When it comes to protecting your car, vehicle service contracts (VSCs)—often referred to as extended warranties—can offer valuable peace of mind. These contracts promise to cover certain repair costs once your manufacturer’s warranty expires. However, while VSCs can provide essential protection, they often come with a set of common complaints that can leave car owners feeling frustrated and cheated.

If you’re thinking about purchasing a VSC, it’s important to be aware of these issues and take steps to avoid them. In this post, we’ll explore the three most common complaints about vehicle service contracts and provide helpful tips on how to handle them.

1. Coverage Denials and Fine Print

The Complaint: BBB     Ripoff Report

One of the most frequent complaints about vehicle service contracts is that claims are denied or that the coverage is not as comprehensive as advertised. When you sign up for a VSC, you’re often promised coverage for major components like the engine, transmission, and electrical systems. However, when it comes time to file a claim, you might be told that the issue isn’t covered due to the fine print in the contract.

Common reasons for claim denials include:

• Pre-existing conditions: Some contracts won’t cover issues that existed before you purchased the service contract, even if you didn’t know about them.

• Specific exclusions: VSCs often contain long lists of exclusions—from routine maintenance like oil changes to certain components like the exhaust system or cosmetic parts. In some cases, common parts are excluded from your extended car warranty contract.

• Part that broke not covered: Different coverage levels discussed at time of purchase create confusion as to what actually should be covered by the vehicle service contract and in many cases, the lesser coverage selected doesn’t cover the part that broke.

• Improper maintenance: Many VSCs require that you follow specific maintenance schedules (e.g., oil changes, fluid checks) in order to remain eligible for coverage. Missing maintenance could result in a claim being denied. This makes a lot of sense considering this is the number one reason for large claims and extended car warranties would be too expensive if they covered bad behavior.

How to Avoid It: 

• Read the Fine Print: Always thoroughly review the contract before signing. Pay attention to any exclusions and the fine print regarding maintenance and coverage limits.

• Ask Questions: If you don’t understand certain aspects of the coverage, ask for clarification from the warranty provider. Don’t leave room for confusion—especially when it comes to exclusions and service requirements.

• Choose a Reliable Provider: Some extended warranty companies have a reputation for denying claims more frequently than others. Research trustworthy, reputable companies with a good track record for honoring claims.

2. High Cost and Limited Value

The Complaint:

Another major complaint is that VSCs can be expensive, and the value they offer may not always match the cost. Consumers often report that they paid a premium for their vehicle service contract, only to find out that the repairs they needed weren’t covered, or they didn’t need the contract in the first place.

Here are a few reasons why VSCs might not provide good value:

• Excessive costs: Many service contracts come with high upfront costs that can be a significant financial burden. In most cases, this is because there are so many businesses like the dealer and the wholesale provider taking a cut raising the price of your vehicle service contract to excessive levels. Additionally, some vehicle service contract companies charge exorbitant fees for tear down and inspection or high deductibles.

• Overlapping coverage: If you have an existing manufacturer’s warranty or comprehensive car insurance, you may already be covered for many of the same issues, making the service contract unnecessary.

• Underutilization: Some car owners end up paying for a VSC but don’t need to use it at all, especially if their vehicle remains trouble-free. In these cases, the cost of the contract can exceed the actual value of the coverage. This makes sense for most since the coverage was purchased for peace of mind, not as an investment to profit from.

How to Avoid It:

• Evaluate Your Vehicle’s Reliability: If your car is new, you may not need a vehicle service contract. Do the math—consider the age and condition of your car and weigh the potential cost of repairs versus the cost of the contract. Repairs are expensive and good vehicle service contracts like those found at VIP Warranty are simple, transparent and reliable.

• Know what the Vehicle Service Contract covers: Don’t settle for lesser VSC coverage. Make sure you have the most parts covered so your extended car warranty will pay when you need it. 

• Check Existing Coverage: Verify what your car’s manufacturer warranty already covers. If you have an active warranty, an additional service contract might overlap, rendering it unnecessary. In most cases, once your car is 3 years old or more, you have little coverage (maybe some powertrain remaining) on your vehicle. 

3. Poor Customer Claim Service and Delays

The Complaint: 

When you need a repair, the last thing you want is to deal with poor customer service. Unfortunately, many vehicle service contract providers are criticized for their slow response times, unhelpful representatives, and difficulty in processing claims.

Frustrated customers often report:

• Long waiting times to reach a customer service representative, making the process of filing a claim or getting information frustratingly slow.

• Unclear communication: Some companies fail to clearly explain the claims process, leaving customers in the dark about what they need to do to get repairs approved.

• Delays in repair approvals: Sometimes, even after the paperwork is in order, approval for a repair can take weeks, leaving car owners without a working vehicle and rental coverage that has long expired. In many cases, vehicle service contract companies will force an authorized tear down at your expense only to deny the claim weeks later. Now you have a broken car and a bill to look at it. 

How to Avoid It:

• Read Reviews: Customer reviews are a goldmine for understanding how a warranty company handles claims and customer service. Look for providers with high customer satisfaction ratings and minimal complaints about poor service.

• Ask for Recommendations: If you know people who have purchased VSCs, ask about their experiences. Recommendations from friends or family can help steer you toward companies known for their reliability and excellent service.

• Choose a Company with a Clear Process: Opt for a provider that offers a transparent claims process and clear communication. If the company is difficult to contact or lacks clear instructions, it might not be the right choice for you.

Conclusion: How to Protect Yourself from VSC Complaints

Vehicle service contracts can be a good investment if you choose the right provider and understand the coverage. However, the three complaints discussed here—denied claims, high costs, and poor customer service—are legitimate concerns that many consumers face.

To avoid these issues, always do your research before purchasing a VSC:

• Understand the coverage and exclusions.

• Shop around to compare prices and find the best deal.

• Look for reviews to ensure the company provides excellent customer service.

By following these tips, you’ll be better equipped to make an informed decision and avoid the common pitfalls that frustrate many vehicle service contract customers.

Vehicle Service Contract (VSC) Resources:

Trust Pilot

Pissed Reviews

Consumer Reports