Extended Warranty- Insurance Policy or Vehicle Service Contract?
As vehicles become increasingly intricate, particularly with the integration of new electrical components, Canadians are seeking comprehensive solutions to safeguard their investments. Traditionally, the term “bumper to bumper” has been synonymous with new vehicle warranties, suggesting that all components between the bumpers are covered. However, the reality is far more nuanced, with a plethora of coverage options available, none of which truly encompass the entire vehicle.
New vehicles come with a full warranty of three years and 60,000 km, four years and 80,000 km or five years and 100,000 km, depending on the manufacturer (check out our blog on what each provides). Depending on the province you live in or who you buy from, when it comes time to extend a warranty, you have two primary options: an independent insurance policy (akin to home or auto insurance) or a vehicle service contract (VSC) from the manufacturer or an independent provider (both of which are often heavily marked up in dealerships due to sales commissions).
Buying an extended car warranty- What exactly is it?
Canadians must scrutinize and comprehend the policies they’re considering, evaluating factors such as the source of warranty advice, what is covered, repair facility options, coverage duration and extent, claims assistance, transferability, and more.
Vehicle Service Contract
A VSC, also known as an extended warranty, is a contractual agreement between a vehicle owner and a provider (typically the manufacturer or a third-party company) that offers coverage for certain vehicle repairs and maintenance beyond the original manufacturer’s warranty period. Extended warranties are sold as VSCs in many Canadian provinces, including Ontario and the East Coast.
Some examples of manufacturer-offered VSCs are GM Total Plus, Toyota Extended Care Plan, and Ford Care. Be aware that a VSC from the manufacturer is different from the original warranty—it isn’t an extension of the same thing, and it can be open to a lot of interpretation.
VSCs vary widely in terms of coverage options, duration, and cost, and they may have specific exclusions and limitations outlined in the contract. Choosing the right warranty amidst the sea of options can be daunting. Despite flashy marketing materials boasting extensive coverage, consumers should prioritize understanding what isn’t covered to make informed decisions. When claims arise, it’s the fine print of the policy that truly matters, emphasizing the need for transparent warranties with clear exclusions.
Some VSCs, like Obvi’s, offer comprehensive coverage similar to the original manufacturer’s warranty, while others may have more limited coverage or exclude certain types of repairs. It’s essential for consumers to carefully review the terms and conditions before purchasing to understand exactly what is covered, what is excluded, and any requirements or limitations that may apply.
Dealerships often push the manufacturer’s warranty extension, leveraging their incentives and brand names to make a profit. However, these warranties often lack standardized formats, language, or regulatory oversight, leaving consumers vulnerable to misunderstandings in coverage.
Mechanical Breakdown Insurance
Residents of Alberta, British Columbia, and Saskatchewan can purchase insurance policies to extend their vehicle warranties. Many dealers offer third-party insurance policies, which are often marked up significantly due to sales commissions. However, alternative sources like Obvi offer insurance protection without dealership markups, providing a more cost-effective solution for consumers. Manufacturers do not offer insurance policy warranties.
Insurance policies offer greater security due to strict regulations and financial stability requirements. Companies operating in the insurance sector must adhere to federal and provincial guidelines, safeguarding consumers against unscrupulous practices. Opting for an A-rated insurer reassures Canadians they have a quality warranty due to their established track records of reliability and compliance with regulatory standards.
What does Obvi offer?
Obvi’s extended warranty is a straightforward solution that prioritizes transparency and comprehensive coverage with minimal exclusions. By eliminating dealership markups and offering clear terms, Obvi aims to provide affordable and reliable insurance-backed VSC protection and mechanical breakdown insurance where required for consumers. This ensures that the coverage is comparable to, if not better than, manufacturer warranties, offering vehicle owners and repair shops peace of mind.
Our Elite coverage outlines a small list of exclusions; if something isn’t explicitly excluded, it’s covered! This approach safeguards against unforeseen issues and accommodates the evolving landscape of vehicle technology, ensuring broad and reliable customer protection.
Learn more about Obvi’s Extended Warranty and how we do things differently or get a fast and free online quote.