Here are some important tips to remember in your search for an extended warranty for your vehicle. There may be many more issues you will have questions about, but these points should always be addressed before purchasing.

Do: Read your contract before you buy.
Many consumers find warranty contracts confusing. Exclusionary, listed component, powertrain, bumper to bumper and comprehensive, each of these terms should be plainly defined in your contract. Be sure of what you are purchasing, some coverage's can be misrepresented by unethical sales people. So READ READ READ your contract.

Do: Ask if the warranty company is direct insured or re-insured.

There are two types of companies in the warranty industry, direct insured and insured by a Risk Retention Group. Direct insured companies have state and federal government guidelines that they must follow in order to do business and are required to keep more reserves in trust to administer claims. Risk Retention Groups face less government restriction and are not required to meet the same standards, so you should verify their business history, the amount of time they have been in operation, where the company is based and their financial stability. A financially weak Risk Retention Group can be the death of an extended service agreement, some of the best known warranty companies are insured by Risk Retention Groups. These types of extended warranties are not necessarily bad options, but you should know all the facts about them before you buy. If this is a major concern for you, then you should ask for quotes from direct insured companies only.

Do: Ask if the contract being offered covers full parts and labor.
Some service contracts may cover only a portion of the cost of parts replacement and labor, while other warranty plans may replace failed components with used parts. Be sure to verify that 100 percent of parts and labor cost are covered for the necessary repair. Additionally, make sure that the contract replaces parts that fail with either new or rebuilt components meeting manufacturers OEM specifications.

Do: Get a second opinion.
Very often individuals may feel the need to get a second opinion. If your uncertain or confused about something in the contract set some time aside to review the contract with your repair facility. Since they are familiar with you and your vehicle they will give an unbiased opinion. After all they will ultimately be the people working with the Warranty Provider to get you back on the road.

If visiting a Dealership for an opinion be sure to work with the Service Department. A New or Used vehicle Sales associate will most likely try to get you to purchase one of their contracts at a higher rate.

Do: Check the BBB Report.
Check the status of the company with the Better Business Bureau BBB.Org. BBB reports provide information on over two million organizations. Many companies participate in the BBB's Online Reliability Program, however, this program does not give the current status of complaints. Be sure to visit the BBB.org main website and lookup the company name to see a complete report. It is a good idea to check before you invest. Not all companies are members of the BBB, if they aren't be sure to ask for the details.

Do: Check the AM Best Rating.
Check the status of the company with AM Best. AM Best monitors the financial stability of companies and assigns a corresponding rating. Companies may be listed with AM Best but not rated, so you have to login to view a company's current status. Membership is free but, you will have to give your email address and a password to join. Some of the best advice I can give to consumers shopping for an extended warranty, is to buy a service contract when the company or administrator listed on the contract is A Rated by AM Best. Remember the contract agreement is between you and the people listed on the contract, ANYONE ELSE'S RATINGS DON'T MATTER!

Do: Know the correct information about your vehicle.
When requesting quotes from Brokers, Agents or Internet sites it is very important to provide as much information as possible about your vehicle. Such items as Turbo Chargers, Superchargers, 4,6,8 10 or 12 cylinders, 4X4, All Wheel Drive, 4 Wheel steering and Diesel powertrains make a large impact on the cost of an Extended Warranty.

Also make sure you know how much coverage you need. Determine how many miles a year you are driving and how long you plan to keep your present vehicle. Purchasing a seven year warranty is unwise if you are panning to keep your vehicle for three years. By providing this information you can eliminate confusion when purchasing warranty coverage.

Do: Expect to pay a fair price.
There is an old saying in the repair business, "Good work ain't cheap and cheap work ain't good". This rule applies to your extended warranty coverage as well. Cost is a major factor in your decision to purchase a an extended warranty. However, it should not be your only concern.

Remember to consider all the information concerning the warranty contract and weigh the pros and cons. Don't be blinded by a cheap proposal that offers half the coverage at half the price. Your warranty contract is an investment in your vehicle's future, it should be based on practical needs as well as wants. Remember, you get what you pay for!

Do: Have your vehicle inspected.
Performing a vehicle inspection is the best way to gauge just how well your vehicle is aging. This will give both you and the future warranty company peace of mind about the vehicle in question. If any of the components do not meet the pass criteria during the inspection they will need to be replaced or repaired before warranty coverage can be placed on the vehicle. Pass criteria should be outlined in your Brokers, Agents or Internet Sites inspection form.