Guide to Auto service contracts

10 When you buy a VSC you may think you are buying an insurance policy. This is because VSCs are very similar to insurance policies. However, VSCs and insurance policies are actually different. An insurance policy is a contract between you and an insurance company. The insurance company is the obligor. If you have a claim, you deal directly with the insurance company (or a claim adjuster hired by the insurance company). A VSC, however, is between you and a VSCP or dealer. VSCPs are not, technically, insurance companies. Many laws apply to MBI policies that do not apply to VSCs. For example, the price of MBI policies is regulated by the CDI; the price of a VSC is not regulated. Consumers may get the most for their money with an MBI policy, especially one purchased directly from the insurance company. The price of MBI policies is regulated by the CDI to make sure the price is not excessive. MBI policies are sold by some banks, credit unions and insurance agents, and directly by insurance companies. One way to buy MBI is over the Internet. Unlike with VSCs, it is legal to sell MBI over the Internet. If you want to obtain MBI over the Internet, it is very important to do the following: • Confirm the insurance company providing the MBI is licensed by the CDI. • If you buy MBI from the website of someone other than the insurance company itself, i.e. an insurance agent, make sure the agent is also licensed by the CDI. • Confirm that an MBI insurer or agent is licensed at the “Company and Agent/Broker Information” page of CDI’s website, at www.Insurance.ca.gov or contact CDI’s Consumer Hotline by phone at (800) 927- 4357. Never buy MBI unless you confirm with the CDI that both the insurance company and any agent offering the MBI are properly licensed in California! Mechanical Breakdown Insurance(MBI)