How clear are you on your cover? Service plans, maintenance plans and warranties explained.

How clear are you on your cover? Service plans, maintenance plans and warranties explained.

Do you know what you’re covered for if something goes wrong with your car? Do you know the difference between a service plan and a maintenance plan? What about a factory warranty, and an extended factory warranty? And do you know whether these options are optional or mandatory?

If you don’t, you’re not alone. For many buyers, the extent of their vehicle cover isn’t very clear, and they may end up confused about what is included and what’s not included when purchasing their new or used car.

“When buying a vehicle, it’s important that customers understand what they’re getting into, and appreciate all the costs they are signing for. Knowing the add-on plans is as important as ensuring the actual vehicle meets all their needs, so being informed about the different options will help them make better decisions,” explains David Chard, Managing Director of AA Warranties.

In this article, we’ll help you understand the difference between the various options available to you.

What does a service plan cover?

A service plan covers the costs of regularly scheduled services as determined by the manufacturer. Items covered under a service plan are marked by an “R” (for replacement) at specified service intervals. You’ll need to check with the dealer, or manufacturer’s agent, or consult the vehicle’s handbook to find out when these intervals are. 

Importantly, a service plan does not cover wear and tear on a vehicle, nor does it cover mechanical breakdown.

“A service plan is, essentially, regarded as a budgeting tool for consumers. It can either be bought upfront, as a term product or can be purchased ongoing as a monthly payment. But either way, it covers the prescribed services for a specific duration of time or kilometres, with the premium paid to cover the costs of services when needed,” says David. 

What does a maintenance plan cover?

David explains that a more comprehensive – and more expensive – option is the maintenance plan. Like a service plan, a maintenance plan covers all routine servicing (again, according to the manufacturer’s schedule); unlike a service plan, it also covers mechanical failures, as well as wear and tear.

Maintenance plans are often included when you buy a new car but can also be bought separately. While these plans have a limited initial lifespan, they can be extended through purchasing extensions or follow-on maintenance plans. 

Service and maintenance plans: what you need to know

If you’re contemplating getting a service or maintenance plan for your car, you first need to know that they both have limited lifespans. Secondly, you need to know that the lifespan will depend on either the specific number of kilometres travelled or a specific amount of years that have passed. For example, 5-years or 90 000km (or even 3-years or 60 000km), depending on your vehicle make, model and offer from the dealer. 

When you buy your car, you need to ask your salesperson the following questions:

●    What is included (and not included) with your purchase?
●    Is it a service or maintenance plan?
●    How long it is valid for?
●    Are you able to extend any periods of cover or upgrade your plan? 

You also need to check whether the service or maintenance plan will allow you to choose either annual or kilometre-based services (or both), and how your entitlements work, For example, if you choose annual services, will the car need to be serviced at the same time every year for the plan to stay active? Or is there a grace period?

What about warranties?

Warranties are different from both service and maintenance plans. A mechanical warranty will cover mechanical failures or breakdown of parts but will typically not cover scheduled services or wear and tear. They cover the risk of parts failing. 

Like the other products, warranties are often included by the manufacturer on new cars. They can be extended or replaced with another equivalent once their initial term has expired. David adds that these extension or replacement products are especially useful, and important, for two reasons:

Firstly, research shows that in tough economic times, car owners keep their vehicles for longer before replacing them. In the past, owners may have opted for new cars every three to five years. Now, this is being stretched out to seven or more years. This means that caring for the vehicle becomes even more important as the use of the car needs to extend for longer.

A second reason is that more pre-owned vehicles are being bought instead of new vehicles. While buyers still want peace-of-mind motoring, manufacturers’ service and maintenance plans may not be applicable anymore (particularly for vehicles older than five years). 

“What we’ve seen is that changing vehicles just to have the peace-of-mind of a manufacturer’s new warranty or maintenance plan can be extremely costly and has the potential to drive buyers into debt. Also, with the right products, it is potentially unnecessary,” David notes.

But this doesn’t mean that you shouldn’t have any cover.

Don’t be stuck without cover

“Keeping an older used car without a service plan, maintenance plan or at least a warranty exposes one to potentially crippling maintenance and repair costs and can result in a nasty financial surprise. We’ve heard stories from people who have had to come up with thousands of Rands to get their cars back on the road. One doesn’t want unnecessary products, but one also doesn’t want to be stranded,” David says.

For this reason, extended warranties are growing in popularity in South Africa as both new and pre-owned vehicle buyers either extend or renew plans which will cover them in the event of breakdowns.

David concludes: “An extended warranty offers a lifeline to motorists when they need it most, and ensures the vehicle can be operational again far quicker than if the owner first has to raise a lot of money to have it repaired. An added benefit is that some of these warranties are available on a pay-as-you-go basis, meaning buyers can purchase them monthly and not only when cars are changing hands at a dealership. This is an extremely attractive option for many buyers.” 

Here’s a simple summary:

  Service Plan Maintenance Plan Warranty
Limited lifespan
Covers services  
Covers mechanical failures    
Covers wear & tear  

Know you’re covered with AA Warranties.

With AA’s extended warranty cover, you’ll get up to R50,000 of cover for your vehicle, so you can keep it running smoothly for up to the age of 15 years or 300 000kms (whichever occurs first). 

An extended vehicle warranty takes over when the manufacturer’s warranty ends, and covers the costs of replacement parts and labour for major (and costly) car parts (as per the policy terms and conditions), so you won’t have to pay for them out of your own pocket. 

For more information, or to get a quote for your car from AA Warranties, visit our website.