Glossary of Vehicle Service Contract Related Terms

If you are considering the purchase of a Vehicle Service Contract (or have purchased one), it is important that you are familiar with the common terms used in the Vehicle Service Contract industry.

Common Vehicle Service Contract and Automotive Aftermarket related terms:

A-Rated Insurer

A.M. Best's Financial Strength Rating is an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations. It is based on a comprehensive quantitative and qualitative evaluation of a company's balance sheet strength, operating performance and business profile.

An A.M. Best "A" rating is assigned to companies that have, in A.M. Best's opinion, an excellent ability to meet their ongoing insurance obligations, and are given the descriptor "Excellent" for financial strength.

All SunPath Vehicle Service Contracts are backed by carriers with an A.M. Best "A" rating.

See A.M. Best for more information.

Additive Product Warranty

An express warranty warranting a motor vehicle lubricant, treatment, fluid, or additive that covers incidental or consequential damage resulting from a failure of the lubricant, treatment, fluid, or additive.

SunPath Ltd. does not offer Additive Product Warranties.

Administrator

The party responsible for claims adjudication of a service contract.

SunPath is an administrator of vehicle service contracts.

A.M. Best Company

A.M. Best Company provides news, credit ratings and financial data products and services for the insurance industry.

Among other things, A.M. Best is an issuer of financial strength ratings of insurers, reinsurers, captives and other risk-bearing entities, and a publisher of in-depth reports on industry segments and key topics. See A.M. Best's website for more information.

Authorization

An approval issued by the Vehicle Service Contract Administrator to the repair facility to allow a repair to be performed.

Auto Warranty

A common reference to a manufacturer's warranty. A manufacturer’s warranty is coverage provided when purchasing a new vehicle and comes directly from the manufacturer of that vehicle. This coverage is designed to cover defects and problems that may have arisen during the manufacturing, assembly, or design process of the automobile.

Basic Warranty

A common reference to a manufacturer's warranty. A manufacturer’s warranty is coverage provided when purchasing a new vehicle and comes directly from the manufacturer of that vehicle. This coverage is designed to cover defects and problems that may have arisen during the manufacturing, assembly, or design process of the automobile.

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)

The Better Business Bureau (BBB), founded in 1912, is a nonprofit organization focused on advancing marketplace trust, consisting of 112 independently incorporated local BBB organizations in the United States and Canada, coordinated under the Council of Better Business Bureaus (CBBB) in Arlington, Virginia.

The BBB serves as an intermediary between consumers and businesses, handling customer disputes and inquiries. The BBB also alerts the public to scams, reviews advertising, and assists when donating to charity.

SunPath is an accredited member of the BBB representing Eastern Massachusetts, Maine, Rhode Island and Vermont. See more about SunPath on the BBB website.

Breakdown

Defects in materials and workmanship of a covered part to perform the function for which it was designed by its manufacturer.

Certified Car / CPO

A certified pre-owned car or CPO is a type of used car.

Most often late-model, they differ from other used cars by having been inspected, refurbished, and certified by a manufacturer or other certifying authority. They also typically include an extended warranty, special financing, and additional benefits.

Claims Reserve Account

An account containing funds from which the Administrator uses to pay claims.

Consumable Items

Parts such as fluids, tires, batteries, clutch plates, throw-out bearings and wiper blades that are generally not covered under any vehicle service contract or warranty.

Corrosion Warranty

Corrosion warranty coverage is oftentimes provided by the vehicle's manufacturer and typically includes naturally occurring corrosion during a set period of time. Corrosion coverage usually covers the corrosion or rust that can occur on the surface (or paint) of your vehicle after the paint and protective layers have been compromised from an accident or natural exposure.

Covered Part

Parts or components listed as "Covered Part(s)" in the service contract which are subject to responsibilities for vehicle maintenance and not excluded from coverage by the service contract.

Deductible

The amount defined in the service contract that must be paid each time a claim repair is made under the service contract.

Diagnostics

The effort by the repair facility to determine the cause of the vehicle’s problem (often through the vehicles OBD connection), and to determine what is necessary to repair the vehicle. Most plans typically do not cover diagnostics, unless the diagnostics lead to the repair of a covered component.

Drive Train

The components that transfer power from the engine to the wheels. The components typically include the clutch, transmission, drive shafts, U-joints and differential.

Drivetrain Warranty

Also known as a "powertrain warranty," a Powertrain Warranty is a warranty offered by the manufacturer that covers all parts of the power train of the vehicle. A powertrain is typically made up of the engine, transmission and drivetrain.

Emissions Warranty

In order to meet the emission standards set by the federal government, the federal government requires that every manufacturer offer a limited warranty emissions control on the vehicles they build. The Federal Emission Warranty covers any repairs needed to correct defects in materials or workmanship which would cause your vehicle not to meet the Environmental Protection Agency (EPA) standards.

Extended Warranty

An extended warranty is only offered by the manufacturer, and is a warranty that is in effect past the expiration date of the original new car warranty.

Exclusionary Policy

A vehicle service contract that offers comprehensive coverage in which it is shorter to list the items not covered (excluded) by the VSC than it would be to list the thousands of items that are.

SunPath's exclusionary coverage is called Horizon Diamond.

Inclusionary Coverage

A service contract that covers most of the major parts and components on your vehicle. These policies will list all components covered or included in the service contract. If the part is listed in the policy it is covered.

SunPath's inclusionary coverage offering is called Secure Advantage

In-Service Date

This is the date when a vehicle is placed into operating service. Typically this date is defined by the date the vehicle was first purchased and driven off the lot or used as a demo.

Insurer / Insurance Company

 

Lemon Law

Laws governing the rights of purchasers of new and used motor vehicles that do not function properly/are deemed to be defective and which have to be returned repeatedly to the dealer for repairs.

Maintenance Guidelines

 

Manufacturer’s Warranty

Coverage provided when purchasing a new vehicle and comes directly from the manufacturer of that vehicle. This coverage is designed to cover defects and problems that may have arisen during the manufacturing, assembly, or design process of the automobile.

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.

Mechanical Breakdown

Defects in materials and workmanship of a covered part to perform the function for which it was designed by its manufacturer.

Mechanical Breakdown Insurance (MBI)

 

Named Component Coverage

A type of vehicle protection plan that pays for claims to certain named components. The contract lists all covered components, does not cover all systems and items typically covered by exclusionary coverage.

Powertrain Warranty

A Powertrain Warranty is a warranty offered by the manufacturer that covers all parts of the power train of the vehicle. A powertrain is typically made up of the engine, transmission and drivetrain.

Provider

 

Rebuilt Title

A rebuilt or reconstructed vehicle that previously was a salvage vehicle but has now been repaired and restored to operation. These vehicles are often severely damaged before they are rebuilt, and refurbished parts are typically used during reconstruction. In most states, an inspection of the vehicle is required before the vehicle is allowed to return to the road.

SunPath Ltd. does not issue Vehicle Service Contracts for vehicles with rebuilt or reconstructed titles.

Recall

According to the US Department of Transportation, a safety recall involves a motor vehicle or an item of motor vehicle equipment that has a safety-related defect or is found to be in noncompliance with a Federal motor vehicle safety standard. A safety recall can be independently conducted by a manufacturer or ordered by the National Highway Traffic Safety Administration (NHTSA).

Manufacturers are obligated to attempt to notify owners of recalled products. For vehicles, that means manufacturers merge their own records of vehicle purchasers with current state vehicle registration information. Even if you do not receive a notification, if your vehicle, child restraint, or other item of equipment is involved in a safety recall, the manufacturer is obligated to provide a free remedy.

Repair Facility

A licensed automobile repair facility located in the United States or Canada, which includes dealerships, local mechanics or national repair facilities.

Rental Benefit

The amount specified in your vehicle service contract that you may be reimbursed for rental car expenses while your vehicle undergoing repairs authorized under the vehicle service contract.

Risk Retention Group (RRG)

A specialized type of insurance company formed under federal laws in which policy holders are also stockholders. This is in contrast to traditional insurance companies which are formed under state laws and policy holders hold no equity. RRGs are limited to insuring businesses of a similar type and its members control both risk and litigation issues. While RRGs eliminate many excess filing and licensing fees, its members are not backed by a guaranty fund in case the company becomes impaired.

Vehicle Service Contracts backed by Risk Retention Groups are typically thought to be inferior to those service contracts backed by A.M. Best "A" rated insurance carriers.

SunPath offers Vehicle Service Contracts backed by "A" rated insurance carriers, and does not offer products backed by Risk Retention Groups

Roadside Assistance

 

Salvage Vehicle

A total loss salvage motor vehicle is a motor vehicle which has been stolen and unrecovered or which has been wrecked, destroyed or damaged by collision, fire, water, or other occurrence to such an extent that the owner or if the vehicle was insured, the insurer, considers it uneconomical to repair.

SunPath Ltd. does not issue Vehicle Service Contracts for salvage/total loss vehicles or vehicles with rebuilt or reconstructed titles.

Seller/Vendor

 

Technical Service Bulletin

Technical Service Bulletins, or TSBs, are recommended procedures for repairing vehicles. Not to be confused with recalls, a TSB is issued by a vehicle manufacturer when there are several occurrences of an unanticipated problem.

Transferability

The ability of a Vehicle Service Contract holder to transfer coverage from themselves to another person. The coverage must remain on the same vehicle, but the named owner on the VSC can be changed should the vehicle be sold to a new owner.

Travel Interruption Benefit

 

Vehicle Identification Number / VIN

A vehicle identification number, commonly abbreviated to VIN, is a unique code including a serial number, used by the automotive industry to identify individual motor vehicles, towed vehicles, motorcycles, scooters and mopeds.

In 1981, the National Highway Traffic Safety Administration of the United States standardized the format. It required all over-the-road-vehicles sold to contain a 17-character VIN, which does not include the letters I (i), O (o), or Q (q) (to avoid confusion with numerals 1 and 0).

Vehicle Protection Products

 

Vehicle Service Contract

 

Waiting Period

 

Wear and Tear

 

The above definitions and information is for illustration purposes only. Please refer to the Vehicle Service Agreement for all terms, conditions, coverages, and exclusions.

 
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