National Vehicle Protection Services FAQ

What is a vehicle service contract?

Vehicle service contracts are designed to protect consumers against unexpected, costly repairs to their vehicle.

A vehicle service contract can be purchased by a consumer to cover the costs associated with vehicle repair, including parts, labor, and/or sales tax, for certain repairs or replacements that may be required after a manufacturer’s warranty expires. Different contracts have different coverage levels. A given individual’s coverage for any given repair is based on the terms and conditions of his or her vehicle service agreement.

How does a vehicle service contract work?

With a vehicle service contract, the contract holder is covered when their vehicle experiences a mechanical breakdown or failure that is addressed by the vehicle service contract.

The process varies throughout the industry, but, typically, you simply have the repair facility of your choice, employing an ASE certified technician, contact the provider’s claims center to report the claim prior to repairs. The claims representative then works with the service center to ensure that they receive their payment and that your vehicle is repaired.

If you are unsure of where to take your vehicle for repair, you can typically contact the administrator of your service contract for guidance.

The terms of the agreement should make clear that certain costs are covered and certain costs may not be covered. In some cases, the contract holder may need to pay a deductible. The vehicle components that are specified for coverage in your agreement should be covered outright, provided regular maintenance has been properly and regularly performed as defined by the terms and conditions of your vehicle service contract.

Why do I need a vehicle service contract?

A vehicle service contract can offer peace of mind and several other benefits to car owners. Knowing that many of your repair costs will be covered can ease any tension about owning a car. Similarly, unexpected repair costs are minimized because of coverage – making it more affordable to own and maintain a vehicle.

Your vehicle is a big investment and the longer it stays in great working condition, the more value you get from your investment. Vehicle service contracts are designed to protect your investment by keeping your vehicle in good, drivable shape without you having to incur a lot of extra, unexpected repair costs that you might otherwise have difficulty paying.

Considering that the average hourly rate for mechanic labor is over $100 an hour, labor alone can be a smart reason to have an extended car warranty. When you also consider how expensive parts and systems can be to fix, the value proposition for vehicle service contracts becomes that much stronger.

What does a vehicle service contract cover?

Each vehicle service contract is different. Buyers must read their vehicle service contract carefully and ask questions to fully understand what’s covered.

Vehicle service contracts cover automotive repairs. However, repairs due to accidents, wear and tear are not usually covered. Your coverage may lapse if you do not make the required payments or if you fail to do the basic maintenance on your car that the contracts often require.

What is an extended warranty?

An “extended warranty” is a vehicle service contract offered by a new car dealer to “wrap” the new car warranty and extend beyond it. If sold outside of a new vehicle purchase, a vehicle service contract is sometimes incorrectly referred to as an “extended warranty.” The automotive service contracts industry is moving away from this terminology to avoid confusion amongst consumers.

The difference is a subtle one. Warranties are provided by a manufacturer and are included with the original vehicle purchase. In contrast, vehicle service contracts must be purchased separately and can be purchased at any time. However, the earlier you purchase a service contract in the life of the vehicle, the better coverage you can usually obtain.

A warranty came with my car when I bought it. Why do I need a vehicle service contract? Isn’t my car covered by the original warranty?

Car warranties provided by manufacturers or dealers don’t last forever.

Repairs are only covered up to a certain point, usually based on the car’s mileage or age. It’s often the case that after the warranty expires, your car starts to require numerous repairs. (By many accounts, that usually happens one day after the manufacturer’s warranty expires.)

Vehicle service contract coverage is meant to fill the gap or take over when your existing warranty expires. In this way, purchasing a vehicle service contract can help you avoid unexpected costly repairs.

What happens if I sell my car? Is my vehicle service contract transferrable?

In many cases, a vehicle service contract is transferrable. This added benefit can add value to your vehicle when potential buyers are looking into purchasing it. Passing along peace of mind can help make the sale go more quickly and smoothly. So, try to obtain a transferable contract when purchasing.

If you are uncertain as to the transferability of your vehicle service contract, ask your sales representative for this information when purchasing your contract, or refer to the terms and conditions of your contract that you received shortly after your purchase.

Can I purchase extensions and upgrades to my vehicle service contract?

Most vehicle service contract providers will allow you to purchase extensions and upgrades to your service. Whether you want to upgrade to a plan with more coverage or simply maintain the service contract after it has expired, you can find a contract to fit your needs.

Contact your selling agent or administrator for further information regarding availability.

What vehicle upkeep am I responsible for in order for my service contract to remain valid?

While it varies from contract to contract, most vehicle service contracts explicitly state which items the contract holder is responsible for maintaining regularly. This often includes regular manufacturer recommended maintenance such as oil changes and fluid checks, among others.

Where can I take my vehicle for repairs?

Most vehicle service contracts can be taken to any service center that is willing to work with a vehicle service contract. Many contracts require the vehicle to be taken to a facility with an ASE Certified technician. Your contract provider will be able to confirm for sure if a service center is allowed to do work for your contract. Most dealerships are included as service centers you can use. However, please note that some contract’s reimbursements are based on aftermarket labor rates which are often exceeded by new car dealers.

If you are unsure of where to take your vehicle for repair, you can typically contact the administrator of your service contract for guidance.

If I get a vehicle service contract, can I still work with my local mechanic?

Most vehicle service contracts offer considerable flexibility regarding where you can have your vehicle repaired. For example, your vehicle protection plan might allow you to have the car repaired at your local dealership or any ASE certified garage.

There are many different types of vehicle service contracts, so it’s best to ask your policy provider this question.

Do I have to pay for my vehicle service contract in full at the time of purchase?

No. Most vehicle service contracts offer options to pay for your contract over a period of 12 to 18 months with no additional fee. Ask a service representative at your contract-providing company what types of payments plans they offer.

What if I want to cancel my vehicle service contract?

The specifics of canceling a vehicle service contract vary from provider to provider. Canceling within 30 days of purchase will often provide for a full refund. After that period, and if the contract was not utilized, a pro-rata refund may be available depending on what is specified in the agreement. In some cases, an administrative fee may reduce the amount of your refund. Ask before purchasing your service contract what the terms of your agreement allow, including whether there are any administrative fees associated with canceling.

Can my claim amounts exceed the amount of money I paid for my vehicle service contract?

Yes, this is typically the case. However, you should read your policy carefully to fully understand what is covered and whether there are any coverage caps that you need to be aware of.

How are vehicle service contract claims paid?

The way claims are paid varies from agreement to agreement. In many cases, payments are hassle-free for you because they are paid directly to the service center. In other cases, a contract holder may be reimbursed for repairs made. Often, the policy owner is required to contribute via a deductible payment. The amount of the payment is stated in the agreement and can be adjusted before purchase. Ask your contract representative or review the terms and conditions of your contract for more details.

What happens to the money I pay for my vehicle service contract?

When you purchase a vehicle service contract, your money along with the money from other contract purchasers is put into an account for future claims.

That pool of money is then used to pay claims for individual contract holders as they arise.

What should I look for when considering purchasing a vehicle service contract?

Understand what you want, what you’re willing to pay and find a contract that will fit that bill. If you want a lot of coverage, then that’s what you should ask for. Want less coverage? There’s a contract out there that’s right for you.

Beyond that, look at the company providing the contract, research them through the Better Business Bureau, and make sure you fully understand the details of your contract.

The details of your coverage are typically provided to you in booklet format via mail shortly after purchasing your vehicle service contract. In many cases, you can elect to receive an electronic copy of your service contract via email.

Prior to purchase, many vehicle service contract sellers are able to provide you with a sample contract to assist you in making your decision. Ask your selling agent for details of this service.

How does a vehicle service contract deductible work?

Most vehicle service contracts come with a deductible. Typically, the deductible only needs to be paid one time on each repair visit, no matter how many different items are fixed.

Why should I buy a vehicle service contract now? Especially if I still have a manufacturer’s warranty.

Just like health insurance or life insurance, the better shape your vehicle is in when you obtain coverage, the better your rates and pricing will be. It actually costs far less to purchase a vehicle service contract on a newer vehicle in tip-top shape than it does for an older vehicle that’s fallen into disrepair. By buying when your car is newer and in better condition, you lock in the costs of a vehicle service plan now, while your vehicle is at its best.

Are auto manufacturers involved with the creation and sale of vehicle service contracts?

No. Vehicle service contracts are typically not affiliated with the auto manufacturers in any way. They are typically backed by third party administrators and/or insurance companies.

What’s the difference between a vehicle service contract and a manufacturer’s warranty?

Warranties come with a product and are included in the purchase price. Service contracts, on the other hand, are agreements that are separate from the contract or sale of the product. They are separate either because they are made some time after the sale of the product, or because they cost the customer a fee beyond the purchase price of the product.

Will purchasing a vehicle service contract subject me to telemarketers and mailings from companies that may not be reputable?

Purchasing a vehicle service contract from a reputable provider will not subject you to additional mailings and telemarketing from unsolicited sources. Check your provider’s privacy policy to be sure, but most companies do not share your information with any other sources.

How does the National Vehicle Protection Services (NVPS) ensure that I, as a consumer, am protected from fraud, false advertising, or other exploitive practices?

NVPS has launched a two-pronged strategy to 1) educate consumers about their rights; and 2) develop a set of industry standards that protects consumers from bad actors attempting to enter the vehicle protection industry.

Does NVPS provide a list of trusted organizations and businesses?

At present, we do not provide a list of recommended providers for vehicle service contracts.

Who can I contact if I have a problem with my automotive service contract or its provider?

NVPS is developing a complaint/inquiry-response framework to assist consumers in determining the proper member company to contact when problems or questions arise with their service, and to expedite complaint/inquiry processing so that consumers receive an adequate response as expeditiously as possible. Please contact (877) 517-9966 for any questions or concerns with your vehicle protection plan.


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