Does my SUV need an extended warranty?

Buyers often expect the modern SUV to be indestructible, so it can be a shock when the car leaves the owner stranded.

But that shock is nothing compared with a bill in the thousands for fixing the car.

While SUVs can be particularly prone to infrequent and indifferent servicing – and that could result in trouble for the second and third owners of the vehicle - it's the unexpected glitch that has been a time bomb laying in wait since the vehicle left the factory that could leave you and your family stranded.

Sometimes even heavy-duty off-road machines that are household names will be brought down by an unexpected fault, and you don't want to be the second owner of the car paying for an oil sender unit that has finally unscrewed itself from the engine block because it wasn't fastened properly on the production line.

An extended warranty takes a lot of the anxiety out of buying a vehicle. It covers family SUVs for the cost of repairs when the vehicle breaks down. If a buyer is considering the purchase of a used SUV, he or she should leave something in the kitty for extended-warranty cover, because there's little chance the vehicle will still be covered by the new-car warranty from the factory.

Many used-car buyers don't even think about arranging an extended warranty when they're purchasing a pre-owned car. It may not even occur to the buyer that the factory warranty for the car has already expired. Longer warranty cover for new cars has been in the news lately, but that doesn't mean the buyer of a used car will be covered in the event of a mechanical defect.

It's only in the last couple of years that all the major brands have moved to a five-year term for the factory warranty. Prior to that most warranties were limited to three years. And since most used cars are at least three years old, the factory warranty is almost certain to have expired for a used vehicle on sale today.

Even the very best brands can occasionally produce a lemon. Take for instance the Toyota LandCruiser Prado that would have otherwise cost the owner $3000 for fuel pump, suspension, dampers and engine mounts, if not for the extended-warranty cover.

Holden's Captiva has been a consistent subject of extended warranty claims, in two cases the extended-warranty cover saving the respective Captiva owners $8000 for cooling and fuel systems, and $3000 for fuel injectors.

Even prestige SUVs aren't immune from unforeseeable faults that cost big bucks. A Volvo XC90 recently required $2000 worth of repairs for its electrical system and wheel bearings – but was covered by an extended warranty, with the insurer picking up the tab for the work carried out.

There's also one final point to remember. Many common component failures should be rectified by the importer and its dealer network at no charge to the owner of the vehicle, according to the Australian Competition and Consumer Commission. That would hold true even beyond the expiration of the standard factory warranty.

The ACCC is the watchdog that enforces compliance with Australian Consumer Law (ACL), which stipulates that the 'rejection period' for a claim from a consumer may exceed the duration of the factory warranty.

In other words, if the dual-range transfer case for your seven-seat off-roader karks it three days after the end of the factory warranty – and provided there's no reason for the manufacturer to suspect your vehicle has been subjected to abnormal use (abuse) – the cost of repair is to be born by the importer. That's what ACL tells us, but the rejection period hasn't been tested in courts of law. So if the transfer case dies two years after the expiration of the warranty period, ACL may not provide the protection the SUV owner requires.

At that point, the owner's only option – in the face of the importer and its dealer rejecting the claim – is to take them to court. Dragging a car company or a dealer through a civil and administrative appeals tribunal over a period of months, costing the owner a legal adviser to assist with the claim – only to have the claim rejected by the tribunal anyway – is when an extended warranty really pays for itself. And you’ll have your SUV back on the road in no time.

When buying a used SUV, holding back a few hundred dollars for an extended warranty is prudent. After all, it's a tiny percentage of the purchase price, but how do you place a value on the peace of mind an extended warranty brings?