Bottom Line First - do your research people, make an informed decision on buying a service contract (which is what these are).
I was presented an offer for an AUL "service contract" today when I bought a 2015 used car. I read over the eight-page brochure and decided AGAINST purchasing AUL's service contract.
This is a review of the AUL's "sales pitch" to pay $2,900 for its (best) service contract. This is NOT a review of AUL's performance on a claims made under its contract.
Backstory: I have years of experience with service contracts, back from the days when it was called an extended warranty, or insurance.
NOT A WARRANTY: Because these contracts are NOT a manufacturer's warranty, California long ago prohibited these contracts being represented as a "warranty." This is because these contracts are NOT an extension of a manufacturer's warranty. The only true manufacturer's warranty is that offered by the manufacturer when you buy a new car at the dealership, e.g., Nissan, Honda, Toyota.
NOT INSURANCE: AFAIK none of these contracts are insurance. Generally, insurance is where you protect against accidents or casualties. Since these service contracts do not insure your car against mechanical damage caused by an accident or flood, for example, calling service contracts "insurance" is outlawed.
NOT "CERTIFIED PREOWNED" (CPO) Coverage: I have had CPO cars. CPO is now a term of art in used car sales. It means the car manufacturer/dealership is selling you a USED car where the manufacturer is extending the original vehicle warranty for the number of years specified in the used car contract. Note: You pay a higher price for a CPO car but you get the comfort of an ironclad manufacturer extended warranty.
SO WHAT ARE THESE: Most states that regulate these contracts consider them "service contracts." For a sum of money paid the company agrees to provide the services listed in the contract, and MOST IMPORTANT to DENY claims pursuant to the contract's exclusions.
Buyer Beware: The (flashy) sales brochure is NOT the service contract. The CONTRACT is the small print, complex language document the salesman presents to you for signature. Indeed, the AUL brochure says "These are general coverage descriptions. Please refer to the service contract for complete terms and provisions."
Bottom Line: Consumer Reports (I'm a subscriber) has rarely recommended purchase of (expensive) service contracts. The trouble with them, and I agree, is the contract's EXCLUSIONS (things that are not covered). Exclusionary language gives the service contract company company a lot of wiggle room on interpretation, i.e., terms worded in a manner to DENY claims made.
P.S. I do recall a few friends over the past 30 years who have purchased service contracts and thousand dollar or three in claims were paid. That seems a ringing endorsement, but today I read the brochure's technical language, exclusions, and what was covered. I didn't understand most of what it said, so I passed on purchasing the contract.
P.P.S. In December 2018 AUL's prices were from by 12 to 60 months. Example pricing: for 60 months / 50K miles as follows: Vintage - $2,300 (the basic plan) up to Reserve (the highest plan), for $2,900.
DO YOUR RESEARCH BEFORE BUYING! read more