Re: new used jag owner... extended warranties

Several months ago I researched extended warranties (service contracts), because I was considering purchasing one for my 2001 XK8 Convertible. Ultimately I decided to forego the contract and self-insure. But I did gather a lot of valuable information.

The best Jaguar service contracts are, in this order:

(1) the original Jaguar factory warranty; 4yrs/50K miles

(2) the Jaguar ExtraMile service contract. It must be issued by a Jaguar authorized dealer on a Jaguar with remaining original factory warranty.

(3) the Jaguar Select Edition service contract; 6yrs/100K miles. Written by a Jaguar authorized dealer on a pristine, low-mileage, pre-owned Jaguar that is being offered for sale by the dealership. Requires a 140-point inspection and reputedly costs the dealership several thousand dollars to have added to the vehicle.

Beyond these three, there are dozens of contracts written by good/bad/indifferent insurers. Some contracts are sold online, some are only sold through an automobile dealer. Some require a vehicle inspection before the contract is written. Some Jaguar dealerships do write service contracts from other insurers. Jaguar Seattle, for instance, offered to sell me a service contract from Fidelity Warranty Services, a subsidiary of JM&A Group. However, the same dealership had stopped writing APCO EasyCare contracts because of recent claims resolution issues. By contrast, Monte Shelton Jaguar in Portland, Oregon refused to write any service contracts other than the Jaguar ExtraMile and Select Edition contracts. They also do not negotiate with aftermarket insurers. You pay the bill and then submit a claim to the insurer for reimbursement.

The best aftermarket contract, beyond the factory warranty, ExtraMile and Select Edition contracts, would be one written by a Jaguar authorized dealer, that stated in writing that the dealer would honor the contract even if the insurer went bankrupt.

Why am I concerned about insurer bankruptcy? Because, the dirty little secret in the aftermarket auto warranty industry is that insurers go bankrupt on a regular basis. Insurers are typically formed as limited liability corporations (LLC) so if they go bankrupt, the parent corporation has no liability. Or the parent corporation might operate as a Risk Retention Group (RRG) outside the jurisdiction of the U.S., again to avoid legal liability. In fact, many of the largest aftermarket auto insurers have gone bankrupt in recent years, and are no longer in business. Many customers of these insurers don't discover that their service contracts are worthless until they try to file a claim. Some of these recent bankruptcies include:

The Exotic Warranty Company, April, 2006
First Assured Warranty Corp
National Warranty Insurance (SmartChoice), 2003
1Source Auto Warranty
Platinum Warranty Corporation WarrantyWizard), 2003
PrimeGuard Insurance Company Inc
WarrantyGold, 2003
WarranteeWise Inc

Here is a link to an interesting article dated February 7, 2006 on the subject of "Extended Warranty Bankruptcies": http://www.warrantyweek.com/archive/ww20060207.html

Having said all of this, there is one aftermarket auto warranty insurer that I think might be worth investigating, although I am not recommending it. It is called "EFG Companies": http://www.efgcompanies.com/home.aspx

The trick would be to find a dealership that writes service contracts backed by EFG, and that your service provider would honor. I did find a dealership called Gran Prix Imports, in Wilsonville, Oregon, (www.gpimports.com) that would inspect my XK8 and would write a service contract backed by EFG. Of course Gran Prix Imports also offered me a contract from "The Exotic Warranty Company", just two months before Exotic went into receivership prior to liquidation. Do I make my point?

In my opinion, the only auto service contract worth anything in the long run is the one backed by a profitable auto manufacturer who has a long-term committment to keeping their customers satisfied.

However, if you are really intent on buying a service contract, I'd suggest you first talk to the service manager where you usually have your vehicle serviced. What service contracts do they honor? Which insurers do they like working with? Use that information as a starting point in your search, and... good luck :>)