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The Definition of an Auto Extended Warranty Lies in its Essence

An extended warranty is a product that insures your vehicle for repairs once the manufacturers guarantee has expired. It is a vehicle service contract that is taken out between your-self and the extended warranty company. These are not insurance policies, they take the money that you contribute to the extended warranty product and deposit this in a “claims reserve account”. This account is insured and hopefully re-insured, so that if the extended warranty company is unable to pay you claims, the insurer and re-insurer will be able to meet these claims. Car dealers sell extended warranties and this is one of their most profitable activities. If you do not understand contract, you will find that the language used in an extended warranty product is tricky. However you are not obliged by any means, to purchase an extended warranty from your car dealership. It is very important to remember this as this is the only way to obtain a reliable extended warranty product. Extended warranties quite simply extend the life of the original manufacturers warranty beyond the expiry period. If you have purchased an expensive vehicle (and let’s face it, today all vehicles are an expensive purchase), repairs can be costly. When gadgets and electronics fail, say nothing of engine and transmissions, you don’t want to have to fork out the cost of these repairs and so should ensure the most coverage possible on an extended warranty product.

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