Covering your bases

Buying a used-truck warranty gives you the added assurance of a thorough truck inspection, which warranty providers usually require.

Providing a warranty on a used truck, says Rick Clark, vice president of sales and marketing at National Truck Protection, is akin to selling life insurance to an 86-year-old: No matter how good a shape the insured is in, you just know something’s going to go wrong before too long.

One owner-operator recently insisted on buying a top-grade NTP-administered warranty with his truck purchase despite it having passed every test at the manufacturer’s dealership with flying colors. That turned out to be a wise decision, Clark says: “He had only 214 miles on the truck when the push tube went through the cylinder block. It cost us $14,000, but we covered the repair, and he got a fresh engine out of the deal.”

The warranty is “what makes the truck warm and fuzzy,” says Eddie Walker of Best Used Trucks in Fort Worth, Texas, president of the national Used Truck Association. “Warranties are the best things that can happen to the used-truck buyer.”

Warranty should be one of the used-truck buyer’s top considerations, on par with the make of the truck and the selling dealership’s reputation, says Drew Backeberg, manager of marketing and customer support for SelecTrucks, which has 29 dedicated used truck centers.

A solid warranty starts with a thorough inspection process and is backed by a nationwide service and repair network, like that found at SelecTrucks, whose warranties are serviced by Freightliner, Sterling or Western Star dealers. Having that support network on the road is worth far more than the warranty’s cost, Backeberg says.

Most owner-operators, 57 percent, buy their trucks used. Of those who do, 85 percent have had to rebuild or replace at least one major component, such as the engine, drive axle or transmission, according to Overdrive research. Fortunately, warranties are much more widely available in the used-truck market than they were even 10 years ago, and they’re available in much greater variety, from original equipment manufacturers that guarantee their long-term workmanship to national providers such as NTP that specialize in used-truck warranties sold primarily through dealer partners.

“All of them are very reliable about paying, if you dot your I’s and cross your T’s,” Walker says.

Warranties typically are good for a certain amount of time or miles, whichever comes first. Warranties also differ on how much equipment they cover and in what circumstances. Full coverage is more expensive than partial coverage, and a “major-component” warranty covers only a handful of big items, not the countless “minor” things that nevertheless can ruin your bottom line if they break down.

“If you’re paying $30,000 to $60,000 for a used truck, how do you not buy a warranty?” Clark asks. “Some of these guys, they’ll think they’re saving money by passing up the truck warranty, but they’ll put a warranty on a used car, and it’s not even their livelihood.”

For example, Cummins’ Encore warranty plans on engines greater than 460 horsepower range in pricing from $800 (for six months or 50,000 miles) to $2,200 (for two years or 200,000 miles). The prices of NTP warranties range from $800 (for six months or 50,000 miles) to $5,000 (for three years or 300,000 miles). Beyond the 60-day warranty provided free with most purchases, SelecTrucks offers warranty options covering engine and drive train parts that range from six months or 50,000 miles to three years or 300,000 miles. Pricing can range from $1,500 to $5,000 or more, Backeberg says.

Against expenses such as those, consider that engine rebuilds can run $10,000 to $14,000, “and that’s just parts, not counting labor at $90 an hour,” Clark says. “We just did our first Cat with a twin turbo. It cost $8,600. I remember when injectors were $35 apiece. Now they’re $580 apiece, and some have gone to $610.”

Before buying an expensive warranty, don’t forget to investigate whether any of the truck’s components already are covered by existing warranties. This especially may be true if it has new parts or its engine recently was overhauled or rebuilt. Dealers should be able to provide a repair and maintenance record for each truck, and serial numbers of vital components can be checked against the manufacturer’s repair database. “You can find out a lot of information if you just ask,” Walker says.

Through its warranty partners, the dealer should be able to offer you a range of warranty options that can be tailored to your operation, Walker says. For example, if you’re buying a “step truck” – one you’ll be running only a year, perhaps as your first truck to get the hang of the owner-operator life – “there’s no sense in buying a three-year warranty,” Walker says. “Get you a good, solid truck with a warranty that’s going to last you for a year.”

Otherwise, two years of the next owner’s warranty are coming out of your pocket.

Like smart used-truck buyers, warranty providers typically require a thorough inspection of the truck before committing. “The better the warranty, the better the inspection,” Clark says.

Even trucks with fewer than 100 miles since their last dynamometer test have been known to fail NTP inspection, Clark says. Among other things, it includes a compression check of the cooling system, a thorough turbocharger check and a data dump from the electronic control module rather than relying on dashboard readouts. “We tell people, ‘Even if you don’t buy our warranty, do our inspection.’ At least you’ll know what you have.”

When choosing among warranties, make sure you thoroughly understand each option, Clark says.

“Make the dealer give you a list that tells you what this warranty covers, and don’t get lulled to sleep by the things they do pay for,” Walker says. “Also get a list of the things they don’t pay for. There’s not a warranty out there that’s going to pay 100 percent of everything.”

The “don’ts” often include towing charges, lubricants and certain gaskets. Warranties may cover only internally lubed parts, which leaves out a lot of important things.

Many warranties cover only manufacturers’ defects. That’s good coverage to have, of course, but might fall short of what a used-truck buyer needs because manufacturers’ defects are likely to have made themselves known well before the truck cycled into the used market. Since 1983, NTP has offered oil-consumption and wear-out coverage, meaning it pays for repairs incurred by the normal wear and tear of aging equipment.

Warranty claims often involve emergency situations, but in your haste to get back on the road don’t make assumptions about who is authorized to do repairs.

“Whatever you do, never go around telling the shop, ‘Go ahead and do that because I’m sure the warranty people will pay for it,'” Walker says. “Don’t assume anything.”

Getting back on the road is your highest priority. So in a polite, professional manner, make sure the technicians and the warranty provider make it a priority, too. “In most cases, downtime is costing you much more than the repair,” Walker says. “You have to stay in contact not only with the shop but with the warranty people also, and monitor their conversation.”

“Learn the warranty well enough that you could go out there and sell it yourself if you had to,” Walker says. And, in effect, you will be: When you have a happy experience with a covered repair, and tell your fellow owner-operators, you’re the best advertisement that warranty provider could hope for.

Fine points to consider
It’s far better to think of all warranty contingencies before buying coverage than to buy a warranty and learn about its weak points the hard way. Check out these aspects before buying:

INITIAL FEE. There can be a fee incurred simply when you break down and notify the warranty provider of a claim.

DEDUCTIBLE. Just as with insurance, the deductible is the amount you have to pay before the warranty kicks in. A zero deductible is ideal.

REPAIR CAP. Some warranty provisions have repair caps. If your warranty caps the cost of any repair at $13,000, and an engine repair costs $23,000, the $10,000 difference comes out of your pocket.

DIRECT BILLING. Find out whether the repair facility will bill the warranty provider directly, or whether you’ll have to pay the repair facility, then bill the warranty provider for reimbursement. The former is ideal, of course, but be prepared to pay more for the convenience.

COVERED REPAIRS. If you’re a dedicated do-it-yourselfer with good repair skills and a well-stocked shop, let the warranty provider know this before you sign. Many warranties, especially OEM warranties, specify that work is covered only when done by trained technicians at authorized dealers. Those terms can be amended – likely requiring you to provide timely documentation of your work, complete with receipts for the parts and supplies – but after you sign the contract is too late to change it.

BREAKDOWN PROTOCOL. Find out what your responsibilities are when you have a breakdown. Just as insurers want to be notified immediately in case of an accident, warranty providers want to be notified immediately in case of a breakdown, and put in direct contact with the repair facility. Under some warranty terms, the provider retains the right to select the repair facility.

Warrantors’ experience can tip you off about quality
Like insurers, warranty providers crunch a lot of numbers and have a keen appreciation for statistical averages. This can be helpful to an owner-operator deciding among used trucks – if he’s alert to the signals.

National Truck Protection’s extensive database of a quarter-century worth of trucks and engines allows it to predict with great accuracy the work soon to be needed on any make and model by mileage and even by serial number, says Rick Clark, vice president of sales and marketing. Replacing pistons alone on one manufacturer’s 1999-2000 engines, for example, has cost NTP $3.2 million in less than four years, Clark says.

As a result, NTP will warranty some engines only if the owner is willing to pay a surcharge. If you’re told the engine you’re considering will incur, say, a $750 surcharge over the base warranty price, it behooves you to ask why, Clark says. “We won’t come out and say, ‘Don’t buy this,’ but we will try to steer them away from particular engines.”

Many used-truck buyers, of course, are blind to such warning signs. “A lot of owner-operators don’t buy a truck,” Clark says. “They buy an emotion.”