Extended warranties may not fix car problem

Amy Whiteman, 27, wanted to have extra assurance that she could get her 2000 Chevy S-10 pickup repaired if it broke down. She regularly drives from her home in Clarkston, Mich., to Wayne State University in Detroit, where she is taking courses toward a master’s degree.

So she took out a warranty when someone called about a service plan last summer. It sounded like a pretty good deal for $1,500. She paid $150 down and then had $50 a month taken out automatically from her bank account.

Her truck broke down shortly afterward. But that warranty did not cover replacing the front ball joints, a key part of the suspension system. She had to pay more than $300, and she had a tough time getting any money back when she canceled the extra warranty.

When Whiteman initially talked to someone when she bought the warranty, the person on the other end of the phone said it would cover a wide range of repairs. Once she read the fine print — after the truck broke down — Whiteman realized that very little would be covered unless there was a specific defect.

"I felt like it was false advertisement and an outright lie," she said.

Just open the mail or answer the phone and you’re bound to find someone telling you about a "Final Notice" that your car warranty is about to run out. Consumers, though, need to realize that many of these offers aren’t good deals at all.

Many times, the existing warranty is already in place when someone offers a Final Notice.

Jack Nerad, executive editorial director for the Kelley Blue Book, said many consumers do not need to buy extended warranties.

Many new car warranties offered by the manufacturer will last up to three to five years — so you may not need to buy anything else.

Nerad suggests talking to the dealer — not someone who calls out of the blue — about an extended warranty if you want one.

But consumers should negotiate the price of an extended warranty, too, with a dealer, Nerad said.

Warranties have high markups, he said, and there is room to negotiate the price.

Whiteman, who works on the assembly line at General Motors’ Lake Orion, Mich., plant, said she was lucky in one way.

Her truck broke down within a month of buying the warranty, and the outside warranty company had initially promised a refund within the first 30 days.

Even so, it took her more than six months — and a contact with the Better Business Bureau — to get her refund and her $200 back.

Chiquinia Hill, 53, of Detroit said her extended warranty didn’t do her any good, either. The warranty firm offered to pay for a water pump on her 2002 Chrysler Sebring. But she needed a new engine because the engine locked up. It wouldn’t pay for the engine repair, which cost more than $1,400. She decided to decline getting the water pump repaired, too.

"I was pushed to my son’s house," she said.

The car has been sitting for months in her son’s driveway. She is not able to work and cannot afford to get the car repaired.

Some extended warranties have absolute exclusions that can deny coverage for any reason.

Here’s one clue: If the contract specifies that only mechanical breakdowns will be covered, problems caused by normal wear and tear may be excluded.

Many extended warranties won’t cover all repairs. In Whiteman’s case, the company said her truck’s problems were wear and tear.

Timothy Burns, spokesman for the Better Business Bureau Serving Eastern Michigan, said consumers should read the disclaimers — and know their responsibilities for maintaining the vehicle or submitting a claim.

Burns suggests that if consumers are tempted to buy an extended warranty that they first request a copy of a contract to read all the specific rules before sending any money.

"You need to see and understand everything, not just get the information over the phone," Burns said.