Vehicle Protection Plans refer to a type of service contract that covers the cost of repairs in the event of one’s car suffering a mechanical breakdown.
The service contract provider will cover the repair costs only for the affected car components covered under a particular policy/program (bought by the car owner).
These vehicle protection plans are designed to ensure that car owners won’t have to pay out of pocket for costly and unforeseen repairs once the original manufacturer’s or the factory warranty on the car has expired.
For most car owners, an vehicle protection plan, also known as auto coverage plans and vehicle service contracts, provides maximum peace of mind while they are on the road. Typically, car repair costs in the US often run to $1,000 or more. Very few people can afford to produce that kind of money on demand without seriously affecting their finances.
Therefore, having a vehicle protection plan that will cover the unexpected breakdowns and repairs makes sure that the unexpected costs will never derail your planned monthly budget or make you fall into a financial hole.
Unlike car insurance, one must also note that car owners are not legally obliged to buy a vehicle protection plan. However, if you are financing your vehicle, your lender may require that you buy a comprehensive vehicle or auto protection plan.
Also, note that vehicle service contracts are not replacements for car insurance. The latter pertains to damages suffered to a vehicle and people riding it when the vehicle in question gets into an accident.
All claims in such a situation must be filed through one’s insurance provider. On the other hand, a vehicle protection plan will only provide cover for damages caused by mechanical breakdowns.
Table of Contents
Types of Vehicle Protection Plans
The two most common vehicle protection plans are stated contract or coverage and exclusionary contract. The former typically includes two main types of coverage: powertrain and drivetrain.
Powertrain protection plans commonly cover a car’s engine, transmission, drive shafts, and axles, while drivetrain covers only drive shafts, axles, and transmission, but not the engine.
Then, the exclusionary coverage is similar to the original car manufacturer’s bumper-to-bumper warranty. In other words, an exclusionary contract will cover all major components of a particular vehicle.
As with the factory warranty, some standard exclusions are involved with all vehicle protection plans. These exclusions include items like
- Common wear and tear items such as rotors, shoes, and brake pads
- Light bulbs and windshields
- Exterior trim, upholstery, and other such cosmetic items
- Lift kits and aftermarket accessories
- Airbags and catalytic converters
- Damage occurred due to neglect, misuse, abuse, collision or accident, and stormy weather
Where Should You Buy a Vehicle Protection Plan From?
A protection plan can be bought right when purchasing your car at a dealership. In fact, in almost all cases, the sales agent in charge will try his utmost to make the car buyer purchase a vehicle service contract when selling a car.
The point to note is that when you purchase a service contract from a dealership, it either comes from the car manufacturer itself or an administrator or an independent third-party provider.
Many recommend that car buyers go with an independent service provider. This is because an independent service provider offers greater flexibility across the board compared to manufacturer-backed plans.
For example, most reputed service providers will commonly offer five or more plans compared to only one or two by the manufacturers. Furthermore, many top-shelf companies will also offer customizable plans to suit one’s particular needs and budget.
Independent providers like CarGuard Administration will also have more deductible options, enabling you to choose an amount that suits your budget.
With a manufacturer’s warranty, your car will be eligible for repair at a limited number of dealership facilities. Most top-of-the-line independent administrators will allow your car to get repairs at national repair chains, independent body shops, dealerships, etc.
In addition to all of these, you will receive several added benefits (such as 24/7 roadside assistance, trip interruption coverage, rental car reimbursement, towing assistance, transferrable coverage, and more) when you purchase your plan from an independent provider.
So, always check what added benefits are offered when researching your options as to who to buy your car protection plan from.
Do You Need A Vehicle Protection Plan?
You need to properly assess your finances and check your vehicle’s reliability while trying to find an answer to the above question. Generally speaking, your basic factory warranty should suffice if you don’t plan to keep your car for long or if you only use it to make infrequent short trips.
However, if you plan to own the car for a few years to come, a vehicle protection plan provides you with that safety net should anything go wrong.
Also, as mentioned, assess your vehicle’s overall reliability. For example, if the model is prone to frequent breakdowns, a vehicle protection plan is necessary.
CarGuard Administration
CarGuard Administration is one of the most trusted independent auto service providers in the US. The company’s three main protection plan categories include Platinum Coverage, Gold Coverage, and Powertrain Coverage.
However, you will find several different sub-plans included within these categories. The Platinum coverage, for example, includes Platinum, Platinum Plus, and Platinum Deluxe plans. Other plans include Gold Deluxe, Gold Plus, Powertrain Enhanced, etc.
However, the company has recently merged its Platinum Plus and Gold Plus into one. Also, notably, some of their plans, such as Platinum Deluxe and Platinum Plus, become Powertrain and Powertrain Plus after 125k miles and 100k miles, respectively—just as with some car models, the original bumper-to-bumper warranties change into powertrain warranties after a certain amount of time (or miles driven).
Also, all CarGuard Administration plans come with extra benefits like a rental car program, trip interruption service, towing, and roadside assistance.
And last but not least, under its Flat Rate program, all CarGuard plans currently offer a $12,500 limit of liability or the car’s actual cash value at the time of the claim, whichever is greater.