Buying a car The A-Z of terms and conditions
'Always read the small print' is a familiar mantra. But what do all those terms and conditions actually mean?
Our evidence suggests that used car warranties are poor value for money — particularly when you consider the potential difficulties of making a claim.
If you decide to buy a used car warranty, read the policy wording carefully first. This A-Z guide will help you decipher the jargon.
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If your car is approaching the maximum age allowed (12 years for Warranty Direct, for example), it may not be worth buying a warranty.
Some warranty providers steer you towards their 'approved' garages for repairs
Watch out for betterment clauses. When a repair (such as a new engine) makes a car more valuable, you may have to pay a percentage of the cost, which increases the older the car gets. Warrantywise does not charge for betterment in its policies.
Most warranties offer this as an extra-cost option.
Check the limit for each individual warranty claim – ideally, it should be up to the value of the car. We found a policy from ALA with a claim limit of just £500. That could leave you paying most of the bill for a major repair.
This is where the failure of one part causes damage to another or some other loss. For example, a fuel line might leak and damage an electrical component.
A contribution towards the cost of each warranty claim. Look out for percentage excess clauses, which ramp up the amount you pay as your car’s mileage increases.
You may be able to claim the cost of expenses, such as a hotel room or a hire car. Check your policy wording.
Can you choose where your car is repaired? Some companies, such as Click4Warranty and Warranty Direct, have networks of ‘approved’ garages. If you go elsewhere, you may need to pay an excess labour rate.
Get your service book stamped to prove the car has been properly maintained
Third-party warranties usually impose a limit on the hourly labour rate for repairs. These vary widely, but most won’t cover the cost of repair at a franchised dealer. If you want to use a pricier garage, you’ll pay the extra.
Check whether there’s an annual or total mileage limit above which the warranty won’t pay for repairs.
Any faults that your car had before the policy started may not be covered.
Make sure your provider is regulated by the Financial Conduct Authority and you get a 14-day cooling-off period.
You must keep the car serviced according to the manufacturer’s schedule, and keep all the paperwork. Be careful about fitting non-standard parts; these could invalidate your cover.
Some providers state that you must be with the scheme for a period of time (e.g. 90 days) before you can make a claim. This would effectively mean a 12-month warranty is only valid for nine months.
If you ignore any warning lights on your car’s dashboard and carry on driving, the provider may refuse to pay out.
Wear and tear
Items that fail because of wear and tear are commonly excluded. Even policies that claim to cover it restrict cover to mechanical and electrical parts. ‘Consumables’, such as tyres and brake pads, aren’t included.