Although an auto repair insurance policy can save you money on some types of common vehicle repairs, you should be aware of the potential for fraud and scams associated with these types of policies. Here’s a quick list of common scams related to auto repair insurance.
Always be aware of companies that call you at home and tell you that the warranty on your vehicle is about to expire. Many times, these companies represent themselves as the car’s manufacturer or the dealership where you purchased your vehicle. In most cases, this is simply not true and the warranty products offered by these types of company are usually inferior and overpriced. Also, many of these high-pressure warranty companies tend to quickly go out of business after they have sold a number of policies. The result is many consumers having auto repair insurance policies that are totally worthless and provide no protection at all.
Some unscrupulous car dealerships will pressure you into purchasing high-priced car repair policies or extended warranties from no-name companies. These dealers then cancel the warranty and have the policy premium refunded directly to the dealership. The customer is often totally unaware of the policy cancellation, and only finds out about the cancellation when they attempt to use the warranty coverage. If there is never a problem with the vehicle, the scam often goes completely undetected; however, when problems with a vehicle arise – that’s when the nightmare begins with trying to collect the money paid for the warranty from the dishonest dealer.