Car Extended Warranty Caution

Reported by: John Matarese

Have you ever received a phone call or post card pushing an extended warranty for your car?

Did you wonder what would happen if you actually agreed to buy that coverage? One couple did, and soon regretted their purchase.

Couple Goes for Post Card Pitch

Almost every car owner has found a post card pitching an extended warranty for their car in their mailbox at some time. Paul Rosenberger and Trish Setters always pitched the cards.

But this time, they said yes, and bought an extended warranty for their 2000 Hyundai. Trish says she agreed to "$149.49 a month for 18 months, and it came to $2,800."

The company, "National Dealers Warranty" out of St Louis, promised full protection for their $2,800. It appeared that almost any breakdown would be covered.

But when an oil change shop discovered her car's front axles were bad, she says national refused to cover it. Trish claims all she did was drive it home after the diagnosis, but that was apparently enough to trigger a clause in the warranty denying coverage. The warranty company told her she may have worsened the condition by continuing to drive.

Paul says "National Dealers Warranty refused to cover the work simply because she had driven the car after they told her she had a problem."  Paul and Trish say they wanted time to think about the diagnosis before agreeing to a repair, and drove less than 20 miles.

A Familiar Complaint

National Dealers Warranty is no stranger to controversy.

• The Better Business Bureau gives it an "F," with more than 300 complaints.
• Two years ago, the company paid a $20,000 settlement to Missouri's Attorney General, after he filed a lawsuit based on so many complaints of denied coverage.

An attorney for National Dealers Warranty tells me they have now agreed to give Trish Setters a full refund, to settle her complaint.

But Paul and Trish still want others to know that an extended warranty may give you false peace of mind.

Paul says "they would not cover it at all. They refused."

Next: When Extended Warranties Can be a Good Idea