Limited vs. Insured warranties

The Difference Between a Limited and Insured Warranty

What is an “Extended Service Contract”?

An extended warranty is coverage for a mechanical breakdown. It may or may not cover peripheral items, wear and tear, normal maintenance, accidental damage, or any consequential loss. Most state insurance regulators have approved the inclusion of normal wear and tear, the standard coverage for defects in materials and workmanship. The indemnity is to cover the cost of repair and may include replacement if deemed uneconomic to repair.

Extended service contracts are designed to assist the consumer from the unfortunate high cost of a “catastrophic” failure, but not for general maintenance or the re-conditioning of a heavy truck prior to delivery. It is vitally imperative that a thorough inspection, fresh filters and fluids are completed prior to the delivery of the truck. From the inspection, all/any major component deficiencies should be fixed by the selling dealer.

 

It is important for consumers to read and understand the terms and conditions offered at the point of sale. As an insurance product, please read the terms and conditions under “covered parts”.

In the United States, extended warranties are regulated by many state insurance commissioners as “service contracts.” Service contracts can cover automobiles, consumer goods (such as appliances, electronics, lawn equipment, etc…) and homes. The regulatory structure requires licensure or registration of the warranty providers, financial solvency regulation, and service contract consumer disclosures. Service warranty “providers” apply for licensure or registration, and then may sell their products, usually at the point of sale of the product, for example at the dealership. In the United States, a type of extended warranty called vehicle service contracts are typically regulated by the states as insurance.

There are substantial differences between a “Limited” warranty and an ” Insured Extended Service Contract“, mostly in the language regarding whom is responsible in the event a covered component breaks or malfunctions. A “Limited” warranty is between the selling dealer and the consumer, eliminating the administrator or warranty manufacturer of any responsibility.

If your dealership is selling “Limited Warranties”… THE DEALERSHIP IS RESPONSIBLE! 

 

As stated in the contract of an uninsured, LIMITED warranty, and by definition- “This agreement is between two commercial entities regarding a vehicle used for the purpose of carrying goods or fare-paying passengers. This agreement is a limited warranty and is not subject to State Insurance Laws, instead it is regulated by State Laws governing warranties”.

Note: Although the Truck master Warranty  CPO90 program is a limited warranty, the significant difference is that it is insured.

 

Definition of a Limited Warranty “An agreement between a seller and a buyer in which the seller agrees to pay damage to a “good” under certain conditions.” Note: Under the Uniform Commercial Code (UCC) , which has been adopted in some form by almost all states, liability for breach of warranty is based on seller status. Retailer (Dealer) could be severally liable, so that the full amount of damages could be collected from one or any of them.

Truck Master Warranty, “our obligations are guaranteed by a contractual liability insurance policy issued by Wesco Insurance Company. As an insured service contract, Truck Master Warranty is the ONLY commercial warranty provider contractually obligated to paid a claim. Limited warranty providers can arbitrarily decide to pay or not approve a claim, regardless of contracual language.In the event We (Truck Master Warranty), cease to operate, are bankrupt or fail to pay or provide service on an authorized claim, including any claim for the return of the unearned portion of the Agreement purchase price, within 60 (sixty) days after proof of loss is filed, Claims may be filed directly with Wesco Insurance Company, 59 Maiden Lane, 6th Floor, New York, NY. 10038 (866-505-4048)”. If your current “Limited” warranty provider ceases to exist, the Dealership is responsible to pay all claims.

 

All Truck Master Warranty plans are insured by an AM Best “A Rated” carrier.