Maintenance plans, service plans and warranties – confused?

When purchasing a new or used vehicle knowing what maintenance plan, service plan or warranty to get can be overwhelming. 

And in today’s economy, every cent spent needs to make sense for our specific circumstances.

Les Mc Master, chairman of the Motor Industry Workshop Association, says it is important to understand what the differences are between the three options available so you can make an educated decision on where to put your money.

Interestingly we find that many vehicle owners don’t fully understand what their specific plan covers. This leads to many complaints when repairs are needed, especially when the owner thinks the repairs should be covered by the plan, but in fact are not.”

He highly recommends taking the time to understand what is and isn’t covered by the different plan options and to ask questions if in doubt.

Warren Fryer, Dealer Relations Manager at Motorite Administrators, takes a moment to outline what each option entails. 

“Firstly emphasis must be made that a service plan is not a maintenance plan. A service plan covers only service parts and labour used in accordance with a manufacturer’s service schedule.

“Parts that are replaced on a scheduled service such as oils, filters, spark plugs, air filters (when required and stipulated by the specific service) are covered by a service plan. Additional parts such as brake pads, v-belts, brake linings etc. are excluded from a service plan.”

Items generally not covered by a service plan include:

• Internal and external trim, body work and paint due to normal wear and tear.

• All glass, tyres, wheels, wheel alignment, accessories, electrical wiring components.

• Additional maintenance that may be required as a result of the vehicle being operated in severe or unusual conditions.

• Additional maintenance that may be required as a result of any modification made to the vehicle.

• Additional maintenance that may be required as a result of:

o Accident, damage, abuse or misuse or consequential damage as a result of such an action.

o Failure to use the vehicle in accordance with the instruction contained in the vehicle service book.

o Failure to ensure that the vehicle is properly, regularly and punctually serviced in accordance with the instruction and recommendations specified by the vehicle manufacturer in the owner’s handbook.

“A vehicle maintenance plan covers regular scheduled vehicle services as well as specified wear-and-tear on parts and labour costs. This means that certain problems that are not part of a routine car service and the labour costs involved to repair them will be covered.

Examples of items covered in maintenance work include clutch, exhaust, globes, fuses, brake pads, brake discs, shock absorbers, v-belts and wiper blades,” he says.

Fryer points out that a maintenance plan makes budgeting for a vehicle’s maintenance needs simple. 

“It is a convenient way of ensuring that your maintenance costs are taken care of. These costs are also fixed which means they do not change throughout the duration of your contract. Inflation does not affect your maintenance costs should you decide on taking out a maintenance plan.

“In some cases, especially where there is a built-in maintenance plan at purchase, car owners are required to pay an additional fee into the maintenance plan as the years progress. This will be stipulated in the maintenance plan contract so make sure you familiarise yourself with this aspect.”

When it comes to a warranty, Fryer stresses that this is insurance cover against vehicle mechanical breakages and the repairs resulting from the failure of these covered items.

“Each warranty may be similar to another but may differ in the items covered and, in terms of used vehicle warranties, the maximum benefit limits,” he says.

The term ‘Extended warranty’ is used when a warranty has been designed to follow a manufacturer’s standard warranty when the vehicle is bought new. These warranties are often unlimited in terms of the benefits on covered items.

A ‘Used car’ warranty is designed to cover mechanical breakages on covered items but is limited to a maximum benefit depending on the age of the vehicle in terms of years and mileage. Examples of what components may be covered under a warranty include the engine (including turbo chargers); fuel system and fuel pump; drive shafts and axles; brake components etc.

“There are many differentiators in warranty policies hence the various pricing structures.

Always compare against another warranty to ensure that you choose the most cover for the amount of money you will be paying. It is the owner’s responsibility to ensure the servicing schedule is strictly adhered to, to ensure that the plan remains valid,” he advises.

So what plan options should a vehicle owner go for when buying a new or used vehicle?

Fryer says this depends on the needs of the consumer but generally for an older vehicle, especially one with an unknown history, it is advisable to consider a warranty to cover unforeseen repairs.

“It is also advisable to consider a service plan so that you have the peace of mind that for a certain amount of services the vehicle will be properly maintained. Correct servicing often results in preventing large repairs should the service repairer identify a problem when it is relatively small.”

”If a vehicle already has an underlying warranty and service plan, and your budget allows, you may want to consider upgrading to a maintenance plan which ensures that most expenses in terms of mechanical breakage, service costs and wear and tear costs would be covered within the duration of the plan,” he explains.

“In most cases when you buy a new car in South Africa the warranties and service plans are built into the price of the vehicle. As the consumer you don’t have the option of declining these items. They come with the vehicle as a package. In much the same way as the manufacturer sells a vehicle with a specific brand of tyre, they will sell the vehicle standard with a warranty, service plan, maintenance plan or combination,” he says.

Mc Master says while these plans are often viewed as so called grudge purchases, if done properly, they often prove to be well worth the money paid. 

When buying a vehicle, especially a used vehicle, you can’t be sure of the maintenance history of the vehicle. 

“Owner abuse and lack of maintenance can add undue stress on mechanical components that limits their lifespan. It’s always wise to be prepared should an unforeseen mechanical failure take place.

“The key, however, is making sure you understand the plan or policy and what the terms and conditions are that will enable the plan/policy to remain valid and enforced before signing anything,” he concludes.

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