Best Car Warranties

Types of car warranties

A factory warranty is included when you purchase a brand new car. This contract offers consumers bumper to bumper coverage for major repairs resulting from mechanical breakdown or malfunction. If you want to extend this protection past the manufacturer's warranty's expiration, you'll have to purchase an extended car warranty, vehicle service contract, or auto protection plan.

Extended warranties have several names because the only true warranty is the one offered by the manufacturer. An extended warranty is really more like a service agreement for the most expensive car repairs resulting from mechanical malfunction.

Manufacturer's warranty

A manufacturer's warranty is issued by a vehicle's manufacturer and it covers certain parts of your car, but only for a limited time. Other names for a manufacturer warranty include factory warranty, original warranty, bumper to bumper warranty, and limited warranty.

Most manufacturers' warranties have a warranty period of around three years or 36,000 miles.

A basic warranty covers defects, not normal wear and tear on the vehicle and routine maintenance, including the following:

• windshield wipers
• tires
• brake pads
• filters
• belts
• hoses

Extended auto warranty

An extended car warranty or extended vehicle warranty can be purchased from a third-party auto warranty provider. It is a contract stating that if certain parts of a vehicle break down, the warranty provider will help pay for the repairs. In this sense, an extended warranty functions like insurance because there is a deductible and cost-sharing stipulations. It is an added warranty beyond the original warranty.

Extended auto warranties can be purchased for a pre-owned car. Sometimes these are referred to as a service contract, vehicle service contract, extended service contract, or limited warranty. These warranties only come into effect once the original warranty on your car expires. Check your owner's manual to check your car's warranty.

Car warranty companies typically have several coverage plans, each offers a different level of extended coverage. Common warranty plans include:

• Exclusionary warranty
• Stated component warranty
• Powertrain warranty

The availability of these plans depend on the mileage and age of your car. The monthly payment amounts are determined by the age, mileage, and make of a car.

An exclusionary warranty protection plan offers bumper to bumper coverage. It is the warranty service most similar to the manufacturer's warranty because it covers everything except the items listed in the service contract. Exclusionary coverage is available to newer cars after the factory warranty has expired.

A stated component vehicle service contract includes a list of covered parts. It is the middle level of coverage. It does not cover everything like an exclusionary warranty, but it covers more than a powertrain warranty.

A powertrain warranty covers repair costs for a limited number of items, like the engine transmission. This warranty covers the powertrain components, or everything that makes the car move. Items that don't directly affect the power of your vehicle, such as brake pads, are often not covered by this type of plan. Powertrain coverage is for the most essential car parts, which contribute to some of the most expensive repair costs. Because powertrain warranties offer the least amount of vehicle coverage, they tend to be cheaper and often have a longer contract length than other kinds of car warranty plans.

Additional features

Many car warranty companies also offer benefits, so customers with a warranty can receive additional value. These benefits include travel interruption, roadside service, wear and tear coverage, rental car reimbursement, seal and gasket coverage, and electronic equipment coverage.

Trip interruption benefits reimburse meals and lodging resulting from a covered breakdown and repair. This benefit is a great bonus for those who like to take road trips.

Roadside assistance is another great benefit because it provides free assistance like jumpstarts, gas delivery, and towing.

When purchasing an extended warranty for your vehicle, find a company that has good coverage options and additional benefits because these services add value to your vehicle service agreement.

Most warranty companies allow car owners to choose their own mechanic and repair shop. Many warranties are accepted widely at a car dealership and repair shops with ASE certified technicians.

You do not always need to visit the dealership for regular maintenance or auto repairs. In fact, the repair cost may be cheaper at a privately owned repair facility than at the dealership.

Car warranty vs. car insurance

The main difference between a car warranty and car insurance is the kind of protection each policy offers. A warranty typically covers certain types of mechanical breakdowns, including parts and labor costs. It should not matter whether these repairs are due to manufacturing defects or due to issues with certain car parts.

Additional mechanical breakdown coverage can be purchased as part of a car insurance policy. Car insurance, on the other hand, helps cover repairs for your car if it's damaged in a collision, theft, fire, or a natural disaster.

Choosing a car warranty provider and extended warranty plan

Before purchasing an extended warranty, it's important to answer this question:

Are car extended warranties worth it?

The answer to this question depends on your situation.

Car warranties are useful for covering major repairs from unanticipated vehicle part malfunctions, some mechanical breakdowns for pre-owned cars, or coverage after the original warranty has expired. Looking at extended auto warranty plans might be worth it if the pre-owned car has already had mechanical issues and repairs covered by the original warranty.

When choosing a car warranty plan, consider your financial habits.

If your car breaks down, how will you pay for repairs?

Will you proactively set money aside to cover unanticipated car repairs or is it worth paying a warranty provider for the peace of mind to know that you are budgeting for future car repairs? 

Warranty policies offer different levels of coverage, so consider your options when deciding what to buy. If you regularly set money aside for unexpected expenses and still want some coverage, a powertrain warranty could be a good fit because it offers some coverage and won't be as expensive as a plan with more extensive coverage.

You should also consider how old your car is and the kind of driver you are. If you have a pre-owned vehicle, it's also a good idea to look at the CarFax and its vehicle history. These factors can help determine whether it is actually worth it to buy an extended warranty and the kind of coverage you need.

Consider the cost of these plans. The greater risk your car has of needing covered repairs, it's likely that the warranty cost will be higher.

If you decide to buy an extended warranty, you'll also want to look at reputable extended car warranty companies. Buying your vehicle protection plan from a reliable, reputable warranty provider will ensure that you're spending your money wisely.

Beware of car warranty scams. Service contract companies listed on BestCompany.com are not scams. If a company is found to be a scam, it is removed from our site.

Another way to protect yourself from car warranty scams is to pay attention to what current and former clients say in the company's extended car warranty reviews. This information will give you a sense of the value offered by the company, its warranty service, and the quality level of its customer service. All the reviews on BestCompany.com go through a verification process to ensure authenticity.

Additionally, consider if the car warranty company sells vehicle service contracts from third-party providers. Then, do your research on those third-party providers to make sure they offer good quality. Although, real customer reviews of the company you consider will tell you about as much as reviews of the third-party provider.

It's also worth checking to see if the warranty company buys car warranty insurance. Purchasing a warranty plan from a company that insures its plans is safer because it helps ensure that the company will be able to meet its claims obligations for the cost of repairs.

Car owners should also look at the other benefits offered by car warranty companies. Most offer 24-hour roadside assistance, towing, trip interruption, and help with car rentals. These benefits can be valuable during car emergencies in addition to the benefit of warranty coverage.

Before you purchase a warranty, ask for details about payment plans, the claims process, and the cancellation process. Some warranty companies pay the repair shop directly according to the cost-sharing rules, and then the client pays the remainder until the deductible is met. Some companies do not have a deductible and cover auto repairs fully. Be sure to understand what the real cost and value of the warranty are by including estimated out-of-pocket expenses.

Car owners purchasing warranties should understand all the terms of the limited warranty or vehicle protection agreement, including the fine print. Car owners should note that their warranty coverage can be voided for failure to keep up with regular vehicle service maintenance among other reasons. Routine maintenance includes oil changes. You can find your car's recommended maintenance schedule by looking at your owner's manual.

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