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What Does an Extended Warranty Cover on a Vehicle: Explained
Published: August 17th, 2023
Getting a new car can be a thrilling and rewarding experience. But let’s face it, it can also be stressful and confusing, especially when it comes to ensuring your car stays in the best condition for as long as possible. One way to do so is to have an auto warranty, but what exactly does it cover? And what are the advantages and disadvantages of having one? In this blog post, we will go over everything you need to know about car warranties, from their purpose and scope of coverage to the specific components they cover. Amidst so many choices, we have outlined the essential information you need to make an informed and confident decision.
Understanding Extended Vehicle Warranties
During your research, you may have wondered, "What is the difference between a car warranty and car insurance?" They serve different purposes and address various types of vehicle issues. A warranty covers mechanical and electrical breakdowns, whereas an insurance policy protects against damage caused by accidents, theft, vandalism, or natural disasters. A car warranty is not legally required, but auto insurance is.
Car warranties protect against unexpected repairs and are available for new and used vehicles. They are contracts between you and the manufacturer of the vehicle or an aftermarket warranty provider. These warranties vary in coverage levels and duration, with different terms and conditions.
You may have come across terms like aftermarket extended warranty and original factory warranty while researching car warranties. Typically, the manufacturer of your new vehicle will offer a manufacturer's (or factory) warranty. This type of warranty covers most parts and systems in your car and offers extra services like rental car coverage for a limited duration or mileage. These limitations depend on the make and model of your car and usually last up to three years or 36,000 miles. Before the expiration of the warranty, the manufacturer offers an extension of its coverage in what is called an extended manufacturer’s warranty.
On the other hand, an aftermarket extended warranty, also referred to as a vehicle service contract or "Mechanical Breakdown Insurance" (MBI), is sold by third-party companies or through a dealership. Extended auto warranties extend beyond the manufacturer's warranty and can have mileage restrictions of up to 500,000. With this option, you usually get multiple plans to choose from according to your specific needs and requirements. It also includes more components and has added perks. When you buy a vehicle with the manufacturer’s warranty still intact, an extended warranty can provide extra coverage. However, most buyers tend to purchase it after the factory’s warranty has expired.
What Does an Extended Warranty Cover on a Vehicle?
Extended car warranties generally cover the cost of repairs or replacements of major components, such as the engine, transmission, and drivetrain, due to unexpected breakdowns. Certain companies may also provide more protection for specific electrical parts on your electric vehicle, including the onboard computer system and battery. Additionally, they commonly offer extra benefits such as 24/7 roadside assistance, towing services, rental car reimbursement, and trip interruption benefits. Most warranties also include a deductible that you will be responsible for paying.
Types of warranties
Coverage options and details vary from company to company; some may provide different levels of coverage for the same vehicle with different pricing and deductible options. There are two major types of coverage that plans can be customized around: powertrain and bumper-to-bumper coverage. Understanding the key features of each type can help you choose the right level of coverage.
Powertrain warranty
This basic coverage focuses on the major parts that make your car work, such as the engine, transaxle, driveshaft, transmission, and front- and rear-wheel drive systems. These components are important for your vehicle to function and can be very expensive to replace or repair. Depending on the company, you might find two or more plans that serve you under this coverage. These plans last for a specified number of years or miles, whichever comes first. Some companies might offer you a basic or premium version of this warranty. The premium version might include the vehicle’s exhaust system, wheel bearings, and axle shaft.
Bumper-to-bumper warranty
These warranties provide comprehensive coverage for most of the parts of your vehicle, except for a few specific items, which is why they are also known as exclusionary contracts. These types last for a specific time or mileage, depending on the provider, usually less than the powertrain. The bumper-to-bumper warranty covers the components included in the powertrain as well as in the suspension, brakes, cooling, electrical system, and steering. Some plans offer additional coverage for components in electric cars at an added expense.
Does an extended car warranty cover routine maintenance?
Whether you own a used or new vehicle, following a strict maintenance routine is always recommended because it reduces your chances of experiencing a breakdown. Routine maintenance often includes oil and filter changes, tire rotations, replacing worn parts, and multiple inspections to ensure everything is working properly. Almost all vehicle service contract providers require you to keep up with maintenance. In some cases, they will cover the cost of some of the maintenance needed. For example, Protect My Car offers maintenance coverage for up to 12 months, including three free oil changes and two tire replacements. Some companies might offer a separate maintenance plan to cover routine maintenance on your vehicle, which might come with a high price tag.
Coverage limitations: What’s not included
Even though a vehicle service contract might be a relief from some expenses, there are limitations and exceptions that you need to understand before you purchase. As mentioned, it doesn’t cover normal wear-and-tear repairs, neglect, or improper maintenance. Additionally, some companies may exclude damage from accidents, environmental factors, or modifications. Consumable items like brake pads and clutches may not be covered either. You will sometimes find that there is a certain limit on the extra benefits, like roadside assistance and rental car reimbursement. Understanding the fine print of an auto warranty contract will save you a lot of time and trouble.
What steps can you take to prevent voiding your car's warranty?
To safeguard your vehicle service contract from becoming void, it's essential to adhere to the maintenance schedule provided by the manufacturer and utilize authorized service centers and geniune parts. Moreover, refrain from making any changes or adjustments to your vehicle that haven't been approved by the manufacturer.
Cost of Extended Warranties
The total cost of a vehicle service contract varies according to your vehicle’s age, make, model, and number of miles. It also depends on your coverage, deductible, and payment plan. The average cost is between $1000 and $3000, although you might find some to be more expensive. If your car is older and has higher mileage, it will be more expensive to cover, especially when it comes to the cost of certain repairs. Most providers will have information on their websites about the possible costs associated with the coverage they provide. Certain companies may request an upfront payment without offering a payment plan to help finance the associated costs. Visit our blog to learn more about how a warranty can help you save money.
Extended Car Warranty: Is It Worth It?
If you’re considering getting an extended warranty for your car, you should know its benefits and drawbacks. On the plus side, it provides peace of mind, protects against unanticipated repairs, and can save you money in the long run. However, it can be costly, have coverage limitations or exclusions, and may not be necessary for all vehicles. When determining whether it's worthwhile for your specific situation, consider factors such as the reliability of your vehicle, the cost of repairs, and your own risk tolerance. Investigating various options and seeking advice from reliable sources, such as consumer reviews, can provide valuable insights.
Conclusion
To summarize, car owners must be aware of the coverage of an extended vehicle warranty and how it will protect their vehicles. It covers various vehicle components and systems, ensuring that you don’t have to bear the full cost of repairs. However, the cost may add up over time, and you may not use it at all. Before making a purchase, consider factors such as the vehicle's age and condition and the total cost of the coverage you choose. It is a good idea to keep in mind the options and limitations available for new and used vehicles. Whether you buy from the manufacturer or a third-party provider, a warranty can be beneficial in the long run, providing you with a reliable and hassle-free driving experience. For more information on auto warranties and the options out there, visit our comparison, review, and blog pages