Equipment Extended Warranty FAQ

  • Compact and Utility Tractors
  • Row Crop Tractors
  • 4wd Tractors
  • Combines
  • Sprayers
  • Floaters
  • Forage Harvesters
  • Cotton Harvesters
  • Windrowers
  • UTV’s
  • Skid Steers
  • Excavators
  • Tractor Loader Backhoes
  • Forklifts
  • Telehandlers
  • Wheel Loaders
  • Dozers
  • And More!

Most of the major brands of farm equipment and construction equipment will be eligible for some type of coverage, either through the OEM or another third party. This includes but is not limited to John Deere, Case IH, New Holland, Massey Ferguson, Fendt, Versatile, Deutz Fahr, McCormick, Bobcat, Kubota, Caterpillar, JCB, and many more.

The solutions available across the industry will vary significantly depending on the equipment type.
  • Typically tractors will be eligible for coverage 10 or more years past their original invoice date and/or 5,000 hours at the time of enrollment. 
  • Typically combines, cotton harvesters, and forage harvesters are eligible for coverage 10 or more years past their original invoice date and/or 3,500 engine hours at the time of enrollment.
  • Sprayers and floaters are usually eligible for coverage 10 or more years past their original invoice date and/or 3,500 engine hours at the time of enrollment.
  • Other types of equipment will vary significantly depending on the equipment type.

Any coverage we are aware of is only eligible for purchase through an equipment dealership. Some coverages will only apply to dealer inventory. Other coverages might include options for customer owned equipment. Regardless, the coverage would be purchased from the dealership and they submit the funding to the warranty administrator.

Usually, the policy follows the covered equipment, regardless of who purchased the policy. It would be best to ask the dealer for the terms and conditions.

In most instances, equipment that is within base warranty will not require an inspection in to qualify for enrollment. With that said, we suggest getting an inspection anyways prior to the base warranty coverage expiring. Your base warranty will always provide you with the best coverage, so it is advisable to identify any imminent failures.

Used equipment will usually have some sort of a qualification process to try to flush out any equipment that has pre-existing conditions. These requirements will vary depending on the plan providers. Some plans will only require a physical inspection of the machine with visual inspection to ensure that the fluids are not contaminated. The advantage of this is real time qualification by the dealership. Other plans will require the physical inspection plus fluid samples that get sent off to be scanned. This can provide a very thorough assessment, but usually requires a couple weeks to get results from the fluid scans.

Inspections can be done at any OEM dealership. A routine inspection can limit your risk by having an experienced service mechanic assess the equipment before you buy, sell, or go to the field. We have faith in service techs. They are trained to find things wrong. If they are confident in the equipment, that should be worth something. Preventative inspections combined with coverage will be your best way to mitigate risks.

The parts covered are the main difference between each plan. It is important to review the breakdown of what is covered by each level of protection being offered in the terms and conditions of the coverage.

  • Engine – Usually covers the internal components of an engine. Review the terms and conditions to determine if additional components are included in the coverage. 
  • Powertrain – Usually includes all the components pertaining to the engine and transmission the oil touches. Some coverages will also provide coverage on additionally related components. Some powertrain coverages will include hydraulically driven components such as a RWA on a combine. Others will require you to purchase hydraulic coverage to get this component covered. 
  • Hydraulic – Usually covers the hydraulic pumps and valves. In some instances, it will need to be purchased to cover hydraulic drive components. 
  • Electrical – These components might be covered in various plans, but rarely should you expect to have all electrical systems and components included in the coverage. “Premier” or “Comprehensive” types of coverage may cover more of the electronics, but it is best to review all sections of the terms and conditions to know what is and isn’t covered.

Our advice is to know what you are buying and pay attention to the terms of the coverage. In most instances, the engine, transmission, and hydraulic components are relatively straight forward. Coverage beyond those components and hourly limitations of certain covered components will vary significantly between the plan providers and can be very complex.

​Most coverages require the repair work to be completed by a local OEM dealer. OEM dealers are expected to have the tools, resources, and talent in order to complete the repair in a timely and effective manner. While you may have a local independent repair shop that you like to use, there is not an industry standard for independent repair shops and they do not always have equal access to all the same tools and resources as an OEM dealer. Additionally, OEM repairs usually have the advantage of being backed by a 12 month parts and labor warranty from the manufacturer and/or the dealer.

Most coverages will require OEM replacement parts. Depending on the nature of the repair, some coverages will reimburse for an overhaul or a rebuild on an engine or transmission failure. Others might pay for OEM remanufactured components (such as an engine). Each repair scenario might dictate what parts can be used or if the failed component(s) should be rebuilt or replaced.

Most coverages will reimburse “reasonable” diagnostic times. However, this can get a little dicey on some of those gremlins that are difficult to diagnose, particularly as it pertains to electronics. Sometimes an OEM will request that a dealer run certain diagnostic tests. This can be a matter of diagnosing an issue, but it might also serve the interests of the OEM and their engineering team. Usually OEM coverage will reimburse for these requests, but it can be difficult for a third party administrator to justify this kind of reimbursement. This is not a frequent event, but a mutual understanding of this kind of situation can mitigate frustrations.

As you can imagine, the cost of the coverage varies. Its a math equation (or should be) that depends on the following factors:

  • Age of the equipment
  • Current hours
  • Type of equipment
  • Horsepower
  • Usage (General agriculture, scraping, etc.)
  • Prior claims history on that model (or series)
  • Requested Terms (Years of Coverage)
  • Requested Usage (Hours per Year)
  • Coverage Type (Powertrain, Comprehensive, or Otherwise)
  • Deductible

There are numerous reasons why having an extended service plan might make sense for your operation. When purchasing new equipment, the rates to extend coverage are usually the lowest and can include the best coverage options. Used equipment will often have higher rates, but coverage is still worthwhile particularly if you don’t have a lot of history on the machine. Besides being a risk management tool on your operation, having extended warranty remaining on used equipment will translate to improved resale value. For example, we estimate that used equipment with some coverage will have improved resale value between 1% and 5% assuming all other things to be equal. For dealerships, equipment that has coverage will sell more quickly versus those that do not (assuming everything else being equal).

Besides reviewing the components that are and are not covered, it is important to understand the provisions that cap the liability of the administrator responsible for providing the coverage. This can be written in several formats. Some coverages will have a total limit of coverage for the term of the contract. Once you hit that limit, you no longer have coverage. This can be stated as a fixed dollar amount or sometimes as a percentage of the equipment’s value.

Another provision that will sometimes be included is a stop-loss provision or a limit that is placed on the amount paid per claim. For example, a contract having a provision such as this may state that it has a $100,000 total limit, but will only cover up to $30,000 per claim. On large equipment, a major engine or transmission failure might cost $45,000. In this example, only $30,000 of the $45,000 would be reimbursed by the administrator. This does not mean coverage has expired in total. It is likely to have a balance remaining on the contract’s total limit of coverage.

This does not mean to suggest that all coverage options will have these provisions. Just make sure to look for them in the terms of your coverage. The total limit of coverage is understandable. We prefer when it is stated as a fixed dollar amount. When it is stated as a percentage of the value of the equipment, it has the potential for subjectivity and frustration.

This can be confusing. In practical terms, they are a similar product. Some will say that extended warranty can only be provided through the original equipment manufacturer. In reality, commercial extended service plans and extended warranty plans are meant to protect the equipment owners from the same thing… the enormous cost of unexpected repairs that stem from a defect in components that cause a premature failure. The terms of the coverage will vary depending on the plan provider, but the concept is the same. Don’t assume, however, that the coverage is the same from one company to the next. If considering multiple options, compare the coverage of each.

What you need to pay attention to is the differentiation between one of these plans designed to protect you from major mechanical failures and a prepaid maintenance plan. There has been a major push by the OEM’s for dealers to offer more maintenance programs for equipment. These are basically prepaid parts and service programs that will cover some of the wear and tear on machines. Typically extended warranty plans (or any other term they might go by) does not cover wear parts and components.

Most OEM’s offer some type of coverage. Some of these programs are “in house.” Other OEM’s might use a third party to administer these programs. Additionally, there are a few third party providers that offer coverage for a wide range of types, makes, and models of equipment without specific OEM endorsements. It stands to reason that OEM coverage has an incentive to keep you happy so that you keep buying their equipment. They also have the advantage of visibility to other internal programs such as OEM recalls and product updates. Unfortunately, these companies can also be quite large and sometimes less unresponsive to the needs of their customers. Some third party providers have a few limitations, but can be more responsive to the needs of their customers. Each has their place.

A difference from one company to the next is how the programs are financially supported. Programs can be fully insured, reinsured, bonded, or backed by the financial strength of the administrator and/or the company offering the policies. Additionally, commercial extended service contracts are regulated differently by each state. Certain terms, products, and or programs will vary from state to state. It is not unreasonable to ask questions.