issue a refund based upon unused mileage and time, as the dealer usuallycannot transfer the contract to a new owner. If you sell the car on the retail
market, you can offer to transfer the service contract to the buyer, and askmore for the vehicle to compensate you for not taking the refund. As an
example, if you bought a 4-year/50,000-mile service contract for $2,000and sold it two years later, with half the mileage allotment remaining, you (^)
can expect to receive roughly 40 to 45 percent of its value back if you tradein, or ask for $1,000 from the retail buyer if you sell outright. The
administrator will provide whatever cancelation or transfer forms areneeded.
TYPES OF COVERAGE
There are two main categories of coverage for parts and service contracts:Stated component coverage and exclusionary coverage. In the first, only
the components listed on the contract will be covered. Common names forthis type of limited coverage are “Powertrain” and “Powertrain-plus”
coverage. If something isn’t listed, they won’t cover its repair—or the repairof other failures caused by it. This is called “consequential damage,” and is (^)
the major limitation of stated component coverage.
consequential damage. TIP: Even factory warranties can have clauses about^
The typical 5-year/60,000-mile powertrain warranty that extends out afterthe “full” factory warranty has expired is an example of this. Often, it only