Automotive Digest: SCIC Educating Consumers on the Logic of Service Contracts

The Ser­vice Con­tract Indus­try Coun­cil (SCIC) esti­mates that con­sumers bought more than 10 mil­lion ser­vice con­tracts in 2012 for both new and used vehi­cles. Those ser­vice con­tracts cov­ered 95% of annual claims filed, including repairs nec­es­sary due to nor­mal wear and tear, pro­vid­ing cov­er­age above and beyond a tra­di­tional manufacturer’s war­ranty. Today’s vehicles are made up of more than 10,000 com­po­nents, yet the stan­dard pow­er­train war­ranty cov­ers only a fraction of them. The aver­age new car has six to 20 com­put­ers that con­trol every­thing from fuel injec­tion and anti-lock brakes to airbag deploy­ment. Those sys­tems can be expen­sive to repair, due to both the high cost of parts and labor costs that can run as high as $250 an hour for spe­cial­ized repairs on lux­ury vehicles.