Here’s a question worth asking: if you’re still using insurance-backed warranty providers, what protection are you actually buying?
You’re paying £150 to £300 per warranty to transfer risk. That’s what insurance does. You pay a premium, they carry the liability. Except here’s the problem: they’re often not carrying the liability you think they are.
We’ve reviewed the terms from several major warranty providers. The exclusions lists can be extensive. Some exclude components like tailgate struts, exhaust manifolds, fuel tanks, coolant systems. Things that can go wrong on used cars and that the Consumer Rights Act says you’re liable for if they fail due to a defect at point of sale.
One provider we reviewed even excludes “well-publicised faults”. The issues most likely to happen on any given model. If you can Google it, it’s not covered under their terms. So that clutch problem affecting thousands of that particular vehicle? Check the exclusions. The gearbox issue everyone knows about? Might not be their problem.
Here’s what we’ve consistently found isn’t covered: consequential losses. Recovery costs when the car breaks down. Hire car while it’s off the road. Accommodation if the customer is stranded. Under Consumer Rights Act, you can be liable for all of that if the fault stems from a defect at sale. Most warranty companies won’t touch it.
So what are you actually paying for? Often it’s partial protection on a specific list of components, with a claims process designed to minimize payouts, and a premium structure that assumes you’ll never claim. Meanwhile, you’re still carrying liability for anything the warranty excludes but Consumer Rights Act covers.
Running your own warranties isn’t radical. It’s been happening for nearly three decades. It’s the norm now, and more dealers switch every year because it makes commercial sense. Insurance-backed warranties are a declining model. The question isn’t whether to do it. It’s why some dealers are still paying middlemen to do what they could do better themselves.
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