Vehicle Service Contracts and Aftermarket Products Flashcards
7 cards from real AFIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Vehicle Service Contracts and Aftermarket Products flashcards as text
What is the primary purpose of a Vehicle Service Contract (VSC)?
Answer: To provide coverage for mechanical repairs after the factory warranty expires or beyond its limits
A VSC is designed to cover the cost of mechanical repairs once the factory warranty has expired or to supplement it, protecting consumers from unexpected repair bills.
Which entity typically bears the financial risk of paying claims under a Vehicle Service Contract?
Answer: An insurance company or administrator acting as the obligor
An insurance company or third-party administrator serves as the obligor, meaning they are legally responsible for paying covered repair claims under the VSC.
What does 'exclusionary coverage' mean in the context of a Vehicle Service Contract?
Answer: Everything is covered except for a specific list of excluded items
Exclusionary (bumper-to-bumper style) coverage covers all vehicle components except those specifically listed as excluded, making it the most comprehensive type of VSC.
Which of the following is typically NOT covered by a standard powertrain Vehicle Service Contract?
Answer: Air conditioning compressor and electrical system
A powertrain VSC covers only engine, transmission, and drivetrain components; items like A/C and electrical systems require more comprehensive coverage tiers.
What is a 'waiting period' as defined in most Vehicle Service Contracts?
Answer: A period after contract purchase during which no claims can be filed
A waiting period is a contractually defined timeframe after purchase (often 30 days or 1,000 miles) during which the contract is active but claims are not eligible, protecting against pre-existing conditions.
In a Vehicle Service Contract, a 'disappearing deductible' structure means:
Answer: The deductible is waived if repairs are performed at the selling dealership
A disappearing deductible waives the per-repair deductible when the customer returns to the selling dealership for repairs, incentivizing customer loyalty and repeat service visits.
Under AFIP guidelines, which disclosure is most critical when presenting a Vehicle Service Contract to a customer?
Answer: The identity of the obligor and the process for filing claims
AFIP's ethical standards require that customers clearly understand who is financially responsible for paying claims (the obligor) and how to access coverage, ensuring transparency and trust.