A vehicle service contract is essentially a protection plan that promises to pay for repairs or component replacements if your car experiences a mechanical or electrical failure. It functions similarly to insurance: you pay a set amount—either upfront or through monthly payments—and in return, the contract provider agrees to cover repair costs for specified parts and labor.

These contracts do not typically cover damage from accidents, weather, or negligence. Instead, they focus on breakdowns caused by normal use, offering peace of mind for owners who want predictable repair expenses.