What is Extended Warranty Insurance?
Extended Mechanical Warranty is an ‘Add On Protection Policy’ the same as Guaranteed Asset Protection or Motor Equity Insurance. They that they both serve to assist with covering your costs in case of an unexpected accident where your car ends up damaged or written off. But while GAP insurance will help you pay off your car loan, your Extended Mechanical Warranty is there to help pay for your repairs to your damaged motor vehicle. There are three primary types of extended warranties:
- Factory Warranty – This is provided on a registered new car
- Manufactures Insurance Warranty – which is provided at a cost by the car manufacture.
- Aftermarket ‘Extended Mechanical Protection’ – which can be provided by third party vendors such as an insurance/car dealers or warranty companies that isn’t directly affiliated with a car brand.
Why Was Extended Warranty Insurance Purchased?
Extended Mechanical Warranty is what you would call an “add on insurance” or a “peace of mind insurance” that can be purchased to ease your mind knowing that Mechanical parts are covered in the event of them failing. This insurance is usually organised by a motor dealer through an insurance company, but is an extension of the factory warranty provided by the manufacture, really just another way to make more money as you are covered by consumer fair trading for a certain amount of years anyway!
You will often hear lenders bring up the scenario “There are over 3 thousand parts in your car, there is a big risk to not cover yourself in the event something could go wrong mechanically, would you be able to pay for the repairs?”. This is super farfetched and a very low probability scenario is commonly used to scare you into thinking that this coverage is a necessity and you will find yourself in trouble without it, rather than logically weighing up the likelihood of that happening and your financial capabilities to cover costs. There could be a number of instances where you may be entitled to a Extended Warranty Insurance refund.
Examples of Mis-Sold Car Loan Insurance
Please find below some common examples of how Extended Warranty Insurance can be mis-sold to consumers:
- Sold to clients that are purchasing motor vehicles that are still under their original manufacturer’s warranty, so extended mechanical warranty is completely unnecessary if they sell their car prior to the end.
- Sold to clients who use their motor vehicle for work purposes such as ubers/taxis, food delivery, driving schools, couriers etc
- Sold to clients without checking if the motor vehicle has pre-existing conditions, which would make them ineligible for insurance claims
- Sold to clients without explaining that most extended warranties don’t cover any parts of the car that can wear out over time, such as brake pads and windshield wipers
- Pressuring the client to buy Extended Warranty Insurance at the same time they purchase their motor vehicle, when in actual fact, it can be purchased at a later date
- When selling a used car with warranty, not properly explaining whether the warranty begins when the client takes ownership of the car, or whether it began when it was originally sold new
Why was Extended Mechanical Protection Purchased?
Extended Mechanical Protection is an add on package that IS NOT and insurance product. This is where it gets confusing!! They are a dealer retention plan and are sold as a warranty product that will help you in the event of the minimal LISTED car parts failing. Mainly sold with used car purchases but also sold on new cars too. Although there are many exclusions, limitations and guidelines that make them pretty much worthless!
These Extended Mechanical Protections plans require the vehicle to be serviced at the purchased dealer, failure to do so will make the plan instantly void!
Examples of Mis-Sold Extended Mechanical Protection
- Knowingly Selling the Extended Mechanical Protection when the dealer knows the client will not be servicing with them. For example, lives outside the area.
- Misleading the clients by selling it as a Manufacture Warranty
- Not taking in to account pre existing faults, or failures.
- Potentially selling as ‘included’ although the costs have been included in the vehicle price meaning the it is therefore not a free protection.
How do I know if Extended Mechanical Warranty was unknowingly added to my policy?
Unfortunately, one of the most deceitful forms of mis-sold insurance comes from lenders discreetly including it into your original insurance documentation and paperwork without you knowing about it or having agreed to it. Your Certificate of Insurance that is provided to you should have an itemised listing of the insurance products you have purchased, along with important information such as:
- Your policy number
- Period of insurance
- Costs or Premiums
If the policy wording or the information proves to be confusing or unclear, you can contact your insurance provider and ask them to explain all of that itemised information in detail. If you feel that you have had Extended Mechanical Warranty mis-sold to you, you may be entitled to a refund.
Am I entitled to an Extended Mechanical Warranty Refund?
Thankfully this is where our industry expertise comes in! We take care of the entire claims process for you:
We take care of the entire claims process for you:
- Provide us with your details, including loan contracts if you can (If not we can help)
- We analyse these details and call you to finalise your claim>
- We submit your refund claim(s)
- You get paid!
