Service Contract Industry Council Responds to Consumer Reports Survey on Extended...

Service Contract Industry Council Responds to Consumer Reports Survey on Extended Auto Warranties

TALLAHASSEE, Fla.--(Business Wire)--
In response to a Consumer Reports survey on "extended auto
warranties," as reported in the April 2008 issue, the Service Contract
Industry Council (SCIC) believes the magazine did a disservice to its
readers by omitting key information that would help consumers make an
objective decision about motor vehicle service contracts.

In a letter to the editor of Consumer Reports, SCIC Executive
Director Timothy J. Meenan said auto buyers and owners can be better
equipped to evaluate extended service contracts with information that
addresses "the regulatory and consumer protections in place, value and
benefits, contextual details providing relevance in today's market,
and additional tips for maximizing value after purchase."

Mr. Meenan further stated:

"Extended service contracts for today's sophisticated cars,
trucks, vans and SUVs - whether new or used - are an efficient way for
consumers to protect their investment and ensure that their vehicles
perform in topnotch condition and remain reliable day after day, year
after year. Offering two-prong protection, extended service contracts
can fill in gaps in the manufacturer's warranty and take over when it
expires, providing vehicle owners with many benefits.

"In today's economy, millions of people are keeping their vehicles
longer, carrying longer-term loans, and seeking the protections
offered by extended service contracts. These protections can help
consumers manage unexpected and costly repairs and add value and
longevity to a vehicle by helping them resolve problems quickly
without budgetary concerns or delays.

"As the April issue noted, motor vehicles offer varying
performance expectations. A typical service contract can help close
the performance gap by covering costly-to-repair systems not covered
by the manufacturer's power-train warranty, such as air conditioning,
power windows, and electronic systems, including the vehicle's
navigation system. As a result, extended service contracts can often
pay for themselves after only one claim.

"In addition, extended service contracts often are transferable at
the time of sale. All providers must refund the owner any unearned
portion of the retail service contract cost when it is cancelled at
any time prior to the contract expiration.

"The Service Contract Industry Council is hard at work urging
lawmakers to mandate consumer protections. Thus far 37 states have
enacted specific laws governing motor vehicle extended service
contracts. In these states, companies offering extended service
contracts typically are required to fulfill their financial
responsibility to the consumer in one of the following ways: (1)
insuring the program through a contractual liability or reimbursement
insurance policy, (2) maintaining reserves and placing a deposit on
file with the state, or (3) maintaining a minimum net worth of $100M.

"In many states, extended service contracts come with a 'Free
Look,' usually 30 days. If a consumer believes he or she acted
impetuously or changes his or her mind for any reason, the contract
can be cancelled during this period for a full refund.

"As with most laws, there may be exemptions from certain
requirements. It is important for consumers to research the company or
provider as well as any insurer backing it.

Consumers who purchase extended service contracts are urged to
thoroughly read and understand the terms and fully adhere to the
manufacturer's recommendations for routine maintenance to ensure they
gain the most value and benefit when utilizing or activating their
extended service contract. Also, it's important for consumers to keep
detailed records, including receipts, to prove that the vehicle was
properly maintained.

"The Service Contract Industry Council encourages consumers to
fully understand the benefits and value of auto extended service
contracts and seek out the protections they offer based on their
individual needs. We also urge consumers to file claims against their
contracts to maximize their value and to protect and enhance their
motor vehicles. To help consumers learn more about extended service
contracts, we invite them to visit our website, www.go-scic.com."

Editor's Note: Mr. Meenan is available for interview.

For the Service Contract Industry Council:
Phyllis Laorenza Linnehan, 781-275-7226
phyllisll@verizon.net
or
Greg Venne, 781-640-4196
gregvenne@yahoo.com
or
Jane Meehan Lanzillo, 617 244-0448
jmlanzillo@rcn.com

Copyright Business Wire 2008