Service Contract
What is a service contract?
A service contract is a promise to perform (or pay for) certain repairs or services. The separate and additional cost distinguishes a service contract from a warranty. A service contract may be arranged at any time and always costs extra; a warranty comes with a brand new car and is included in the original price.
What type of service contracts are there?
A service contract coverage ranges from basic powertrain (engine and transmission) all the way to exclusionary/bumper-to-bumper. In between are other levels such as powertrain plus, which will cover the powertrain and some basic components of the suspension, steering, fuel, cooling, and electrical systems; powertrain enhanced coverage will cover all of powertrain plus components plus more specific components. Some service contract companies have even more levels with each higher level having more specific items covered.
Midline Motors primary offers service contracts with exclusionary coverage, which is the highest level of coverage after factory warranty. Instead of the contract listing what is covered like in the powertrain/powertrain plus/powertrain enhanced contracts, you will have a list of what is not covered. The exclusion/not covered list is primarily maintenance/wearable items and emission-related & airbag components. Things like batteries, brake pads/rotors, spark plugs, rubber hoses, shocks, spark plugs, exhaust systems, tpms sensors, fluid changes and airbags will not be covered. You will have peace of mind knowing that everything that is not on the exclusion list is covered.
What is the importance of caps on labor and parts?
This is the difference of a good service contract from a poor one. Many cheap service contracts you see will offer what we call “limited coverage” service contracts. They may look like they cover a decent number of components (or not), but they limit you on how much they will cover. Hourly labor may be capped at $75/hour, so if your mechanic charges $125/hour, you’re on the hook for the other $50. Limited coverage policies will also have caps on major components like $1,500 for a transmission and $2,500 for an engine.
We do not sell limited coverage service contracts at Midline Motors. The service contracts we offer will pay either the posted labor rate of the shop or the average going labor rate in your area. There will be no specific caps on parts. There is an total aggregate cap on what the service contract will pay and it’s typically the lessor of what you paid for the car or the NADA/KBB value for it. For example, if you purchased a car for $25k and the book value was $19k at the time you made a claim, you would be able to make $19,000 worth of total claims made at that time.
How do I use my service contact?
When you purchase a service contract you will be given a copy that we would recommend you keep in your glovebox, so you can have it handy when you bring your vehicle in for repairs.
Before getting work done on the car, provide your service contract to your mechanic, whether it’s the dealer or your go-to local mechanic (no backyard mechanics or DYI). Your service contract will have a phone number for your shop to call in to the claim department. It is important they call a claim in before you have work done, so be sure you provide your service contract upfront every time you bring your car in for service. If you have a major issue that requires a teardown to further diagnose an issue, the service contract company will need to authorize it as well.
Your mechanic will call in the claim, send in their estimate and evidence, and get paid directly for the repair after it’s approved. Your responsibility for a covered claim is your deductible (usually $100), fluid costs (if any), and the sales tax portion on parts.
Why would a service contract company deny a claim?
The number reason a claim is denied is because it’s for a component that is not covered. With an exclusionary policy, you will run into this scenario a lot less often than you would with a more basic policy. Claims will also be denied for items that can be proven to break from neglect or abuse. For example, if your vehicle started to overheat and instead of immediately pulling over, you kept driving and blew the engine, that would not be covered due to neglect.
Is a service contract worth getting for my car?
It’s always a good idea to have a service contract for protection and peace of mind for future repairs, if the cost is reasonable. For European manufacturers like Land Rover, Jaguar, Mercedes, BMW, and Porsche, it’s strongly suggested to get a service contract as these vehicles can be very expensive to fix. We usually see vehicles that have less than 60k miles being the most cost effective for a service contract. If a vehicle is still under powertrain factory warranty it also cheaper to buy an extended service contract than when the car is out of warranty.
If you’re buying a high-end European with high miles, the service contract will be more expensive. Vehicles that also have over 100k miles typically do not qualify for exclusionary coverage and may be limited to a powertrain or powertrain plus coverage.
If you have any questions about service contract options and pricing for a particular vehicle you are interested in, please feel free to give us a call at 480-470-2500 and we’ll be happy to give you some options on the spot. It only takes us a few minutes to gather a quote.
A service contract is a promise to perform (or pay for) certain repairs or services. The separate and additional cost distinguishes a service contract from a warranty. A service contract may be arranged at any time and always costs extra; a warranty comes with a brand new car and is included in the original price.
What type of service contracts are there?
A service contract coverage ranges from basic powertrain (engine and transmission) all the way to exclusionary/bumper-to-bumper. In between are other levels such as powertrain plus, which will cover the powertrain and some basic components of the suspension, steering, fuel, cooling, and electrical systems; powertrain enhanced coverage will cover all of powertrain plus components plus more specific components. Some service contract companies have even more levels with each higher level having more specific items covered.
Midline Motors primary offers service contracts with exclusionary coverage, which is the highest level of coverage after factory warranty. Instead of the contract listing what is covered like in the powertrain/powertrain plus/powertrain enhanced contracts, you will have a list of what is not covered. The exclusion/not covered list is primarily maintenance/wearable items and emission-related & airbag components. Things like batteries, brake pads/rotors, spark plugs, rubber hoses, shocks, spark plugs, exhaust systems, tpms sensors, fluid changes and airbags will not be covered. You will have peace of mind knowing that everything that is not on the exclusion list is covered.
What is the importance of caps on labor and parts?
This is the difference of a good service contract from a poor one. Many cheap service contracts you see will offer what we call “limited coverage” service contracts. They may look like they cover a decent number of components (or not), but they limit you on how much they will cover. Hourly labor may be capped at $75/hour, so if your mechanic charges $125/hour, you’re on the hook for the other $50. Limited coverage policies will also have caps on major components like $1,500 for a transmission and $2,500 for an engine.
We do not sell limited coverage service contracts at Midline Motors. The service contracts we offer will pay either the posted labor rate of the shop or the average going labor rate in your area. There will be no specific caps on parts. There is an total aggregate cap on what the service contract will pay and it’s typically the lessor of what you paid for the car or the NADA/KBB value for it. For example, if you purchased a car for $25k and the book value was $19k at the time you made a claim, you would be able to make $19,000 worth of total claims made at that time.
How do I use my service contact?
When you purchase a service contract you will be given a copy that we would recommend you keep in your glovebox, so you can have it handy when you bring your vehicle in for repairs.
Before getting work done on the car, provide your service contract to your mechanic, whether it’s the dealer or your go-to local mechanic (no backyard mechanics or DYI). Your service contract will have a phone number for your shop to call in to the claim department. It is important they call a claim in before you have work done, so be sure you provide your service contract upfront every time you bring your car in for service. If you have a major issue that requires a teardown to further diagnose an issue, the service contract company will need to authorize it as well.
Your mechanic will call in the claim, send in their estimate and evidence, and get paid directly for the repair after it’s approved. Your responsibility for a covered claim is your deductible (usually $100), fluid costs (if any), and the sales tax portion on parts.
Why would a service contract company deny a claim?
The number reason a claim is denied is because it’s for a component that is not covered. With an exclusionary policy, you will run into this scenario a lot less often than you would with a more basic policy. Claims will also be denied for items that can be proven to break from neglect or abuse. For example, if your vehicle started to overheat and instead of immediately pulling over, you kept driving and blew the engine, that would not be covered due to neglect.
Is a service contract worth getting for my car?
It’s always a good idea to have a service contract for protection and peace of mind for future repairs, if the cost is reasonable. For European manufacturers like Land Rover, Jaguar, Mercedes, BMW, and Porsche, it’s strongly suggested to get a service contract as these vehicles can be very expensive to fix. We usually see vehicles that have less than 60k miles being the most cost effective for a service contract. If a vehicle is still under powertrain factory warranty it also cheaper to buy an extended service contract than when the car is out of warranty.
If you’re buying a high-end European with high miles, the service contract will be more expensive. Vehicles that also have over 100k miles typically do not qualify for exclusionary coverage and may be limited to a powertrain or powertrain plus coverage.
If you have any questions about service contract options and pricing for a particular vehicle you are interested in, please feel free to give us a call at 480-470-2500 and we’ll be happy to give you some options on the spot. It only takes us a few minutes to gather a quote.