Dear Tom and Ray:
In your experience, do people who purchase "extended warranties" have to take what is offered when their vehicle is in need of repair, or may we demand replacement parts better than scrap-yard parts? -- David
TOM: Even though "extended warranties" are often sold by dealers, they are basically just insurance policies, provided by a third-party insurance company.
RAY: Most of them allow you to go to just about any repair shop and have the covered work paid for directly by the insurer. I do a lot of work that gets covered by extended warranties, and in my experience, I've never dealt with an insurance company that forced me to use scrap-yard or inferior parts under such a plan. In fact, they almost always authorize brand-new parts directly from the manufacturer.
TOM: Now, you may have bought your policy from a guy named Fred, who writes extended service contracts when he's not operating his roadside fruit stand. So you need to take a good look at the policy you signed and see if it allows them to insist on used parts. If it does, then you're out of luck. But if not, you certainly can demand OEM (original equipment manufacture), after-market new parts, or at the very least, completely rebuilt parts. And I would do just that.