OMVIC Practice Test

Extended warranty contracts must disclose whether the warranty is:

1. Based on the manufacturer's warranty

2. Transferable to a new vehicle owner

3. Subject to a cancellation fee

4. All of the above

The correct answer is: All of the above

The correct answer encompasses all of the required disclosures that extended warranty contracts must provide to consumers. Extended warranties are essentially service contracts, and it is important that consumers have full knowledge of the terms and conditions associated with them. Disclosing whether the warranty is based on the manufacturer's warranty ensures that the consumer understands what the coverage entails and how it relates to any original warranties that came with the vehicle. This detail is crucial for making informed purchasing decisions. Furthermore, indicating whether the warranty is transferable to a new vehicle owner is significant for consumers who may sell or trade in their vehicles. A transferable warranty can enhance the resale value of a vehicle, making it more appealing to potential buyers. If the warranty is not transferable, this could affect a buyer's decision. Finally, revealing whether the warranty is subject to a cancellation fee is an important aspect that affects the consumer's financial planning. If a fee is associated with cancellation, consumers may reconsider their commitment to the warranty if their circumstances change. Overall, all of these factors contribute to a clearer understanding of the extended warranty, making it essential for full transparency and consumer protection.