When considering the purchase of a service contract, it is important to weigh the costs of the contract against the cost to possible repairs of the product. Compare the service contract to the manufacturer's warranty to make sure your coverage will not be overlapping. Be aware of vaguely worded exclusions or limitations in coverage or maintenance requirements which, if not followed, would allow the company to deny coverage. Find out how repairs are paid for and if you must obtain prior authorization. Also learn about the financial backing of the contract.