Back in the summer of 2007 one of my clients purchased a used Land Rover Discovery from a dealer. It came with a mechanical breakdown warranty issued by an aftermarket auto warranty company. On the date of purchase the car had 85,000 miles and 3,500 miles later it broke on the highway and had to get towed. The claim was called in to the company that issued the warranty in accordance with the contract terms. The vehicle was taken to a local dealer where the rear axle had to be broken down for inspection. The inspector advised that the damage was not a covered claim by the warranty because it was a wear & tear failure. The selling dealer insisted that the vehicle had no problems at the time of sale, so he could not be held liable for the cost of repairs. The repairs needed entailed replacing a seized rear differential following a bearing failure. The vehicle needed to get back on the road so the repairs were completed and the issue is now in small claims court.

The moral of the story is when purchasing an auto warranty for your used car be sure that the plan is of the highest caliber.  Read through the contract as some used car warranties leave much to be desired.