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/.