What You Need to Know About Extended Car Warranties

When you buy a new vehicle, you’ll usually get a manufacturer’s warranty that will cover many things that could go wrong in the first few years. But if your car’s warranty has expired or you’re buying a used car that doesn’t come with a warranty, you’ll be on the hook for those expenses.

An extended warranty can provide some additional protection and pay for things that go wrong if your factory warranty has expired or doesn’t cover the issue. But extended car warranty types differ, and some come with high price tags.

What is an extended car warranty?

An extended warranty — also known as a vehicle service contract — is an optional coverage that can help pay for vehicle repairs.^[1]

Manufacturers, dealerships, and third-party providers often offer extended car warranties that you can purchase when you buy a new car. You can also purchase vehicle service contracts on used cars.

Your extended warranty may work differently depending on the provider. But generally speaking, each warranty has a list of what it covers. If something goes wrong during the warranty period and you need to make a claim, you may need to pay a deductible.^[1] Some warranties may also require you to pay for the cost of repairs up front, then get reimbursed later.

In addition to the warranty agreement listing what is covered, it may also include a list of repairs and expenses that won’t be covered.

What do extended car warranties cover?

The exact coverage you’ll have with your extended warranty depends on your policy. A warranty you purchase from your vehicle’s manufacturer might differ somewhat from one you purchase from a third-party company.

Extended car warranties commonly provide powertrain coverage, which covers the essential systems in your car, including the engine, transmission, driveshafts, and more.

Some policies also cover almost every part of your vehicle, including everything provided with powertrain coverage, as well as your heating and cooling systems, electrical systems, safety features, and more.

Vehicle manufacturer service contracts may be identical to — or at least more closely resemble — the original manufacturer’s warranty. But regardless of where you purchased your policy, coverage may depend on you keeping up with regular vehicle maintenance.

Some extended car warranties may also come with extra perks such as roadside assistance, rental car reimbursement, and trip interruption coverage.

What do extended car warranties not cover?

Extended warranties don’t usually cover routine maintenance or regular wear and tear. For example, you shouldn’t expect to have coverage for oil changes, tire rotations, brake pad replacement, or similar maintenance.

An extended car warranty typically doesn’t cover things that your auto insurance policy covers. For example, if you’re in an accident or your car is damaged in a storm, you wouldn’t file the claim with your warranty provider. Instead — assuming you have comprehensive and collision coverage — you would file it with your auto insurance company.

Extended warranties may also exclude damage caused by modifications to the vehicle, failure to properly maintain your vehicle, and interior damage.

Learn More: What Is Full-Coverage Car Insurance?

How long do car warranties last?

When you buy a new vehicle, you’ll usually have a factory warranty that covers certain repairs for the first three years or 30,000 miles, but it depends on the car manufacturer. Once your factory warranty expires, you might purchase an extended warranty to further protect your vehicle.

An extended car warranty can last anywhere from just a year or two to as many as 10 years. The length of your warranty often depends on the type of coverage. Powertrain warranties might be active for as long as 10 years, while bumper-to-bumper warranties might be considerably shorter.

In many cases, a warranty will cover up to a certain number of years or a certain number of miles, whichever comes first. So if you put a lot of miles on your car, your extended warranty may expire before it would for someone who drives fewer miles.

See Also: How Does Average Miles Driven Per Year Affect Car Insurance Rates?

How much do extended car warranties cost?

The cost of an extended car warranty can range from just a couple of hundred dollars to several thousand dollars.^[1] Factors that can affect your policy’s cost include the type and age of the car you drive, the type of coverage you’re purchasing, and the length of your coverage.

An extended warranty could cost $500 if you just drove off the lot, while a similar car that already has 30,000 miles on it might necessitate a cost closer to $1,800, according to warranty company Protect My Car. In addition to the cost of the policy, many extended warranties also require a deductible when you file a claim, which could be around $100.

When considering whether to purchase an extended warranty, you have to factor the cost into the other costs associated with owning a car, including your monthly car payment and your auto insurance policy.

Types of extended car warranties

Several types of extended car warranties are available. Some are comprehensive and cover nearly every system in your vehicle, while others are far more specific.

Powertrain warranty

A powertrain warranty is one of the most common options available and provides fairly basic coverage. This type of vehicle service contract covers only the most important parts of your car. Covered parts include:

• Engine

• Transmission

• Transfer case

• Driveshafts

• Axles

• Seals

• Gaskets

Powertrain warranties often last around five years, but some plans can last as long as 10 years.

Bumper-to-bumper warranty

A bumper-to-bumper warranty is the most comprehensive type of extended warranty. As the name suggests, it’s designed to cover everything from your front bumper to the back.

A bumper-to-bumper warranty likely covers everything a powertrain warranty would cover. It also covers other major systems within your vehicle, such as your heating and cooling system, electrical systems, steering system, brakes, safety features, and more.

Bumper-to-bumper warranties don’t generally last as long as powertrain warranties. While it’s not uncommon for companies to offer powertrain warranties for up to 10 years, most bumper-to-bumper warranties are good for four or five years.

Read More: Compare Car Insurance by Coverage

Dealership warranty

A dealership warranty is an extended warranty that comes from the dealership where you buy the car. Dealership warranties generally come with the same coverages as those you’d purchase from the manufacturer or a third party.

Buying your extended warranty from the dealer has some advantages. It’s convenient since you’re already at the dealer to buy a car. You may also be able to wrap the cost of the warranty into your vehicle financing.

That being said, dealership warranties can also be more expensive than those that other providers offer. And you may find yourself convinced by a pushy salesman before you have a chance to shop around.

Manufacturer’s warranty

Like dealerships, vehicle manufacturers also offer extended car warranties. Like other providers, manufacturers may offer powertrain warranties, bumper-to-bumper warranties, and other coverage options. And because you’re getting the extended warranty from the same provider as the original factory warranty, the coverage is more likely to be similar (if not identical).

It’s worth noting that manufacturers sometimes require that you stick to your vehicle’s maintenance schedule for the warranty to remain valid. Additionally, you may have to visit the dealership or a specific repair shop when you need work done.

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Rust and corrosion warranty

A rust and corrosion warranty — as the name suggests — is designed to cover rust and corrosion on your vehicle. This type of coverage can pay for surface damage to the vehicle, as well as more serious damage to the metal.

Rust and corrosion coverage is less common, and not everyone needs it. You may want this kind of warranty if your vehicle is frequently exposed to certain environmental factors, like snowstorms and road salt. However, this type of plan may also cover corrosion that occurs after an accident.

Emissions warranty

An emissions warranty is a type of vehicle warranty that can pay for repairs to your vehicle if it fails an emissions inspection. Not everyone needs this type of policy since not all cities and states require emissions or smog testing.

An emissions warranty covers systems and parts that bumper-to-bumper or powertrain warranty plans may not cover. Covered components include catalytic converters, onboard emissions diagnostic systems, and electronic emissions control units.^[2]

Extended car warranties vs. mechanical breakdown insurance

Mechanical breakdown insurance (MBI) is a type of policy some auto insurance companies offer. It pays for repairs when your car breaks down. Some customers may use mechanical breakdown insurance as protection after their vehicle’s factory warranty has expired. However, some people may also carry both coverages at the same time for more protection.

Like an extended warranty, mechanical breakdown insurance won’t cover regular maintenance or wear and tear on your vehicle. However, it does cover many of your vehicle’s systems and parts.

Mechanical breakdown insurance typically lasts for a year, then you renew your policy, much like standard car insurance. However, insurance companies may deny coverage to older cars, while you can buy extended warranties for used cars. But the main difference is that you buy MBI from your auto insurance company rather than a dealership, manufacturer, or third party.

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