Auto Warranty Terms and Definitions
Get informed of common terminology and definitions often used in the warranty industry.
Click on one of the terms below to learn more. You may also be interested in viewing some common myths often associated with extended auto warranties.
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Administrator
The Administrator is the company that actually pays for work done on your car at a repair facility. They work with your mechanic to make sure your claim is handled properly, and make sure you and your vehicle are back on the road as quickly as possible.
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A.M. Best
A.M. Best analyzes and rates insurance companies, and supplies the information to you. Any reputable warranty administrator will be backed by an insurance company. You can find their rating on the A.M. Best Web site: www.ambest.com.
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Basic Warranty
The manufacturer of a vehicle has specific terms and conditions for covering repairs. Their basic warranties cover most parts installed by the factory or dealer, but only last for a limited time period or up to a certain mileage. See also Warranty.
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Breakdown
When a part doesn’t do what it’s designed to do, that’s a breakdown or failure. As long as the part is covered on your extended auto warranty plan, it’ll be repaired or replaced, at very little out-of-pocket expense.
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Certified Car
A certified car has been through a quality inspection process. There is no industry standard for the quality inspection or certification. Manufacturers often certify a vehicle before sale or lease, and attach a limited powertrain warranty. A certified car does not come with a bumper-to-bumper warranty.
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Consumable Items
A certified car has been through a quality inspection process. There is no industry standard for the quality inspection or certification. Manufacturers often certify a vehicle before sale or lease, and attach a limited powertrain warranty. A certified car does not come with a bumper-to-bumper warranty.
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Corrosion Warranty
Parts that are never covered under warranty because they wear out in the normal, everyday use of a car. They include such parts as tires, wiper blades, batteries and clutch plates. See also Wear and Tear.
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Deductible
A small amount that you, as the car owner, pay to have your vehicle repaired. Once the deductible is paid, the rest of the repair bill is covered by your extended auto warranty policy.
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Emissions Warranties
Federal regulations dictate the conditions of the Federal Emissions Warranty in all states, and vehicles are covered by two types, the “Emissions Defect Warranty” and the “Emissions Performance Warranty.”
The Emissions Performance Warranty typically covers a vehicle for 3 years or 50,000 miles, and may vary depending on the state where you live.
Your owner's manual can tell you your exact Emissions Defect Warranty coverage. It is usually in line with the manufacturer's bumper-to-bumper warranty for certain emissions-related parts for up to 8 years or 80,000 miles, whichever comes first.
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Extended Warranty
Also known as a Vehicle Service Contract. An extended warranty protects against mechanical failure and breakdown for covered repairs after the manufacturer’s warranty expires.
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Gray Market Vehicle
A “Gray Market” vehicle is one not manufactured for sale in the U.S. Often not meeting U.S. standards and guidelines, and carrying no manufacturer’s warranty, these vehicles are typically not eligible for extended warranties.
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Inclusionary Policy
An inclusionary policy lists every component covered by your extended warranty. If a part doesn’t appear on the list, then it isn’t covered.
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In-Service Date
The date a car or truck was originally purchased and put on the road.
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Insurance Company
The best warranty providers are backed by insurance companies whose policies guarantee that the administrator can pay for repairs on your vehicle. See A.M. Best & Co. to learn more about insurance company ratings.
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Lemon Law
A “lemon law,” or “buyback” vehicle is so named by the state when it has one or more major, recurring problems and has been bought back, or had its purchase price renegotiated by the manufacturer. These vehicles are not eligible for coverage.
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Maintenance Guidelines
Normal, routine maintenance recommended by the manufacturer of your vehicle to keep it in optimum condition. Suggested timing for oil changes, tune ups, fluid checks, tire rotation, wheel alignment, belt and hose replacement and other maintenance is spelled out in your owner’s manual.
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Manufacturer's Warranty
Every new vehicle comes with a standard auto warranty, covering all factory-installed parts against defects. Typical manufacturer’s auto warranties cover 3 years/36,000 miles, 4 years/50,000 miles or 5 years/60,000 miles.
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Mechanical Breakdown Insurance
An insurance policy that guarantees repairs or replacements to a vehicle when parts break down due to defects or poor mechanical labor. Normally, MBI does not cover parts that fail due to normal wear and tear. In California, insurance companies must be authorized by the California Department of Insurance (CDI) to offer MBI. The CDI reviews the insurance company’s business practices to make sure you are protected and receive a fair price for this coverage.
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Provider
Your warranty’s provider is ultimately financially responsible for your claim. A provider stands behind an administrator and makes sure your policy and claim are properly taken care of. At Continental, our providers are highly rated and respected insurance companies.
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Powertrain Warranty
After the basic, bumper-to-bumper warranty lapses, the powertrain warranty goes on to cover the engine and transmission only. A powertrain warranty is very limited, and does not cover the parts that most frequently break down. Powertrain warranties often are not transferable if you sell your vehicle during the contract period.
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Rental Benefit
With a rental benefit in place, you’ll be reimbursed up to a certain amount for car rental or other costs incurred while your vehicle is being repaired.
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Repair Facility
You can go to your choice of any repair facility that is authorized and licensed in the United States or Canada, whether you prefer your dealership, local mechanic or a national repair facility.
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Risk Retention Group (RRG)
Only in existence since 1981, Risk Retention Groups (RRG) back certain warranty companies in place of insurance companies. But unlike insurance companies, RRG are not rated by A.M. Best and may not meet the same operational and financial standards. While RRG are exposed to the same risks, they lack the level of risk diversification that ensures protection for customers of insurance companies.
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Roadside Assistance
A roadside assistance program offers you emergency help—24 hours a day, 365 days a year—no matter where you are in the U.S. or Canada. If your vehicle breaks down, has a flat tire, needs a jump or water, or even if you just lock your keys in the car, just call our toll free number and someone will be there to help.
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Salvage Title
When a car is badly damaged by a severe accident or other event, an insurance company may declare it a total loss and issue a salvage title. These vehicles are not eligible for extended warranties.
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Transferability
Just having an extended warranty in place raises the value of your vehicle. If you sell your car or truck, you can pay a small fee and transfer your extended auto warranty—and all of its benefits—to the new owner. Note that an extended warranty cannot be transferred to a dealer.
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Trip Interruption Benefit
If you’re more than 100 miles from home and your car breaks down, you’ll be reimbursed for food and lodging expenses incurred while waiting for your car to be repaired.
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Vehicle Identification Number (VIN)
Your VIN is a 17-digit number unique to your vehicle. Kind of like a social security number, but for your car. Your VIN can be found:
- On the driver's side dashboard
- On your insurance card
- On the title to your vehicle
- On the vehicle's registration card
- On a sticker inside the driver's side door
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Vehicle Service Contract
Also known as an Extended Warranty. A Vehicle Service Contract protects against mechanical failure and breakdown for covered repairs after the manufacturer’s warranty expires.
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Warranty
Also known as an Extended Warranty. A Vehicle Service Contract protects against mechanical failure and breakdown for covered repairs after the manufacturer’s warranty expires.
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Wear and Tear
Some parts—wiper blades, batteries, clutch plates and tires, just to name a few—wear out in the normal, everyday use of a car and are not covered by a warranty. Replacing them is just a normal part of owning a car.
