Extended warranties cover mechanical breakdown and not necessarily the normal wear and tear of a vehicle. Before purchasing an extended warranty ask yourself the following questions:
If you have any questions about a warranty, we recommend reaching out to your dealer for assistance in confirming the insurance status of the warranty provider.
Whether buying new or used, if your vehicle comes with a factory warranty that will cover you for the time you plan to drive your vehicle then an extended warranty doesn’t make sense.
If you plan to drive your vehicle longer than this period, you may consider purchasing an extended warranty which goes beyond the factory coverage period.
If you purchase a vehicle no longer covered under factory warranty an extended warranty may be your only coverage.
Extended warranties are provided by vehicle manufacturers, third-party companies and some registered motor vehicle dealers.
Extended warranties can be offered by a motor vehicle dealer during, and sometimes even after, a vehicle has been purchased.
If you’re buying a vehicle from a dealer do not assume the warranty is from the manufacturer. The dealer may offer extended warranties from the manufacturer as well as third-party warranties.
When selling extended warranty, dealers are required to ensure they comply with all requirements under the MVDA. Dealers can only sell extended warranty products that are insured, or for which a letter of credit to the Compensation Fund has been provided.
Extended warranties can be tailored to cover parts and labour and specific items such as: transmission, engine and other major components. Beware of exclusions (such as seals and gaskets) that limit coverage.
Be sure to understand what is covered under your agreement and what is excluded as it may vary by provider.
Length of time and kilometre limits vary.
If you are buying a manufacturer’s extended warranty for a vehicle already under a manufacturer’s warranty, the extended warranty starts the day you take delivery of your vehicle. This will cause an overlapping of warranty coverage.
Extended warranties may be negotiated – no two are the same. Dealers usually mark up extended warranties, so there can be room for negotiation.
Dealers offer different types of extended warranties with a wide range of coverage and as you increase coverage or term, the price normally increases.
If the price seems too good to be true pay close attention to time and kilometre limits, the deductible along with items covered and claim limits.
A deductible is the predetermined dollar amount related to each claim for which you are responsible. Deductibles are found in most extended warranty products and vary just like with insurance policies. A deductible is payable for each claim you make under the extended warranty.
Some extended warranty providers charge more than $100, in addition to costs for the extended warranty, to activate its coverage.
Consumers may need to call the provider to activate its coverage as the dealer may not be able to do this for you. This call for activation is simply a marketing tool by the extended warranty provider to up-sell you on their products which may be more costly.
You should ask your dealer ahead of time if there is an activation fee and get the amount in writing. All-in pricing requires this fee to be included in the advertised vehicle price. Notify OMVIC if it isn’t.
Most extended warranties require consumers to maintain their vehicle within manufacturer specifications or those specifications set out within an extended warranty.
OMVIC recommends consumers keep records of all maintenance performed on their vehicle, including fluid changes, and any work done to the body or mechanical components to help ensure a repair claim isn’t disputed.
A manufacturer’s extended warranty may allow you to complete repairs at any franchise dealership. A third-party product may direct you to specific repair facilities. A dealer warranty offers repairs at their facilities. Consider this carefully when reviewing your options, especially if you travel.
If your warranty provider requires you to have repairs, or an inspection done, at the premises they own and operate you may be charged more than fair market value which deems your warranty useless.
Before you purchase your extended warranty, be sure to understand any claim limits which restrict coverage. Consider whether those limits will provide adequate coverage in the event a repair is required.
For example, some extended warranties have claim limits of only $500 while an engine or transmission repair may cost $2,500 or more.
Always inquire about the ability to transfer your extended warranty. It can add value to your vehicle and may help when reselling.
