allow retailers to mark up contracts 100
percent and more over the actual cost they
pay to the service contract company. That’s
pure profit earned just by getting you to sign
on the dotted line. Consumers usually get
a better deal on service contracts that bear
the name of a manufacturer because these
usually limit the dealer markup amount.
Don’t forget, though, that service contract
prices are a negotiable part of the sale. Some
companies, like Yamaha, allow you to buy
a contract directly through them, bypassing
FACT 8. Independent service contracts
require preauthorization before starting repairs. While that’s fair, some companies may require you to use their network
of shops, just like health-care PPOs, and
there may not be a facility in your area.
Manufacturer-backed service contracts usu-
ally perform more like warranties — simply
bring in your engine for service and the
dealer takes care of all the paperwork and
billing. While you’re limited to using only a
manufacturer’s dealer for repairs, it’s usually
not a problem because they have a vast net-
work of competent repair shops. Beware of
contracts that require you to use the selling
dealer for repair work. It won’t be very use-
ful if you’re away from home or if the dealer
can’t handle the repairs.
FACT 9. Most service contracts are
transferable, for a fee. A new owner may
need to pay a prorated amount of the contract. In that case, the seller may get a refund
of the same amount, which can be used as
part of the negotiations. But beware, not
all contracts are transferable. Manufacturer-backed programs are usually pretty straightforward and charge a small flat fee, but also
require an inspection from a dealership for
the new owner to qualify. Find out the details
before you buy the contract, not when you
sell your boat.
FACT 10. You may be able to cancel the
contract within 30 days of purchasing
of buying a boat. Typically, you’ll pay a
prorated amount plus a fee. Review the com-
pany’s contract to see how it works.
Most defects in new boats and engines
show up within the warranty period, so
spending money up front on a service contract may not make sense. If you decide to
buy, manufacturer-backed service contracts
typically provide better coverage and more
accountability, though they may cost more.
Consumers also need to look into the reliability history of their vessels and engines.
Some models with higher-than-average problems might benefit from a service contract.
The BoatU.S. Consumer Protection Database
contains thousands of firsthand reports about
boats and engines. This invaluable online
resource, created by consumers for consumers, is available only to BoatU.S. members at
For more information about boat buying,
warranties, and service contracts, download our
free “BoatU.S. Guide to Buying and Selling
a Boat,” at www.BoatUS.com/Guide and
“BoatU.S. Guide to Marine Service,”
For more on whether you
should buy an extended warranty, see this article online,
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