SCIC Educating Consumers on the Logic of Service Contracts

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The Ser­vice Con­tract Indus­try Coun­cil (SCIC) esti­mates that con­sumers bought more than 10 mil­lion ser­vice con­tracts in 2012 for both new and used vehi­cles. Those ser­vice con­tracts cov­ered 95% of annual claims filed, includ­ing repairs nec­es­sary due to nor­mal wear and tear, pro­vid­ing cov­er­age above and beyond a tra­di­tional manufacturer’s war­ranty. Today’s vehi­cles are made up of more than 10,000 com­po­nents, yet the stan­dard pow­er­train war­ranty cov­ers only a frac­tion of them. The aver­age new car has six to 20 com­put­ers that con­trol every­thing from fuel injec­tion and anti-lock brakes to airbag deploy­ment. Those sys­tems can be expen­sive to repair, due to both the high cost of parts and labor costs that can run as high as $250 an hour for spe­cial­ized repairs on lux­ury vehicles.

Ser­vice con­tracts, aka extended war­ranties, offer value and pre­dictabil­ity by pro­tect­ing a vehi­cle long after the manufacturer’s war­ranty expires and by cov­er­ing repairs it does not cover, said Tim­o­thy Meenan, SCIC exec­u­tive direc­tor. “The new tech­nolo­gies and com­plex com­po­nents in today’s motor vehi­cles put con­sumers at greater risk for big out-of-pocket repair costs than ever before,” said Meenan. The SCIC offers con­sumer tips on buy­ing and using extended war­ranties or ser­vice con­tracts at: http://www.go-scic.com/.

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