Why do extended warranty claims get denied?

Common denial reasons: pre-existing condition (anything noted before purchase), maintenance records not perfect, claim filed incorrectly, part not on "covered" list, failure caused by wear (excluded), and inspector finds reason to deny. Contracts are written to minimize payouts.

Are phone call warranty offers legitimate?

Almost never. Robocall warranty offers are notorious scams. Legitimate warranty companies don't cold call. If you receive an unsolicited call about your vehicle's extended warranty, it's a scam. Hang up immediately.

Which extended warranties are actually worth buying?

Only manufacturer-backed certified pre-owned (CPO) warranties and factory extended warranties have reliable coverage and claims processing. Third-party warranties have much higher denial rates and often disappear when you need them.

Is self-insurance a better option?

Often yes. Instead of paying $2,400 for an extended warranty, put that money in a savings account for repairs. You keep what you don't use, earn interest, and have no claim denials. This works especially well for reliable vehicles.

Used Car Warranty Scams 2025: Worthless Coverage to Avoid

The Extended Warranty Problem

Extended warranties are sold as peace of mind, but many are designed to collect premiums while denying claims. Nearly half of all claims are denied using fine print exclusions that cover virtually any failure.

Phone Calls Are Scams

If you receive an unsolicited call about your vehicle's extended warranty, hang up immediately. Legitimate warranty companies don't make cold calls. These operations collect money and provide no coverage.

How Denial Schemes Work

Pre-Existing Condition Trap

Any issue that existed before warranty purchase is excluded. Inspectors look for any evidence that a problem was developing—worn parts, slight leaks, any sign of prior symptoms—to deny claims.

Maintenance Record Requirements

Contracts require perfect maintenance records. Missing a single oil change receipt can void coverage for engine claims. Requirements are designed to create denial opportunities.

Exclusion Lists

Read the fine print—"covered components" lists are often narrow while "exclusions" are broad. Wear items, consequential damage, and common failure parts are typically excluded.

The Self-Insurance Alternative

Put the warranty premium ($2,000-$3,000) into a savings account. You keep what you don't use, earn interest, and face no claim denials. For reliable vehicles, this often works out better financially.

Legitimate Warranty Options

Manufacturer CPO Warranties: Backed by the automaker with reliable claims processing
Factory Extended Warranties: Purchased from the dealer but backed by manufacturer
Credit Card Coverage: Some cards extend manufacturer warranty by 1-2 years

Red Flags to Avoid

Unsolicited phone calls about warranty
Pressure to buy immediately
Company you've never heard of
No clear exclusion list
Extremely low prices (you get what you pay for)

BUY

Buyer Beware

Pros

Manufacturer-backed warranties work
Self-insurance is a viable alternative
Awareness prevents wasted money

Cons

Third-party warranties often worthless
Claims designed for denial
Phone scams are rampant

Recommendation

Skip third-party extended warranties unless manufacturer-backed. Put the premium money in savings for potential repairs. If you must buy coverage, only purchase from the manufacturer through a franchised dealer.

Frequently Asked Questions

First Car Guide

Understanding Car Warranties 2025

Scam Prevention

Dealer Fee Scams Guide