May 112004

RAC & AAIndependent automotive warranty specialist, Warranty Direct, has expressed its deep concern over the new trend of “parts and labour” insurance policies being offered to motorists by breakdown organisations like the RAC and AA.

Whilst the new policies claim to offer peace of mind to the motorist, according to Warranty Direct, only a lucky few will actually benefit and make successful claims that will recover more than the original policy cost and excess.

” The worry is that innocent motorists could be lulled into a false sense of security,” explained Duncan McClure Fisher of Warranty Direct.
An estimated 7.2 million vehicles*1 will suffer some degree of mechanical failure this year, with 1 in 3 cars needing to visit a garage to repair or replace anything from a failed wheel bearing to an air conditioning unit, a broken gearbox or a blown engine.

Of that figure, just 15 percent will need recovery from a permanent defect that prevents the vehicle from completing its journey. This condition is a central requirement to qualify for a successful claim under new “parts and labour” schemes.

Further to this, faults that are due to wear and tear or consequential damage are excluded – a factor which is cited for almost 40% of successful claims handled by Warranty Direct.

” An alternator belt is one of the most common failures on a car. It is also one of the cheapest to repair,” explains McClure Fisher. “However, if it breaks, it can fly off, damaging other, more expensive parts of an engine, leaving the motorist with a bill running into the thousands. Consequential loss exclusion gives the insuring party a simple get out clause.”

Warranty Direct estimate that while over 1.2 million motorists will require assistance following an engine failure, less than 27,000 will actually be able to successfully claim on their “parts and labour” policy.

As a result, Warranty Direct is advising consumers to always read the Terms & Conditions, claims limits and excess contributions of all breakdown “parts and labour” schemes before signing up.

Comprehensive warranty protection, without hidden “get out clauses”, is available from Warranty Direct from as little as £150, or an average of £230 per year. Here, the motorist is covered for most eventualities, with the warranty firm also paying recovery costs if they breakdown as a result of mechanical malfunction.

” Breakdown cover is an integral part of the motoring fabric. But when unexpected garage bills can run into the thousands, the peace of mind provided by a warranty can be just as priceless,” adds McClure Fisher of Warranty Direct.


Actual number of ALL motorists who   would require assistance following a mechanical failure

Number of personal members of   breakdown organisations eligible for “parts & labour” policy   payouts

Electrical   e.g. starter motor



Engine   eg: turbo



Cooling   system eg: radiator



Others   e.g. air-con, wheel bearing




Warranty Direct data shows that 30% of all vehicles will suffer some degree of mechanical failure every year. There are 24 million vehicles registered in the UK, according to DVLA.

New “parts and labour” cover is currently only available to personal members of breakdown organisations, which Warranty Direct estimates at 10million in the UK.

Warranty Direct claims illustrate that approximately 15% of the 3 million members eligible for cover will need recovery from a permanent defect that has prevented the vehicle from completing its journey. Warranty Direct data shows that an average of 40% of failures will be caused due to wear and tear or consequential loss.

*1 According to the DVLA, there are 24m vehicles registered in the UK. Analysis of Warranty Direct policies and claims since 1997 shows an average failure rate of 30 percent.