Car dealers like to present extended warranties as ensuring the consumer's peace of mind. They might do that but the real question is whether they can be counted on to pay for major repairs during the term of the warranty. From what I've seen, heard, and experienced; most extended warranties aren’t worth the paper they’re written on. Money spent on extended warranties could be better spent on performing scheduled maintenance, which is the best insurance of trouble-free motoring.

There are approximately 30 auto warranty companies within the United States with U.S. Fidelis being the largest. This is the company that sends you notices from the “Dealer Warranty Division” notifying you your warranty coverage is about to lapse. U.S. Fidelis is the same company that has auto dialers calling your home to tell you about their great auto repair warranty programs. Some other things to know about U.S. Fidelis, they were under investigation in 40 different states for deceptive trade practices. In April 2009, the company founder, Darrin Atkinson (a convicted felon) was the recipient of a class action lawsuit. Lastly, Iowa Attorney General joined the list of states accusing the now bankrupt St. Louis-area company of falsely portraying itself. US Fidelis also faces lawsuits by the attorney generals of Idaho, Kansas, North Carolina, Pennsylvania, Ohio, Washington and Wisconsin.

Buyers beware. There are respectable companies that offer good protection plans and honor their contract. However, even the respectable companies are profit motivated and will deny a claim if given legal opportunity. For example, a young man came into our shop with a blown head gasket on his car caused by a faulty water pump. The young man paid in excess of $1,700 for his extended warranty contract. The extended warranty company concluded they would pay for the water pump repair but the blown head gasket was considered “secondary damage” caused by driving the vehicle with a faulty water pump. In the end, the warranty company paid $50 after the customer’s deductible was met. The customer paid the remainder of $1,300 repair out of his own pocket.

My best advice is to leave the extended warranty companies alone. They are too expensive and provide little to no support when needed. You’re money is better spent maintaining your vehicle in accordance with manufactures recommendations. Save the money you would have spent on a warranty for a repair, if it even becomes necessary.