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Extended Warranty World Tour: Differences Across Continents

BY: Chris Brown
Happy African American man driving his car to work

If you’ve been driving for any amount of time, you’ve probably considered an extended warranty at some point. But did you know they can differ across countries and continents? That’s right: what extended warranty providers will be willing to cover, whether they add on extra benefits, and many more factors all depend on the region you’re living in.

Today, we’ll be going on an extended warranty world tour, looking at variations in terms, coverage, and providers between key continents. So buckle in, get comfortable, and let’s start our journey.

What Is an Extended Warranty?

In the simplest possible terms, an extended warranty is a coverage plan that can save you serious money on the cost of car ownership. But to give you the complete picture, we must start at the beginning.

When you purchase a brand new vehicle, it comes with what’s known as a factory warranty or a manufacturer warranty. This is effectively the car manufacturer’s promise to repair or replace any components that fail due to fault within a predetermined number of years or miles traveled (whichever comes first). Some automotive manufacturers will be more generous than others, but however long it lasts, once your factory warranty has expired, any future repair bills will be coming out of your pocket.

To continue enjoying the peace of mind that coverage offers, there are two potential routes you can go down. The first is a traditional extended car warranty, usually purchased via your dealership or directly from the automaker. This does exactly what the name implies and extends your factory warranty beyond its expiration date.

There are some major drawbacks to this route, though, as all repairs must be carried out at an authorized dealership (not great if you break down hundreds of miles from one), and your factory warranty must be active to purchase an extension. Leave it just one day late, and you’ll be denied.

As a result, most drivers opt for a vehicle service contract (VSC) from a third party instead. These are usually a much better option as third-party providers are incentivized to offer almost like-for-like coverage at an even better price point. Most vehicle service contracts allow you to have repairs carried out at any certified mechanic, and — as long as you meet the provider’s eligibility criteria — you can purchase a VSC regardless of factory warranty status. Better yet, third-party providers also often throw in extra perks to sweeten the deal, so opting for a VSC over a traditional extended warranty really is a no-brainer.

While we’re on the topic, it’s also worthwhile pointing out that an extended warranty/vehicle service contract and auto insurance are very different. An extended warranty covers the cost of repair bills in the event of unexpected component failure, and auto insurance covers the cost of repair bills in an incident such as a collision. The two work great together, so you should always purchase both and cover yourself from all angles.

Extended Warranties in North America

What better place to start than home sweet home? As with many things related to laws and regulations, individual U.S. states can make their own rules about extended warranties. We’d be here for a long time if we looked at each state individually, but we can briefly discuss the Service Contracts Model Act.

The majority of states adopted the Model Act, which stipulates the following:

  • Warranty providers must provide customers with a copy of the contract immediately after purchase.
  • The contract must prominently disclose conditions, exclusions, restrictions, and other important details about the claims process.
  • Customers have a certain number of days to change their minds and receive a full refund if they haven’t made any claims (minus some administrative fees).
  • The provider must guarantee to the state that claims will be paid (either via bond payment or insurance coverage).
  • If the provider can’t or won’t pay a claim, the customer can demand payment directly from the guarantee insurance company.
  • No one can force someone to purchase an extended warranty, including a bank from which the customer gets a loan to buy the car.

Model Act states are also strict on punishing extended warranty companies that break the law. These penalties can range from minor fines for small violations to serious charges. In Missouri, for example, anyone who intentionally lies to sell a service contract can be charged with a felony—resulting in up to a decade in prison.

Europe’s Approach to Extended Warranties

Across the pond in Europe, things are usually done in accordance with European Union (EU) regulations. Extended warranties are specifically affected by contract obligations and consumer guarantees. Contract obligations state that:

  • All contracts must be fair, considering the customer’s legitimate interests.
  • Unfair contract terms are not binding, even if the customer has signed the contract.
  • Contract terms must be drafted in plain, understandable language.
  • Examples of unfair terms include get-out clauses in favor of the provider, limited rights to legal action, and not honoring statements made by staff.

Consumer guarantees include:

  • The consumer has the right to cancel a warranty within 14 days of purchase.
  • Customers can claim a full refund under the legal guarantee provided by EU law if the warranty does not meet contractual obligations.

Like in North America, penalties for breaches vary from minor to major, but a future crackdown on consumer law compliance could see guilty companies fined up to 4% of their annual global turnover.

Extended Warranty Market in Asia

Further east in Asia, the extended warranty market is not quite as booming. Just like in North America, manufacturers and third parties provide contracts to customers, though there seems to be a little more hesitancy regarding the legitimacy of third-party providers. Because of a number of bad actors in the warranty space, the second-hand car market is suffering, as people don’t want to purchase an older vehicle if they can’t trust their coverage options.

As is the case everywhere else, it’s a legal requirement for warranty companies to be underwritten by major insurance providers. However, wider regulatory inefficiency offers plenty of loopholes for scammers to make a quick buck. Companies often lie about their insurance coverage or try to convince customers that insurance coverage is somehow a bad thing.

Comparing Warranties Across Countries

We’ve looked into how extended warranties work in different continents, but we should dive deeper into the coverage that’s available from the top providers:

North American Provider: Endurance Warranty

Founded in Northbrook, Illinois, in 2006, Endurance’s top-quality coverage has earned them the title of America’s most trusted warranty provider. Plans range from exclusionary to basic powertrain coverage, with amazing standard benefits added to every plan.

Comprehensive Plan: Supreme

The Endurance Supreme plan is the most comprehensive on offer. This exclusionary plan features coverage for a wide range of components, including seals and gaskets, plus many high-tech parts that other providers often avoid.

Benefits: Every Endurance plan includes 24/7 roadside assistance, towing, lockout services, trip-interruption costs, and replacement travel reimbursement as standard. Plans are fully transferable, and repairs can be carried out at any certified auto shop.

European Provider: The AA

When people in the UK think of car protection, The Automobile Association (aka The AA) is usually at the top of their list. The iconic yellow brand has been around for over 100 years, branching out into extended warranties around a decade ago. Like Endurance, AA plans range from fully comprehensive to bare necessities.

Comprehensive Plan: Protect Plus

As the provider’s most comprehensive plan, Protect Plus includes some things that U.S. providers wouldn’t cover. For example, car batteries will be replaced if they fail within six months of coverage activation, and other wear and tear parts are covered until the car hits 85,000 miles.

Benefits: The AA also includes standard benefits such as 12-month breakdown assistance, replacement car hire, and overnight accommodation if repairs take over eight hours.

Asia Provider: Warranty Smart

Based in Malaysia, Warranty Smart is just one example of Asia’s many extended warranty companies. The brand was established in 2013 and specializes in mechanical breakdowns for up to 10 years old vehicles. They have four main coverage packages with a long list of other components that can be added for an extra fee.

Comprehensive Plan: Smart Platinum

What’s most interesting about the plans available via Warranty Smart is the limited eligibility for drivers. To qualify for their most comprehensive plan, cars must be under five years old with less than 150,000 miles on the odometer. Claims are also capped at around $3,000.

Benefits: Warranty Smart plans do include some perks as standard, such as free nationwide towing, emergency breakdown assistance, and technical advice. Plans are also transferable to subsequent owners.

Your Top Choice for Auto Protection in the USA

There’s no denying just how useful an extended auto warranty can be, and if you’re lucky enough to live in America, Endurance is the #1 provider. Since opening over 15 years ago, we’ve helped thousands of drivers save serious money on the cost of unexpected repair bills with our comprehensive auto protection plans (also known as vehicle service contracts or extended warranties).

We have a wide range of plans designed to cater to an even wider range of drivers, with something for casual commuters, rideshare drivers, luxury car owners, and almost everyone in between. We pride ourselves on our unrivaled eligibility and flexibility, so if our base plans don’t quite meet your needs and budget, we’ll be more than happy to tailor a custom plan for you and your vehicle.

On top of quality warranty coverage, we also offer the best added benefits in the business. Every Endurance plan includes 24/7 roadside assistance, towing trip interruption costs, and rental car reimbursement. If you’re a new Endurance customer, you also get a year of access to our incredible Elite Benefits package, which brings with it tire repair and replacement, key fob replacement, total loss protection, and more. Just pay a small activation fee, and you’re all set.

We’re rated by experts across the web as the best warranty protection money can buy, but if you need some convincing, check out the thousands of five-star reviews from happy customers on sites like Trustpilot. Once you’re ready to find out more, get in touch with our customer service department at (800) 253-8203 or request a FREE quote online.

For anyone who’d like to do some more reading, we have plenty more articles just like this one on our extended warranty blog.

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