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Like most insurance policies, an extended warranty is something you pay for in the hope that you'll never need to use it. For many owners, it's worth paying the price for peace of mind; even if your car is built by a brand renowned for its reliability, there's always a risk that something could go wrong.

Determining the Cost of an Extended Warranty The cost of an extended warranty is based on the length of the coverage, the type of vehicle, and the deductible. The deductible is the amount you must pay out of pocket before the warranty coverage kicks in.

Summary. If you are unsure about your warranty coverage don't worry, because you can check if your vehicle is still under warranty. Find your bill of sale and VIN number, get your mileage, and call a dealership to see if your car is still covered.

A large percentage of consumers say yes. When they do, the retailer reaps a handsome profit. A business professor at Penn State University says the typical profit margin on these products is 15% to 20% but businesses realize a more than 200% profit on the extended warranty.

Even if you have not recently purchased a car, you might still be receiving these notices. However, the mailings do not say who they are from, as they often have no response address. This is actually a common practice, where scammers dressed as legitimate companies offer you auto warranty.

It could be a fraud involving a car warranty. Do not call the number on any letter or postcard you receive, even if it appears to be from the manufacturer. It could be a forgery. Don't buy a service contract if your vehicle's warranty has ended or is about to expire.

If you opt to cancel the extended warranty within the flat cancellation period, you will get a FULL refund. Typically, the extended warranty flat cancellation period is 30 to 60 days after the date of purchase. Note: If you choose to cancel your extended warranty product, you will NOT receive a check in the mail.