- Vehicle service contract (VSC)
- What you actually bought. An agreement for a
separately stated consideration to repair or replace covered parts. Legally distinct from a warranty,
regulated by the state, not by any federal agency for solvency or claims practice.
- Obligor / provider
- The entity legally required to perform under your contract. Frequently not
the brand that sold it to you. Write this name down at purchase.
- Administrator
- The company that adjudicates your claim — approves, denies, and authorises the
shop. Often a third party. This is who you will actually be arguing with.
- Reimbursement insurance policy
- An insurer's policy issued to the provider, agreeing to
discharge the provider's obligations — including refunding unearned fees — if the provider fails. This is your
backstop. Where one exists, the contract must generally state that if the provider fails to pay a claim within
sixty days of proof of loss, you may claim directly against the insurer — see the
escalation guide.
- Exclusionary vs. named-component
- An exclusionary contract lists what is
not covered; everything else is in. A named-component (or "stated component")
contract lists what is covered; anything absent from the list is out. Exclusionary is materially
better and is usually what the top tier means.
- Mechanical breakdown vs. wear and tear
- The most consequential ambiguity in the product. Narrow
contracts cover only a sudden breakdown and exclude normal wear. Since most failures on a high-mileage vehicle
are the end state of gradual wear, this definition can be pointed at a large share of claims.
- Betterment / depreciation clause
- Reduces the payout on the theory that a new part in an old car
leaves you better off than before. Effect: you pay a percentage of a covered repair, on top of your
deductible. Ask whether one applies before you buy — it is rarely volunteered.
- Teardown authorisation
- Disassembly required to diagnose a failure. If the claim is denied
afterwards, you may owe the teardown and the reassembly, with the car still not running. Ask who
pays on a denial, and get the answer in writing.
- Waiting period
- Typically 30 days and 1,000 miles before anything is payable. Combined with the
pre-existing condition exclusion, this is how most early claims are denied.
- Free look
- The window for a full refund with no claim filed. Ranges from 9 days (Washington) to
60 days (Florida, and some California contracts). After it closes you get pro rata, usually minus an
administrative fee.
- Aggregate limit
- A cap on total lifetime payout under the contract, separate from any per-claim
cap. Watch for caps tied to the vehicle's actual cash value — those shrink every year you own the car, exactly
as your risk of a major repair rises.