IT USED TO BE THAT DECIDING whether or not to buy an extended-service contract on your engine (erroneously called extended warranties by some) was pretty easy. Until recently, our answer to the question was simple: Don’t. Service contracts of old were more profit centers for dealers than benefits for buyers, and navigating the exclusions and other confusing
small print was downright scary. But manufacturer-backed service contracts
have raised the bar; the question now deserves a second look. Here are some
facts to help you decide if buying one makes sense for you.
SHOULD YOU BUY AN EXTENDED-SERVICE CONTRACT?
Offerings from manufacturers can take some of the risk out of service contracts,
but make sure you know the facts before you buy
FACT 1. Extended “warranties” you
have to buy aren’t really warranties,
they’re service contracts. A warranty
is a promise by the manufacturer that their
product will be free of defects for a period of
time. Warranties, by law, are included in the
purchase price. A true warranty offers broad
coverage and has the weight of state and
federal warranty laws behind it. Problems
with your new boat or engine, aside from
wear and tear, accident, or abuse, will be
covered under a manufacturer’s warranty.
Service contracts, on the other hand, are
really insurance policies generally underwritten by third parties, not manufacturers, and
are regulated as such in most states. They are
simply an agreement to pay for repairs only
if the breakdown is covered, and they must
be purchased at additional cost. Service
contracts are often marketed as “extended
warranties,” implying that the boat or engine
manufacturer will cover repairs after the
original warranty has expired, just as they
would if it were covered under the original
factory warranty. Usually, they don’t. But
manufacturer-backed service contracts from
companies such as Yamaha and Mercury
Marine are beginning to perform much the
same way as warranties, though they still fall
outside of state and federal warranty law.
Yamaha’s Extended Service (YES) program is underwritten by an insurance company, but because it’s managed directly
through Yamaha, it acts more like a true warranty and, for most people, it feels similar.
Mercury Marine’s Product Protection program uses no outside underwriting, allowing
the company to tailor their service contracts
to more closely mimic their factory warranty.
FACT 2. Service contracts have limitations that true warranties don’t. Over
the years, BoatU.S. Consumer Protection
has received numerous complaints where an
Buying an extended
service contract may
help you avoid paying
for repairs later.
BoatU.S. CONSUMER PROTECTION BY CHARLES FORT