How to Avoid the Worst Extended Auto Warranty Companies

4 extended auto warranty company red flags to watch for

We looked at ConsumerAffairs’ lowest-rated extended auto warranty companies and considered reviewers’ most common complaints to compile our list of red flags to watch out for.

1. Difficulty reaching a representative

Many extended auto warranty customers complained that their chosen company was too hard to reach. Getting a response to a claim, or even a simple question, could take weeks or months. If you’re unable to reach a representative, the company is likely not legitimate.

Jason, a reviewer from Florida, said: “I purchased this warranty in August 2021 for [$3,550]. [...] [My] dealership could not get a hold of anyone with the company. I tried to email the guy that I originally bought [the warranty from]. [...] [The] email goes as undeliverable. No one will return phone calls[,] so we have reported them to the FBI for fraudulent Internet activity and theft.”

2. Difficulty canceling for a partial refund

Many extended auto warranty companies let you cancel your coverage early for a full or prorated refund. If a company claims you can cancel, but it doesn’t allow you to cancel, it’s suddenly avoidant or it’s openly hostile, the company is likely not legitimate.

To make sure you can cancel a plan, check your contract’s cancellation terms before you sign up.

Lorna, a reviewer from Florida, said: “This company sold my elderly mother, who has dementia and is on a fixed income, an expensive extended warranty. My mother has not had a driver's license for years and her car is in storage. When I called to cancel and request a refund, they questioned if my mother actually had dementia [and] were rude and aggressive.”

3. Going to great lengths to deny claims

Most auto warranty companies require consumers to stay on top of regular maintenance, and they won’t cover repairs or replacements related to neglect, misuse or accidents. But some companies seem to treat this policy more strictly than others. If a company tries to find any excuse it can to deny claims, it’s likely an illegitimate company.

Joshua, a reviewer from Washington, said: “This company will not approve our transmission [replacement] because we can not find [two] missing receipts for oil changes. This is absolutely stupid[,] [...] [an] oil change has absolutely nothing to do with the transmission going out.”

Ginger, another reviewer from Washington, had a similar complaint.

“[I] [s]ubmitted [a] warranty claim for [a] transmission issue,” Ginger said. “[I provided] service records for transmission services that had been done on the vehicle[,] which had been done based on the timeframe stipulated in the contract. They then requested all service records with regards to oil changes, which have absolutely nothing to do with the transmission. [The] [c]laim was denied because a few of the oil changes were not done in the time frame stated in the contract.”

» MORE: How do you get your car warranty claim approved?

4. Prioritizing sales over customer care

Some auto warranty companies seem to put more effort into selling warranties than taking care of existing clients. If an auto warranty company is too aggressive in its sales approach, or if it seems to neglect existing clients, it’s likely a company to avoid.

Jerry, a ConsumerAffairs reviewer from Florida said he purchased his dream car in July 2022 and paid for an upgraded warranty that allegedly wasn’t what he was promised.

“I was employed by the dealer I purchased from at the time and was convinced that purchasing the platinum warranty would be the best option,” Jerry said. “[I] [t]hought I was covered for anything. Wrong.”

Four months later, when his car needed a new transmission and $9,000 worth of repairs, the warranty company allegedly denied the claim, stating that “consequential damage isn’t covered.”

Consequential damage refers to when a part covered by a warranty damages a part that’s not covered. However, since there was no way of telling whether the damage was consequential, the reviewer felt confused and submitted an appeal, which was denied.

“I feel ripped off [...] because of the extra thousands of dollars I paid to finance this warranty that doesn't help when I need it,” Jerry said.

How to find a good auto warranty company

Not every extended auto warranty purchase ends in a cautionary tale. Choosing a warranty from a reputable auto company can save you time, stress and money. Here are four steps to help you find a good extended auto warranty:

1. Learn about extended auto warranties

Before you buy an extended auto warranty, understand what they actually cover so you know what you’re signing up for. Extended warranties typically only cover manufacturing defects or parts that fail sooner than expected. They don’t cover repairs or replacements related to neglect, abuse, accidents or damage.

2. Research companies and read reviews

Research extended auto warranty companies and read online reviews. Consumer reviews are arguably your best source of information when you’re evaluating a warranty company’s trustworthiness. Look for reports of good customer service and approved claims.

3. Choose the right coverage level

Choose the right coverage level for your needs, and ask questions to clarify what’s covered and what’s not covered. Then, balance your budget with your risk tolerance to find coverage you’re comfortable with.

Even a reputable company can sell you more than you need. Getting answers to any questions you may have should provide peace of mind and prevent expensive surprises later.

» MORE: How to choose an extended car warranty

How to avoid car warranty scams

You may have already received robocalls warning that your car warranty is about to expire. While most people can see through these scam attempts — and the Federal Trade Commission (FTC) is working to reduce their frequency — they still happen, and they’re getting sneakier.

Today’s auto warranty scammers may use your vehicle’s make, model and year to manipulate you into thinking they’re legitimate. They may also use caller ID spoofing to appear like they’re a local number even when they’re halfway around the world.

Regardless of how scammers’ tactics evolve, here are some tips to help you avoid car warranty scams:

1. Ask for an offer in writing

If you’re speaking to a live human and you want to verify the legitimacy of their offer, ask to have it in writing. If they resist or refuse, it’s most likely a scam.

2. Don’t answer questions

If an unsolicited, prerecorded call asks you to dial a number to be connected to a live representative, hang up. Similarly, if a call starts with a generic question like, “Hi, can you hear me OK?”, don’t speak. Just hang up. These are tactics scammers use to verify which phone numbers are active.

3. Never share personal information

Never give out personal details or payment information over the phone to an unverified number or caller.

4. Ignore unsolicited offers

Generally, the safest way to avoid getting scammed is to ignore unsolicited offers entirely. Don’t let companies reach out to you and manipulate you into accepting a deal when you might find a better offer elsewhere.

5. Take measures to reduce spam calls

You can reduce the number of robocalls and unsolicited offers you receive by registering your phone number with the National Do Not Call Registry. However, this can take up to 31 days to take effect, and it might not deter dedicated scammers.

Another step you can take is to filter spam calls or calls from unknown numbers on your phone, which may help to reduce scam calls.

What to do if you fall for a car warranty scam

It’s unfortunately common for people with legitimate auto warranties to feel like they’ve been scammed when their warranty companies deny their claims. But often, these customers may just not understand how warranties work or what warranties actually cover.

“There are a number of extended warranties that only cover major component parts (transmission or engine) but are not comprehensive (do not cover sensors, fuel pumps, etc.),” said Allison Harrison, owner of ALH law group. “[T]he consumer should take time to review what is or is not covered by the auto warranty.”

Signs you’ve been scammed

If you believe you’ve been scammed by an extended auto warranty company, your first step is to determine whether you’ve truly been scammed or if there was simply a misunderstanding of your coverage.

Here are some signs that you’ve been scammed by an illegitimate or nonexistent auto warranty company:

• You purchased the warranty during an unsolicited phone call.
• You’ve attempted to call the number back, and it’s disconnected.
• The company has little to no web presence, meaning you can’t find a website or customer reviews.
• The company lists a physical address, but you can't find evidence of it actually being there.
• You can't find any employees on LinkedIn.

What to do if you’ve been scammed

If you think you’ve been scammed, you should take two immediate steps to protect yourself and others:

1. Freeze or cancel payment: Notify your bank of the suspected scam and immediately freeze or cancel any forms of payment you shared with the scammer.
2. File a complaint: File a complaint with the FTC as soon as possible.