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Important Things to Know Before Choosing a Car Warranty Company

We buy warranties for our phones, laptops, and even our smartwatches. Shouldn’t we prioritize a warranty for our most expensive gadget — our car?

A car warranty provides peace of mind and unique protection beyond what car insurance can offer. Although they may seem similar, car warranties can cover mechanical breakdown and labor costs associated with those repairs. Think of a car warranty as an extra life for your vehicle.

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's warranty include factory warranty, original warranty, and bumper-to-bumper warranty.

Most manufacturers’ warranties have a warranty period of around three years or 36,000 miles. These warranties typically give cars either a basic or a powertrain warranty. The basic warranty covers defects, not normal wear and tear on the vehicle, 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 pay for the repairs. It is an added warranty beyond the original warranty. 

Extended auto warranties can be purchased for pre-owned vehicles. Sometimes these are referred to as service contracts, vehicle service contracts, or extended service contracts. These warranties only come into effect once the original warranty expires. 

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 depends 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 most like the manufacturer's warranty because it covers everything except the items listed in the service contract. These are available to cover new cars after the factory warranty has expired.

A stated component vehicle service contract provides 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 contract covers repair costs for a limited number of items, like the engine and transmission. So, this kind of warranty covers everything that makes the car move. These warranties offer coverage for some of the more expensive car parts. 

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. 

When purchasing an extended warranty for your vehicle, find a company that has good coverage options and additional benefits.

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 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 car warranty and car insurance is the kind of protection each 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 by 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

Car Warranties are good for for covering unanticipated vehicle part malfunctions and some mechanical breakdowns. When choosing a car warranty plan, consider your financial habits. Could you set aside money to pay for surprise car repairs, or is it worth paying a car warranty provider to have peace of mind? 

You should also consider how old your car is and the kind of driver you are. These factors can determine whether or not it is actually worth it to buy an extended warranty and the kind of coverage you need. 

You'll also want to choose a reliable, reputable warranty provider. Car owners should also look at the other benefits offered by car warranty companies. Most offer 24-hour roadside assistance, towing, and help with car rentals. These benefits can be valuable during car emergencies in addition to the benefit of warranty coverage. 

Car owners purchasing warranties should note that their warranty coverage can be voided for failure to keep up with regular vehicle maintainance among other reasons. 

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What does bumper-to-bumper car warranty cover?

Bumper-to-bumper warranties are the most comprehensive coverage plans for a vehicle, and car dealers usually provide this coverage for three years. It tends to include electronics and other systems that a powertrain warranty doesn’t. Don’t be fooled by the name, though; there are exclusions. Repairs not defect-related and outside the control of the automaker are not covered in bumper-to-bumper warranties. For example, some bumper-to-bumper warranties do not cover tires, while others do not cover seat belts or headlights. Keep in mind that bumper-to-bumper warranties vary quite a bit depending on the dealership and warranty agreement, so look into your paperwork before agreeing to pay for a bumper-to-bumper plan.

What does powertrain car warranty cover?

Powertrain warranties cover only the parts that make the vehicle go and are least likely to break: the engine, transmission, and driveshaft. These warranties tend to last much longer, from five to ten years or around 60,000 miles.

Is there a mileage limit for car warranties?

Mileage is sometimes a little tricky so make sure to understand your policy. Some plans use actual mileage while other plans use additional mileage. Actual mileage is the reading on your odometer. For example, if your coverage is for five years and 100,000 miles but you already have 50,000 miles on the car, your plan will only cover 50,000 more miles. Additional miles moves from the initial odometer reading on. So if your plan covers five years or an additional 100,000 miles and you already have 50,000 miles on the vehicle, your coverage will expire in five years or once you reach 150,000 miles. When purchasing a vehicle warranty, make sure to note the way the mileage warranty is worded.

What are the best car warranty companies?

Check out the best car warranty companies in your area.