look at this kind of sale, which has attracted more than its share of rip-off artists in recent months.

One reader e-mailed us, noting that after reading the article, she realized she’d bought a useless warranty. One of our caseworkers advised her on the procedure for notifying her credit card issuer to void the purchase.

Legitimate sellers of extended warranties say they’re frustrated by the come-on hustlers and their empty promises about bumper-to-bumper coverage for unreasonable lengths of time. The costs of such coverage are advertised as bargains; given the limited problems they may actually cover, they’re usually less than great deals.

Deciding on some direct research, I called the number on the card we’d been sent by the “Extended Coverage Division” – of what corporation it was not made clear. No explanation came when the phone was answered by “Shawn,” who assured me that even though I was calling past the deadline date on the card, we could still make a deal. Those dates are usually 2-3 days from the time the card lands in your mailbox to save you the trouble of thinking about it for too long.

My first question was, “Where did you get the information about my recent car purchase?” Shawn couldn’t say for sure but said his superiors get details from manufacturers, auto dealers and state auto registries. Our research indicates the state of Maine doesn’t release such data “for marketing purposes,” and dealers we spoke to are solidly against phone- and Web-driven sales of extended warranties. We can’t speak for the manufacturers, but it’s unlikely they took note of my buying a used car.

Shawn said my coverage would cost $640 a year. If I didn’t file a claim at the end of the five-year warranty period, I’d get every penny back. “Of course, that never happens,” he added quickly, explaining that statistics prove I’d file some claim in that time. I knew I’d likely not get a refund, but not for the reasons he stated.

Our cheery conversation ended when I asked to be mailed details of the coverage. Shawn said he couldn’t do that, since “each policy is customized” and “has to be underwritten.” He was all too happy to explain things in all the detail I wanted, but he wasn’t about to put any of that in writing. I told him if I couldn’t see something in print, I wasn’t interested. Shawn agreed to take me off his mailing list.

What the salespeople won’t tell you is that the list of exclusions in that “bumper-to-bumper coverage” is long, probably ruling out payment for most of the reasons you’d want coverage. If you’re considering an extended warranty, do your homework:

. See if you already have a warranty on your vehicle. If in doubt, call the manufacturer or your dealer – NOT the number on the postcard.

. Check the coverage in various manufacturers’ warranties. Nissan’s Web site (www.nissanextendedwarranty.com/warranty/manufacturer warranties) has side-by-side comparisons for major automakers and links for updates.

. Before buying, get information in writing. Don’t be rushed into making a snap decision over the phone.

. Check out a warranty company’s track record, coverage and ability to pay claims; don’t buy based on a low price that covers little or nothing.

Our advice last week bears repeating: Buy nothing. Instead, make regular deposits to a special savings account to be used only for significant repairs. At the end of whatever you decide your warranty period is, you have any remaining funds plus whatever interest that money has earned.

Consumer Forum is a collaboration, now in its 30th year, of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded nonprofit consumer organization. Individual and business memberships are available at modest rates. Interested and motivated volunteers are always needed and welcomed to apply to help with our mission. For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, P.O. Box 486, Brewer ME 04412, or e-mail contacexdir@live.com.