You should keep the cost and coverage of your warranty in mind as you shop, but those won’t mean much if you don’t buy from a reputable provider.
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Some of the best indicators of whether an extended car warranty company is reputable are customer reviews praising the claims process.
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Other good signs include a lack of pushy sales tactics, a friendly and knowledgeable staff, an eagerness to answer tough questions and a straightforward cancellation process.
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If you get an unprompted call from someone trying to sell you a warranty over the phone, it’s most likely not a reputable warranty company.
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What to expect from the most reputable extended car warranty companies
Before you buy an extended warranty, it’s critical that you make sure the warranty provider is trustworthy. Disreputable companies often over-promise and under-deliver, meaning you might buy a great-sounding warranty for a low price only to discover that it’s not worth the paper it’s printed on.
“Like anything, before buying the customer should do their own independent research on the company providing the warranty or service contract,” claimed Allison Harrison, an attorney specializing in automotive law.
So, what are some of the key signs you should look for before trusting an extended auto warranty company? Here are some of the strongest signals that a warranty company is legitimate, why they matter and how to check for them.
1. Positive customer reviews
This may seem obvious, but one of the best ways you can quickly assess an extended auto warranty company’s reputation is through customer reviews.
Just be careful where you read those testimonials. Take any “reviews” you read on the warranty company’s website with a grain of salt, for example. Some of the most glowing reviews may be well-earned, but others may be cherry-picked or completely fabricated.
Many people don’t understand what their warranties cover before they sign up, so don’t take every bad review as a red flag.
Instead, look for sources that have a mix of positive and negative reviews from actual customers, like ConsumerAffairs. That way, you can read about the good, the bad and the ugly of a company and start to pick up on common themes.
Reputable companies should have overwhelmingly positive reviews as a direct result of their honesty, transparency and willingness to pay out claims. Those who scorn customers — or, worse, are downright scams — won’t have the same record of goodwill.
2. Reviews praising the claims process, in particular
The unfortunate truth is that some extended auto warranty companies focus all of their efforts on making the initial sale. Once they have your money, they devote very few employees and resources to handling claims. That means when it’s time to actually get your money’s worth from one of these companies, you may have a slow or unsatisfactory experience.
» LEARN: How an extended auto warranty works
“Thus company only favors to new customers,” wrote TAG from Oklahoma. “I acted like I was a new customer just to get them on the phone and told them the problems I was having … and they immediately transferred me to a line that didn’t answer and I know that line didn’t answer after I let it stay on hold for over 8 hours!”
They're good people and we get no hassle whenever I have a claim.”
That’s why it’s critical to look for extended auto warranty companies who actually follow through on their end of the deal. You can spot these companies by looking for reviews that actually mention making a claim. Ideally, you want to see a good ratio of people successfully making claims — not just people who had a positive signup experience.
For example, check out this consumer review for Endurance: “They're good people and we get no hassle whenever I have a claim,” said William in Georgia. “I had a claim for the radio and Endurance took care of it. They're the real deal. I have already got four of my family members signed up with them.”
» RELATED: How do you get your car warranty claim approved?
3. Friendly and experienced staff
If you call up an extended auto warranty company and the person who answers the phone is friendly, sincere and knowledgeable, that’s a good sign.
The most reputable extended auto warranty companies tend to have more experienced staff who are happy to answer questions without pushing a sales agenda. They’re more likely to believe that the quality of the product and the customer service they provide will sell itself, so they don’t need to fall back on cheap sales tactics to pressure you into making a hasty purchase decision.
4. No pushy sales tactics
On the flip side, if the associate on the phone can’t seem to answer basic questions about the warranty (e.g., What is your waiting period? Do you cover spark plugs?) and they still try to push one on you, that could be a sign that they’re trained to sell — not educate. Reputable companies educate before they sell.
In our experience dialing dozens of warranty companies hundreds of times, reputable extended auto warranty companies tend to be far less pushy with their sales tactics.
Sometimes, it’s easy to tell when you’re being “sold” to. An associate will use cliché sales language like “What if I told you …” and insist that the plan they’re selling is a “no-brainer.”
As a rule of thumb — if you ever start to feel pressured or uncomfortable, simply hang up the phone.
Other times, however, the pushy sales tactics can be more opaque. Reputable and disreputable companies alike will ask you what you drive and what you’re looking for. And even the most trustworthy companies have to use a little bit of sales language to keep the lights on.
But here’s a litmus test to separate the two — see how easily the associate lets you off the phone. In our experience, reps from reputable companies tend to let you go quite easily. As soon as you say you’re not ready to buy just yet, they say, “Well, we’re here if you need us!”
On the other hand, reps from less reputable companies won’t let you end the conversation until they get through their pitch. Despite your polite attempts to wrap things up, they’ll revert back to the script in front of them to try and close a deal. It’s often as transparent as it is discomforting, and in general, anyone trying to push you into a sale probably isn’t your best option.
5. Reasonable pricing
This one’s pretty straightforward — reputable extended auto warranty companies are more likely to offer you reasonable rates with a low deductible (usually $100).
The average bumper-to-bumper extended warranty costs about $1,000 per year of coverage, but prices vary significantly.
That’s not always the case, of course. Each extended auto warranty company has its own proprietary way of calculating premiums per vehicle, and as a result, some may charge half what others charge for identical coverage.
Still, if you find that your quoted rates and deductibles seem unreasonably high, it might be time to get another quote. Likewise, if your quotes are suspiciously low, you might want to verify that the company is legit before you give them your money.
6. An easy cancellation process
Check your warranty agreement to see what the company’s cancellation process looks like, and as you browse customer reviews, keep an eye out for some that mention canceling a plan as well.
Reputable extended auto warranty companies will let you cancel without putting up much resistance. They may ask you to call in or submit a written request, but that’s not uncommon for the industry. (Even trustworthy warranty companies may want to give themselves a chance to keep your business by offering a better deal, a solution to your problems and other alternatives to cancellation.)
But, once you’re ready to go, reputable warranty companies should send you on your way after your business is concluded.
It's a month-to-month contract, so if I cancel, I can reinstate it again. There's no commitment. So, I can cancel anytime.”
“I liked that purchasing was done online. It was fast and easy. Also, customer service was helpful and thorough,” said Asia in California when reviewing olive. “It's a month-to-month contract, so if I cancel, I can reinstate it again. There's no commitment. So, I can cancel anytime.”
Less reputable warranty companies often force you to jump through hoops to cancel your plan, and they may ignore your attempts to cancel altogether as they continue collecting payments.
If you see warnings that canceling your policy might be tedious and expensive, it might be best to look elsewhere.
What is the best extended auto warranty company?
At the end of the day, the best extended auto warranty company is one you trust that offers you the best deal on the coverage you need. There’s no universal best fit for all drivers, and finding the best provider/deal combination will require some looking on your part.
If you’re looking for a shortcut, check out our picks for the best extended auto warranty companies.
FAQ
How do you know if a car warranty is a scam?
As a general rule, don’t trust anyone who calls you unprompted trying to sell you an extended auto warranty. Sometimes, though, a legitimate and reputable warranty company will call you if you’ve already submitted a request for a quote online.
If you get a call,here are a few simple ways you can detect a scammer:
- First, if the person claims to be calling from the company that built your car, it’s a scam. “Manufacturers do not call customers to extend a warranty so anyone telling you they are the manufacturer should be a red flag,” wrote Harrison, the lawyer we mentioned earlier.
- Second, if the person claims to be from a legitimate provider, like Endurance, there’s a quick trick you can pull to verify their claims — dial the provider directly using the phone number listed on their website. “Try hanging up and calling the company back. If the number does not work, it likely is a scam,” claimed Harrison.
- Third, “Ask for information on the coverage before buying. This will help sort through the scammers and leave the real providers,” wrote Harrison. Plus, as you may recall from above, seeing how a representative responds to tough, specific questions is a great way to gauge the company’s overall reputation. If they dodge your questions and keep pushing for a sale, it’s best to move on.
The extended auto warranty industry is a magnet for scam artists because it requires you to share money and personal information upfront, and many consumers don’t even realize they’ve been scammed until they try to file a claim years later.
As a result, consumers lost nearly $30 billion to fraudster calls in 2021, and the leading type of scam was fake auto warranties, according to the National Consumer Law Center.
» MORE: How to avoid car warranty scams
What should I pay for an extended auto warranty?
The average bumper-to-bumper extended auto warranty costs around $1,000 per year of coverage, but your cost will vary depending on your vehicle and warranty terms. The best way to know if you’re getting a good price on your extended warranty is by gathering quotes from different reputable providers. That way, you have context for what’s normal in your situation.
» MORE: How much does an extended car warranty cost?
How should you choose a warranty company?
Start with a list of top-rated providers, compare features and benefits, read plenty of customer reviews and collect multiple quotes to find the best deal on the coverage you need. Before you sign your warranty agreement, though, make sure you read the fine print so that you know what you’re getting into.
» MORE: How to choose an extended car warranty
What’s the difference between a manufacturer warranty and a third-party warranty?
There are several differences between a manufacturer’s extended warranty and a third-party extended warranty, including:
- What it covers
- How long it lasts
- Cancellation policy
- Pricing flexibility
A manufacturer’s warranty comes from the vehicle manufacturer and covers parts, defects and failures. These warranties last a certain number of miles or months. Since the warranty comes from the manufacturer of the vehicle you’re purchasing, there tend to be fewer questions about trustworthiness, and you will get repairs done with quality parts and service.
By contrast, an extended warranty comes from a third-party company of your choosing and widely varies in coverage and term length. You should read the fine print of any extended third-party warranty you’re considering to ensure it covers your needs. While third-party warranties can be more affordable, it’s important to vet potential warranty companies using the tactics listed above, as there are more scams with third-party extended warranties than manufacturer warranties.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- National Consumer Law Center, “New Report Warns Scam Robocalls Will Continue As Long As Telephone Providers Can Rake in the Profits.” Accessed Sept. 20, 2023.
- Consumer Financial Protection Bureau, “What are the differences between a manufacturer’s warranty and an extended vehicle warranty or service contract?” Accessed April 15, 2024.
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