Company Vehicles

Vehicle Service Contracts

Buying a vehicle service contract can be a smart move for business owners that have company cars or company trucks. However, it's critical that you understand what you are buying before you sign on the dotted line.

As a business owner, you may have one or more company cars.

While many businesses take pride in purchasing newer-model vehicles, the vast majority of company vehicles tend to be older vehicles.

When the company car or company truck gets old, business owners may want to consider purchasing a vehicle service contract.

Vehicle service contracts allow an individual or company to purchase a contract that will protect them from unexpected vehicle repairs. After all, small businesses that have tight cash flow don't like unexpected expenses, so the ability to prevent an unexpected vehicle repair expense is pretty nice.

As with many purchases made by small businesses, the key in buying a vehicle service contract is to do your homework before you purchase a vehicle service contract.

Before you purchase a vehicle service contract, please consider these important questions:

  • How Much Does My Vehicle Service Contract Cost? Cost may be one of the most important things for customers considering a vehicle service contract. Make sure it's within your budget, but more coverage and upfront cost now may save hundreds or even thousands in repair costs down the road.
  • How Long Does My Vehicle Service Contract Last? Understanding how long your coverage will be around is another important parameter. Consider how much driving you will be doing and make sure it fits with your expectations for mileage and year length on the contract.
  • What Does my Vehicle Service Contract Cover (or Not Cover)? Understanding what is covered is important, but equally important is understanding what's not covered. This question may influence which contract you purchase based on what types of repairs you're willing to pay out of pocket, should they arise down the road.
  • How Are Claims Handled on My Vehicle Service Contract? Figuring out how claims are handled early is a best rather than waiting until your car is in the shop trying to get repair work done. Asking the question now will help avoid headaches and delays later.
  • Who Backs My Vehicle Service Contract? This is a key detail that many customers may not consider because it identifies who is paying for the repairs. Determine the administrator/insurance company's financial strength and since independent contract administrators authorize payment it is also important to get some details on their background. Get to know how long the administrator has been in business, its standing with consumer organizations and its financial stability. This question will assist you in making an informed decision about a contract provider you can trust.
  • What Kind of Replacement Parts Will My Vehicle Service Contract Ensure Are Used? Many vehicle service contracts will call on repair facilities to use like new parts or reconditioned parts. In some cases where these are not easily obtainable, good used parts maybe substituted. Although these parts are often just as operationally good as a brand new part, understand how this will work and how comfortable you are with alternative parts.
  • What Are The Terms of My Vehicle Service Contract? Never purchase a vehicle service contract from a company that will not provide a copy of the terms and conditions of the contract. Asking this question will make sure you understand those terms and that you get a copy of your own.
  • Can I Understand My Vehicle Service Contract? Every contract you purchase should be easily understood by you and the provider. You should never need a legal degree to understand your coverage. Ask this question of yourself before purchasing and make sure you understand what's going on and how it will exactly affect your service.

Remember, this can be a great investment for a business that has company cars or company trucks, but you absolutely need to do your homework before you choose a provider to work with.

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What's your take on vehicle service contracts? We welcome your comments, questions and suggestions.

  • Rachelle Allouche posted on 12/7/2009
    Rachelle Allouche
    Good article about Vehicle Service Contracts. We have a small business with a company car, so this was very helpful. I did some research recently and found a Kiplinger article that talked about vehicle service contracts and extended warranty scams. They said that vehicle service contracts are worth buying but you need to make sure you work with a reputable vendor. I'm sure you can still find the article at Thanks for the helpful information on vehicle service contracts!

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