Whether the contract covers incidental expenses, such as towing and the costs of a rental car while your car is being serviced. Whether repairs and routine maintenance, such as oil changes, can be performed at locations other than the dealership from which you purchased the contract. Whether there is a cancellation and refund policy for the service contract, and what the costs are if you cancel. Whether the dealer or company offering the service contract is reputable. Read the contract carefully to determine who is legally responsible for fulfilling the terms of the contract.
Some dealers sell service contracts that are backed by a third party.
If a third party is responsible, you may wish to ask if the company is insured and to check the company's performance with your local Better Business Bureau. If a service contract is offered, the dealer must mark the box provided on the Buyers Guide, except in those states that regulate service contracts under their insurance laws. If the Buyers Guide does not include a reference to a service contract, and you are interested, ask the salesperson whether one is available. When you purchase a service contract from the dealer within 90 days of buying the vehicle, federal law prohibits the dealer from disclaiming implied warranties on the systems covered in that service contract. But if you buy a service contract covering the engine, you automatically get implied warranties on the engine, which may give you protection beyond the scope of the service contract.