Vehicle Service Contract and Automotive Aftermarket Terminology
American Auto Shield wants to make sure you understand everything about your American Auto Shield Vehicle Service Contract coverage, including common terms used in the automotive aftermarket industry.
What’s the automotive aftermarket industry? Find out in our list of common terms.
Administrator / Claims Administrator
The company that is contractually obligated to perform under the Vehicle Service Contract; they will authorize and pay the repair facility for covered repairs to your vehicle. The claims administrator works with the repair facility to make sure your claim is handled properly. Because they are the company that pays your claim, their financial strength is an important factor in choosing a reliable company.
A.M. Best Company
A worldwide insurance-rating and information agency founded in 1899. Policyholders and depositors refer to Best’s ratings and analysis as a means of assessing a company’s financial strength and stability. An A rating (A+, A, A-) is the highest A.M. Best rating an insurance company can receive.
The approval provided by a claims administrator to permit repairs to be performed under the terms of the Vehicle Service Contract.
The approval number assigned by a claims administrator indicating repairs are permitted under the terms of the Vehicle Service Contract.
The standard warranty that every new vehicle sold comes with. All factory-installed parts are covered against defects. Typical manufacturer warranties are 3 years or 36,000 miles or 4 years or 50,000 miles. Check your vehicle’s manufacturer’s warranty manual for specific information. Also called Manufacturer’s Auto Warranty or Factory Warranty.
The specific terms established by each manufacturer to repair vehicles through a specified mileage and/or time period. All factory-installed and many dealer-installed parts are covered under this warranty.
Better Business Bureau (BBB)
A reputable source that consumers can use to research a company’s background and profile. In order to participate in the Accredited Business Program, a company must agree to abide by the Better Business Bureau Code of Business Practices, have a satisfactory complaint handling record, agree to participate in the BBB’s advertising self-regulation program, and agree to dispute resolution with the BBB. Most of the companies who participate in these programs value their standing with the BBB and strive to handle complaints as professionally and expeditiously as possible. You can look up a company’s Better Business Bureau report and rating by visiting www.bbb.org.
BBB ratings represent the Better Business Bureau's opinion of the business. The BBB rating is based on BBB file information about the business. The BBB assigns letter grades from A+ (highest) to F (lowest). In some cases, the BBB will not grade the business (indicated by an NR, or "No Rating”) for reasons that include insufficient information about a business or ongoing review/update of the company’s file. BBB Business Reviews generally explain the most significant factors that raised or lowered a company’s grade and are based on information in BBB files with respect to the following factors:
- Company’s complaint history with the BBB
- Type of business
- Time in business
- Background information on business in BBB files
- Failure to honor commitments to the BBB
- Licensing and government actions known to the BBB
- Advertising issues known to the BBB
Many cars sold used or off lease are certified by the manufacturer. This means they have undergone a quality inspection process prior to sale. Often, a limited powertrain warranty is attached to them. Most do not have exclusionary coverage. There is no industry standard for certification. Dealers and/or manufacturers often add a significant cost to certified vehicles.
Claims Reserve Account
An insured account that the claims administrator will maintain to pay future claims.
Any automobile used for business purposes. Tow trucks, taxis, police vehicles and vehicles used for emergency purposes are normally excluded from Vehicle Service Contract coverage.
Parts such as tires, batteries, clutch plates and wiper blades that are generally not covered under any warranty or Vehicle Service Contract.
Covers rust through perforation on sheet metal and is offered as original warranty on new vehicles. Vehicle Service Contracts do not cover corrosion.
Any part of the vehicle listed in the service contract as a covered part and not excluded from coverage by the Vehicle Service Contract.
The amount you pay the repair facility for work once the vehicle is repaired. Vehicle Service Contracts are typically offered with different deductible options ($100, $50 or zero). Find out how the deductible is applied. Better Vehicle Service Contracts will apply the deductible on a per repair visit basis. Beware of those that apply the deductible on a per part basis.
The effort by the repair facility to determine the cause of the vehicle’s problem, and to determine the necessary course of repair. Most contracts typically do not cover diagnostics, unless the diagnostics lead to the repair of a covered component.
Dun & Bradstreet (D&B)
A trusted third party source that thousands use every day to determine the credibility and legitimacy of a company. You can look up a company’s D&B report by visiting www.dnb.com.
The components that transmit the flow of power from the engine to the wheels. The components include the clutch, transmission, drive shafts (or axle shafts in front wheel drive), U-joints and differential.
A limited warranty from the manufacturer that covers certain parts of your vehicle’s engine, transmission and drive train assembly. If any of these components fail while the vehicle is covered under the warranty, the manufacturer is responsible for the repair. These warranties cover about 25% of the vehicle, and some of the most expensive parts of a vehicle. Also called Powertrain Warranty.
The Federal Emissions Warranty guidelines are based on federal regulations and apply to vehicles in all 50 states. Vehicles are covered by two types of emissions control system warranties, “Emission Defect Warranty” and “Emissions Performance Warranty.” Depending on the state you live in, the Performance Warranty is for 3 years/50,000 miles. The Defect Warranty is generally consistent with the manufacturer’s bumper to bumper warranty with certain parts (catalytic converter and electronic emissions controls (PCM)) for up to 8 years/80,000 miles. Please refer to your vehicle’s owner’s manual for your exact coverage.
Extended Auto Warranty
A Vehicle Service Contract is often incorrectly referred to as an “Extended Auto Warranty”, although as defined by federal law, only a manufacturer can offer a warranty – extended or otherwise, and they are usually offered through dealerships.
Exclusionary coverage offers coverage for all of the parts and components of the covered vehicle, with the exception of those parts and components specifically listed in the contract as “not covered”. Exclusionary coverage is the most comprehensive Vehicle Service Contract coverage you can purchase. Sometimes referred to as Bumper to Bumper coverage.
Gray Market Vehicle
A vehicle not manufactured for sale in the U.S. They often do not meet U.S. standards and carry no manufacturer warranty. These vehicles are typically ineligible for Vehicle Service Contract coverage.
A coverage plan that lists the parts that are covered by the Vehicle Service Contract. If the component or part is not listed, then it is not covered. Also called Named Component Coverage.
The date the vehicle was purchased by the original owner and driven off the lot or the date the vehicle was placed in use for rental, demonstration or other purposes.
The insurance company that guarantees the obligations and responsibilities of the Vehicle Service Contract provider and/or claims administrator.
Lemon Law Vehicle
A vehicle with (a) major, repeated problem(s) that has been repurchased by, or had its purchase price renegotiated with, the manufacturer. The state then earmarks these as Lemon Law or Buyback vehicles. These vehicles are ineligible for Vehicle Service Contract coverage.
Limited Product Warranty
A warranty with certain conditions and limitations on the parts covered, type of damage covered, and/or time period for which the agreement is good.
Any part that requires lubrication to perform its function.
The normal, routine maintenance that is recommended by the manufacturer of your vehicle to keep your vehicle in optimum condition. These include such things as oil changes, tune-ups, checking fluid levels, tire rotations, wheel alignments, belts, hoses and others as described in your owner’s manual. All Vehicle Service Contracts require that you properly maintain your vehicle.
Auto Warranty / Factory Warranty
The standard warranty that every new vehicle sold comes with. All factory-installed parts are covered against defects. Typical manufacturer warranties are 3 years or 36,000 miles or 4 years or 50,000 miles. Check your owner’s manual for specific warranty information.
The act or process of failing to function or continue.
Named Component Coverage
A coverage plan that lists the parts that are covered by the Vehicle Service Contract. If the component or part is not listed, then it is not covered. Also called Inclusionary Coverage.
Payment Plan Company
The company that provides and handles payment plans for the purchase of your Vehicle Service Contract.
A limited warranty from the manufacturer that covers certain parts of your vehicle’s engine, transmission and drive train assembly. If any of these components fail while the vehicle is covered under the warranty, the manufacturer is responsible for the repair. These warranties cover about 25% of the vehicle, and some of the most expensive parts of the vehicle. Also called Drivetrain Warranty.
A title issued on a vehicle where an insurance company has declared the vehicle a total loss. These vehicles were typically involved in a flood or severe accident. These vehicles are not eligible for Vehicle Service Contract coverage. Also called a Salvage Title.
When a manufacturer recalls vehicles it has manufactured back to the dealership for specific repairs related to unplanned mechanical problems and/or safety issues. Recalls are usually voluntary and are made in conjunction with regulatory control of the National Highway Traffic Safety Agency (NHTSA). They can originate with the manufacturer or with the NHTSA. Repairs performed under a recall are usually free to the consumer.
A licensed automotive repair shop located in the United States or Canada. This includes dealerships, local mechanics or national repair facilities.
A title issued on a vehicle where an insurance company has declared the vehicle a total loss. These vehicles were typically involved in a flood or severe accident. These vehicles are not eligible for Vehicle Service Contract coverage. Also called a Rebuilt Title.
A company that sells Vehicle Service Contracts or other automotive aftermarket products. Selling companies can range from dealers and direct marketing companies to membership organizations and financial institutions.
Service Contract Industry Council (SCIC)
The Service Contract Industry Council (SCIC) is a national trade association that works with lawmakers across the country to develop fair and uniform regulation to protect consumers, and is an advocate for the regulation of the service contract industry. The SCIC monitors state legislative and regulatory activities, contributes to relevant legislative and administrative proceedings, and educates businesses and consumers about the value and benefits of service contracts. Since 1988, the SCIC has been the national leader and pivotal force in the development of model legislation throughout the country, working for balanced standards that create fair and consistent regulation of the service contract industry.
Technical Service Bulletin (TSB)
This bulletin is produced by the vehicle manufacturer and alerts automotive technicians about specific service problem areas, repair procedures, and new service techniques for a vehicle. Thousands of these are issued each year.
A vehicle owner with Vehicle Service Contract coverage can transfer the coverage to the new owner of the vehicle if it is sold privately. A Vehicle Service Contract cannot be transferred to a dealer or auction house.
Vehicle Identification Number (VIN)
A unique 17-digit identifier of your vehicle. The most common areas the VIN can be found are:
- On the driver’s side dashboard of your car
- On your insurance card
- On the title to your vehicle
- On the vehicle’s registration card
- On a sticker inside the driver’s side door
Vehicle Protection Association (VPA)
The mission of the Vehicle Protection Association (VPA) is to promote regulatory transparency, education and accountability, and compliance and stability for marketing and servicing of Vehicle Service Contracts. The VPA is a not-for-profit trade association representing firms that are active in the automotive service contract industry. Members include service contract marketers, administrators, payment processing companies, insurers, and software providers.
Vehicle Service Contract (VSC)
An agreement between a consumer and the service contract provider to pay for the cost of repair or replacement of covered mechanical parts or systems that fail. In short, it is a promise to perform certain services for the consumer and to pay for covered repairs to the vehicle under the terms of the Vehicle Service Contract.
A period in which no benefits will be paid if failure occurs within the specified time frame.