My Extended Automobile Warranty Experience with Interstate National Dealer Services from AAA
Jul 2, 2009
The Bottom Line You’ve seen all the commercials recently. Should you really buy an extended warranty for your vehicle? Will they deliver as promised?
Long before the latest spate of commercials that have appeared on television, I had an extended warranty from someone other than the dealer. When we bought our 2001 Ford Windstar minivan, the extended warranty the dealer offered really didn’t seem worth it. When push comes to shove and you read the fine print, they cover major failures in the vehicle, not the things that have a tendency to break on a regular basis. It seemed like we would be paying a couple of thousand dollars in case something broke that cost a couple of thousand dollars to fix. It didn’t make sense.
I don’t know how I learned that the American Automobile Association (or AAA or Triple-A to many of you reading this) offered an extended warranty as one of its services. It’s actually through a third party, not AAA. Still, I figured that anything offered by AAA had to be good. I bought the warranty from them for the Windstar and paid about the same as I would have for the warranty offered by the dealer. That warranty worked out very well for us. I can’t remember the name of that third-party company who was the actual warranty provider, but it worked as it shows on the television commercials. We went in to our local Goodyear dealer who was also our mechanic and they called it in to the warranty company. They got a credit card to charge and we just paid the deductible.
Now we are living in New Hampshire and I go to buy a new car with four wheel drive after one of our harder winters. A local dealer had a 2002 Buick Rendezvous with low mileage at a good price. The history of this model vehicle troubled me when I researched it, but I figured if I bought an extended warranty I would be covered. I looked at the warranty offered from the dealer, but once again it covered major expensive failures on the car, rather than the common things that occur. I was confident in my past experience and the fact that the warranty was sold through AAA that the company I was dealing with would be on the up and up.
Boy was I wrong. And if this is what an extended warranty company who is sanctioned and sold by AAA does, what do you think those that are showing too good to be true scenarios on those television commercials will do?
Lie #1 - You can get your vehicle repaired anywhere
I confess this is something I learned with the first extended warranty that really didn’t bother me. The commercials show that you can bring your vehicle into any dealer or repair facility and you are covered. The repair facility and/or dealership has to be willing to deal with the warranty company, and I have yet to find a repair facility within an automobile dealership that will work with outside extended warranties. If you are not dead set on having your vehicle repaired at a dealership, this isn’t a factor. However, not all repair facilities are willing to sit for a half hour on the phone to get authorization for the repairs. Finding a place to work with your extended warranty company can be a challenge.
Lie #2 - You don’t have to lay out a penny
Lets face it, most of us who are buying a vehicle, new or used, don’t have another few thousand dollars around to pay for an extended warranty. If you purchase one through the dealer, they will add it to your payments if you get your financing through them. When I purchased my extended warranty from Interstate National Dealer Services through AAA, I was given the option to make monthly payments. Last time I gave them my credit card. This time, as we have made an effort to get rid of all of our credit cards and live on cash, I was just going to pay the bill every month until the warranty was paid in full. After having the warranty and paying for several months, I bought the vehicle in for service on the air conditioning system and was told it needed a new condenser.
I’ve actually seen that in the commercial for one of the companies where they show someone facing a huge repair bill for the air conditioner condenser and they walk out of the repair shop without paying a cent. However, what they don’t tell you is that if these companies offer financing of the cost of their extended warranties, any reimbursement for repairs made on the vehicle before the contract is paid for won’t be paid to the service center. It won’t even be paid to you. They will pay it towards the balance of the contract. This meant I would still have to lay out the entire cost of the repair.
Think about it - your transmission fails, just as is shown in those commercials, two weeks after you purchase the extended warranty and you still owe money for the contract. You’re not going to pull into the service station and pull out without laying out a cent. You are still going to have to come up with the cash to make the repair. With any luck, though, your extended warranty will be paid in full.
In my case, because it was just the air conditioning, I decided to live without it until the contract was paid for and have it repaired after the contract was paid in full.
Lie #3 - The Hakuna Matata factor
No worries you’d think. The contract is paid in full, I have a repair facility willing to deal with the extended warranty company. Sometimes it does work fine. When my check engine light came on it was one of the O2 sensors, covered in my contract. I went to the repair facility and they said what they would cover for that as well as another part that needed replacement. No problem, we signed something and it was covered.
Let’s face it, these companies are in business to make money. They aren’t there to repair your vehicle. They need to turn a profit. They do that two ways. One is to figure out how much the average contract will cost them over the course of its term and add a premium to that to cover those times when they do have to pay for the more expensive repairs plus administrative fees and a profit. The other is to not pay out on repairs to your vehicle, finding every loophole in the contract to cover it.
Remember that air conditioner condenser? This year the contract was paid for and I wanted air conditioning. Our regular repair facility does not take credit cards, but wanted to do the work regardless, which would have meant waiting for a check. I was fine with that. They were not the original repair facility that diagnosed the problem but had been told what was wrong with it. The called and took the information from me about the contract, telling me it was to see how much of the repair would be covered. Now they hadn’t yet looked at the vehicle - they were just going on what I had told them. The repair shop was I guess trying to get the check in the pipeline before they actually made the repair and reported the failure of the condenser as being due to corrosion.
Here comes the loophole. My contract is not written to cover corrosion. That’s right, and parts that fail that Interstate National Dealer Services can attribute to “corrosion” they don’t have to pay the repair facility for. I live in an area where salt is regularly used on the roads in the winter.
Not that it mattered, because the facility hadn’t reported the failure correctly. The same thing was wrong with it that was the problem a year before when they were going to cover the repair no problem. The air conditioner condenser was broken, pure and simple. I have the part downstairs in my basement for anyone who wants to see it. It was not due to any type of corrosion at all. Not to be deterred, I called Interstate National Dealer Services and told them that the repair facility didn’t have the vehicle kept at them until they agreed to reconsider the claim, saying they could send an inspector out. I had no problem with this, and took the vehicle back to the original service center that diagnosed the problem in the first place (and takes credit cards). I told him what was going on and I wanted everything handled honestly and that there might be an inspector coming out.
Lie #4 - Your Repairs Are Completely Covered
Remember in those commercials how they show all these people walking out of the repair shop happy not to have laid out any money? Well it’s sort of like medical insurance - the repair facility has to be willing to accept what these extended warranty companies are willing to pay for the repair. Upon calling Interstate National Dealer Services, Kevin from my repair facility was told what they would allow for the repair, which was about $100 less than what he charged, in addition to the $50 deductible I had.
Now I didn’t have a problem with this as even spending $150 to repair the condenser seemed like a good deal. But it’s another indication of how misleading the promises are that these warranty companies make. They don’t just accept whatever the repair facility is going to charge; charges which might vary greatly depending on where you are in the country.
So now you have to find a repair facility that is not only willing to work with the extended warranty company and make the phone calls to get authorization for the repair but also accept what they will pay or be prepared to pay more than your deductible if necessary.
Back to that Hakuna Matata thing…
Now Kevin had talked to someone at Interstate National Dealer Services and been told it was okay to repair it, just that they wouldn’t cover all of the repair. I okayed the difference. The repairs were completed and Kevin called to get the credit card for payment from the warranty company. That’s how they handle it so you don’t have to pay anything out - the repair facility can run a credit card number direct from the extended warranty company and get their money without having to wait for a check.
Interstate National Dealer Services wanted to send out an inspector. I was fine with that. The repair facility still had the part. I needed the car back, and gave them a check to cover the charges, which they held onto as Interstate National Dealer Services said the inspector would be out within 24-48 hours. This was on a Friday. I called the repair facility on Tuesday and he hadn’t seen or hear from Interstate National Dealer Services or an inspector. I had things to take care of that week, so I didn’t get back to Interstate National Dealer Services until Friday.
Keep in mind, they stated the inspector was going to be at my repair facility within 24-48 hours and never showed. Because the next story I had from Interstate National Dealer Services was that the repairs should have never been done and they didn’t authorize it.
My belief is that they never intended to pay for the repair in the first place. If they were honestly trying to work with me in an honest way, wouldn’t the inspector have shown up at the repair facility within the time period they said he would? He never did. Instead, they just said that the repairs were completed and they never gave the go-ahead so they weren’t going to pay for it. I have the condenser in my basement. It’s quite obviously not corroded and there’s no reason for it not to be covered under the terms of the contract I purchased. I am out over $400 for what they told the repair facility they would pay, with a total repair of over $600. I never lied throughout this whole process, but Interstate National Dealer Services is lying now when they say they never told my repair facility to make the repairs. Kevin is willing to swear to it and I know before there were problems with the payment, he said he had to spend a half hour on the phone with them.
Extended warranties are a leap of faith of sorts. You give these corporations your money and expect them to honor their contacts and be professional. However, I fear these are just one of the most recent scams consumers will fall prey to. I am quite upset that AAA has chosen to associate itself with a company like that as my faith in them is largely what led to my decision to purchase the contract. I am now left with an extended warranty that I really don’t have faith in it being honored.
I don’t think I would ever purchase an extended warranty again. Instead, I’d take the money I would pay for it and put it aside toward repairs.
© 2009 Patti Aliventi