Consumer Reports Advises: Do Not Buy Auto Repair Service Plans
In its June issue, Consumer Reports flatly advises against buying any service plan. One reason not to buy a service contract is that cars manufactured in the last five years have far fewer problems than in years past. In the article, CR pointed out that two-thirds of owners of five-year old cars reported no problems and serious repairs such as engine or transmission replacement, "were quite rare."
Dealers often sell contracts administered by third parties whose main role is to deny expensive claims. The fine print in the service contracts provides unreasonable conditions, which, if not met, lead to the administrator denying coverage. One favorite is that there is no coverage for defects that manifest in the first 30 days or 3,000 miles of ownership. Another is a requirement to change oil and transmission fluid more often than what is recommended by the manufacturer.
From what my clients have reported to me, the manufacturers' service plans such as the GM Protection Plan do not use dishonest tactics to deny claims, but given how reliable cars are today, the plans are probably not a good investment. Consumer Reports concurs on that point.
