Basic terms to understand when signing and extended warranty agreement

signing warranty

Just like many other agreements, you are bound to come across a fair amount of terms and possibly even jargon within the contract. It’s extremely important to understand every word of the agreement prior to signing.


Extended Warranty

The term used to describe the contract between the vehicle owner and the coverage provider. These are warranties, and they are different from insurance policies. Policy terms, conditions, and coverage varies from provider to provider and from policy to policy. Your extended warranty is designed to pick up where your previous warranty leaves off. In other words, it’s a way of maintaining the same amount of coverage for your vehicle after the manufacturer’s warranty runs out.



This is the sum of money that you will be required to pay out of your own pocket when submitting a claim. This amount is usually predetermined or at least there is a maximum set. Ask your provider about their deductible policy and find out if you can have multiple repairs performed under a single deductible. This should be specified in the contract. You might also qualify for a zero deductible policy, and it’s work asking about. That said, this usually means that these policies cost a bit more.


Mechanical breakdown

This term refers to the state of the vehicle when it is not able to function properly due to a defective part or workmanship issues. This term does not refer to parts that fail due to normal wear and tear. Such repairs would be covered by a different term (see wear and tear).


Named component coverage

This term is quite self-explanatory. Simply put, all of the parts covered by the policy are clearly listed. Anything not on the list is not covered. This is a type of policy and, even if you don’t opt for this kind of coverage, you should always ask your provider for a detailed description of your policy. This option is not necessarily the most comprehensive but is suitable in some instances.


Power Train

Some policies include this term to describe the parts that generate power for the wheels. This includes the engine, drive shaft, and the engine. Again, just like any other part of your coverage, it’s always good to confirm the finer details with your provider.


Wear and Tear

This type of warranty is highly desirable since it really offers the most coverage of all. It’s the most comprehensive option out there since it covers everything – including wear on your car parts. Things like valves, pistons, gaskets, and even the nuts and bolts that hold everything together are often classified as wear and tear. It’s important to understand that even a mechanical failure that results from a worn part might not be covered unless you have wear and tear coverage.


When reading through your policy, make sure that you have a full comprehension of the terms and conditions before you agree to anything. Feel free to ask about various policies and find out how each plan differs from the next. Our trained staff at A-Protect Warranty are available at 1(866) 660-6444 or (416) 661-7444 to listen to all of your concerns and make the appropriate recommendations based on your needs.

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