Worries About Extended Car Warranties

Will they pay for my repair? Will the warranty company go out of business? These are two important concerns when you look for auto extended warranties. I did some research on a few extended warranty companies in which people have experienced these problems.

Will They Pay?

The first is Platinum Warranty Corporation. This company also goes by DealersProfit.com, Warranty Wizard, WarrantyCenter.org, and WarrantySolution.com. The Ohio Attorney General actually filed suit against Platinum Warranty Corp. for not honoring consumer warranty agreements. The press release said that there had been 140 complaints against this company. Cleveland's BBB has 424 complaints that have been processed in the last 36 months.

One person's complaint documented at Complaints.com described how the company gave the repair shop the go-ahead but then did not pay. The woman was forced to pay the repair shop and hope for a refund.

Some other complaints are listed at Ripp Off Report. The main complaint was that Platinum Warranty tries to find every loop hole to get out of paying the warranty claims.

Will They Go Under?

I'm not sure if this is worse than refusing to pay a claim. At least when they go under, you won't have to worry about fighting with the customer service representatives.

One example of a warranty company that went bankrupt is the National Warranty Insurance Company. It was also knowan as Triad Advantage Warranty or SmartChoice Warranty. An article from WYTV News reported that the same company was both the warranty provider and the insurance underwriter. The article described the experience of a woman who found out the hard way about her Triad warranty coverage. She had gone into the dealership for a repair job and was told that she would have to pay to have it fixed since Triad was way behind in paying the dealership. Some more experiences with Triad Advantage are listed in this Edmund's forum thread.

Another example of a warranty company that went bankrupt is Warranty Gold.

This article from the Lincoln Journal Star describes the problems with Warranty Gold. Warranty Gold was just a marketer of extended warranty contracts. National Warranty Insurance Group (NWIW) provided the insurance that backed up the contracts. NWIG went bankrupt in June 6, 2003. Warranty Gold then refused to cover car repairs for those who held its extended service contracts, and put the blame on NWIG. Warranty Gold then switched to a different administrator (First Automotive Service Corp.) to insure its contracts. This allowed Warranty Gold to continue to sell extended service contracts.

The Texas Deparment of Licensing and Regulation warned consumers of Warranty Gold with this alert. It has given Warranty Gold a notice of alleged violation charging Warranty Gold with multiple violations, including failure to provide financial security for the contracts previously insured by NWIG. The alert also stated that Warrany Gold filed for bankruptcy.

The issue of insurance backing of warranty companies can get complicated. A post at this Edmund's thread discusses the reinsurance company for Warranty Gold. One former customer of Warranty Gold was told that they were both insured and reinsured. But this reinsurance didn't seem to help Warranty Gold customers any.