CONSUMER TIPS
From the Service Contract Industry Council

For Purchasing and Using
MOTOR VEHICLE SERVICE CONTRACTS
(Extended Warranties)

Since 1988, the Service Contract Industry Council (SCIC) has worked with state legislatures nationwide to regulate the licensing of service contract providers and implement stringent financial safeguards. 

A majority of states have enacted regulations based on the SCIC Model Act, a legal framework whereby service contracts (extended warranties) are defined, may be sold and incorporate enhanced financial solvency standards for providers.  The Model Act includes significant consumer protections and promotes balanced, consistent regulation of the service contract industry.  State laws based on SCIC model legislation were instrumental in protecting consumers with service contracts in 2009 following the closure of hundreds of auto dealerships nationwide. 

WHERE TO PURCHASE:

  • Most service contracts for motor vehicles are sold at automotive dealerships at the point of sale; service contracts also can be obtained after the motor vehicle purchase from the dealer or independent service contract providers.
  • Service contracts are available for both new and used vehicles; over10 million contracts are sold annually. 
  • The vast majority of service contracts are sold and/or administered by reputable, licensed companies that abide by current regulations, adhere to high principles of customer service, and are protected by financial reserves and/or insurance.
  • A list of motor vehicle service contract providers who are members of the Service Contract Industry Council, a non-profit trade association representing the service contract industry, is available at www.go-scic.com.
  • Be alert to providers who use unsolicited mass marketing techniques, such as direct mail and telemarketing (e.g., “robo-calls”).

BEFORE PURCHASE:

  • Ask for a copy of the contract and read the provisions carefully to be sure the terms and benefits fit your needs.    
  • Only buy from an auto dealer or service contract provider willing to supply a copy of the contract terms and conditions for your review prior to purchase.
  • Research the provider and/or contract administrator with the local Better Business Bureau and/or state insurance commissioner.  As with any vendor, consumers are urged to research the company with whom they do business.
  • Avoid purchasing a service contract if you feel overly pressured by sales personnel. 

ONCE PURCHASED:

  • Read the provisions carefully to become familiar with all coverage, exclusions, and terms and conditions.
  • Most service contracts (extended warranties) come with a free-look period that gives consumers 30 days from time of purchase to review the details of the contract and receive a complete refund upon cancellation.
  • Carefully fulfill all contract obligations, such as regular oil and filter changes, mileage milestone check ups, and other maintenance.
  • Maintain a file for contract paperwork, receipts, and maintenance records
  • Use the benefits of the service contract as often as needed and applicable to enhance the life of the motor vehicle and maximize its value. 
  • Check to see if the contract is transferable when selling the covered vehicle.

About the SCIC
Established in 1989, the Service Contract Industry Council is a national trade association that educates consumers about service contracts and extended warranties, and has developed and promotes model legislation with provisions designed for consumer protection and industry standards.  SCIC members sell approximately 80% of the service contracts sold in the U.S. for consumer goods, home and motor vehicles.

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