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Media > Newsletters > Consumer Advocate > February 2015 > What You Should Know About Warranties and Service Contracts

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What You Should Know About Warranties and Service Contracts

While warranties and service contracts may seem to be similar agreements, they have important differences. If you are buying a vehicle or making another high-ticket purchase, make sure you understand what you can expect from each.
The main difference between a warranty and a service contract is that warranties are provided by a manufacturer or seller and are included in the price of the product. In contrast, service contracts typically are provided by third-party vendors for an extra cost beyond the original cost of the product.
Typically, service contracts are offered when purchasing motor vehicles, homes, major appliances, and electronics. For example, a salesperson may offer you a service contract to cover your car after the original warranty has expired or to cover future repairs to your home or appliances.
Although the coverage from a service contract often is referred to as an “extended warranty,” it is not a warranty at all.
Some service contracts may only provide the coverage already included in the original warranty. Other service contracts may be written to deny many types of repairs by offering very limited or partial services. In some cases, you will only be able to use specific mechanics or repair facilities under the contract.
When considering the purchase of a service contract, the key is to understand all of the benefits and limitations of the deal and to decide if the cost is worthwhile.
The coverage and costs of service contracts can vary greatly, so it is important to read the terms and conditions carefully. In particular, make sure the service contract offers more protection than what you already are receiving under the warranty.
Also remember, no matter if it’s a warranty or a service contract, if it’s not in writing, it’s not guaranteed. Always get all verbal promises in writing.

If you suspect an unfair business practice in any consumer transaction, contact the Ohio Attorney General’s Office by calling 800-282-0515 or visiting