With the winter boat buying season coming up, many new boat owners may decide to purchase an extended service contract.  Essentially a repair insurance policy that provides specific service guarantees after a warranty expires, a contract may offer a boater peace of mind, but that could come with a hefty price tag.

The BoatU.S. Consumer Affairs division, with over 20 years experience helping boaters safely navigate the boat buying experience, has some helpful advice:

Myth #1: "Extended service contracts are warranties." 

Although they're often referred to as "warranties," service contracts are not an extension of a manufacturer's warranty.  By law, express warranties — also known as written warranties — come free with a product and are the manufacturer's promise to make repairs.  Extended service contracts provide maintenance and/or repair services.

Myth #2:  "Extended service contracts offer 'bumper-to-bumper' protection." 

A manufacturer's warranty is a legal obligation to repair, replace, or refund the purchase price of a product if there's a problem.  A service contract is an obligation only to cover what the contract states.  So before you buy, ask to see a copy of the actual contract — not just the promotional brochure.

Myth #3: "Dealers always take care of the paperwork." 

Once you've purchased a service contract or transferred an existing one from seller to buyer, it's the dealer's or seller's responsibility to register it with the servicing company.  If they don't, you could be out of luck when you need it. 

Most contracts require that they be registered within 30 days of purchase, but nearly 25% of all extended service contract complaints made to the BoatU.S. Consumer Protection Bureau involved dealers who failed to do this.

BoatU.S. recommends that boaters contact their extended service contract company no later than 20 days after the purchase of a boat, leaving time to resolve a situation if the dealer hasn't.  Also, if a boat still has an original warranty, make sure the contract doesn't overlap the warranty period since warranty coverage is free.

Myth #4: "All service contracts are created equal." 

While they may look the same, there are big differences in coverage and deductibles. Some plans limit payouts that could affect boats with recurring problems, and some cost extra for coverage for haul-outs, towing, or delivery charges. BoatU.S. recommends comparison shopping or asking your fellow boaters about their contract experiences.

Myth #5: "Buy a used boat, buy an extended service contract." 

Extended service contracts aren't for everybody.  Understand that most plan exclusions give service contract companies some "wiggle room," such as the case of a BoatU.S. member who had been denied replacement of a third engine in three years because it was a recurring failure.