Glossary of Terms

Glossary of Terms

It’s important to understand the terms and conditions of the vehicle service contract you are purchasing. That’s why we prepared this glossary. If, after reading this page, you are still unsure about the meaning of a term in your contract, please feel free to contact us directly.

When you purchase coverage, the administrator is the obligor of the vehicle service contract. The administrator handles the claims process with your mechanic directly, adjudicates the claim and approves any covered repairs under the contract terms.

The National Institute for Automotive Service Excellence (ASE) is a professional certification group that certifies professionals and shops in the automotive repair and service industry.

Auto Insurance
Auto insurance provides property, liability and medical coverage for vehicles and their owners. It does not cover mechanical or electrical failures and is separate from a vehicle service contract.

This term refers to a failure — due to defects in materials and/or workmanship — of a covered part to perform the function for which it was designed by its manufacturer. Breakdown doesn't include sludging or gelling conditions.

Claims Process
During the claims process, a mechanic diagnoses a vehicle concern and contacts the plan administrator. The administrator then adjudicates the claim and pays for repairs approved under the contract terms.

Covered Part
This refers to the parts or components listed under the section entitled Plan Coverage for your particular plan.

A deductible is the minimum portion of the covered repair which you have to pay if you have a claim. The amount of your deductible is shown on your contract registration page. This amount is applied per claim, and to each claim.

This is the highest level of coverage available for a vehicle once the factory warranty has expired. This coverage includes all components of the vehicle except for a small list of exclusions.

The date or mileage in which the vehicle service contract is no longer in force. Usually expiration of coverage is determined by whichever comes first: time or miles.

Factory Warranty
This term refers to the manufacturer warranty that is provided with new vehicles at no additional cost, and covers repairs to your vehicle to correct any defect in material or workmanship.

Labor Rate
The labor rate is the amount charged per hour by the repair facility for work that is needed in order to repair a vehicle breakdown.

Maintenance Guidelines
These guidelines are recommended by the manufacturer of the vehicle and are usually found in the owner's manual. Following maintenance guidelines allows the vehicle to perform at its highest potential.

OEM stands for Original Equipment Manufacturer. An OEM produces parts that are sold to another company, such as an automobile manufacturer, to be used in that company’s products.

Power Train
This is also referred to as "drive-train" of the vehicle. The power train includes the vehicle's main/major components such as engine, transmission and drive-axle.

Roadside Assistance
This service assists motorists whose vehicles have suffered a mechanical failure that leaves the operator stranded.

Salvage Title
A form of vehicle title branding that notes that the vehicle has been damaged and/or deemed a total loss by an insurance company that paid a claim on it. The criteria for determining when a salvage title is issued differ considerably by each state, province or territory.

Stated Component Coverage
Also known as an inclusionary policy, stated component coverage is an extended service contract that covers most of the major parts and components on your vehicle. These policies list all components covered or included in the service contract.

Vehicle Service Contract
A vehicle service contract is purchased by a consumer to cover the costs associated with vehicle repair, including parts, labor and/or sales tax, for certain repairs or replacements that may be required after a manufacturer's warranty expires.

The vehicle identification number (VIN) is a unique set of numbers used by the automotive industry to identify your vehicle.

Wear and Tear
Wear and tear is damage that naturally and inevitably occurs as a result of normal wear or aging.