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Important Things to Know Before Choosing a Car Warranty Company

A car warranty provides peace of mind and unique protection beyond what car insurance offers. Car insurance is coverage for accident-related car damage, liability, and injury. In contrast, car warranties cover mechanical breakdown and labor costs associated with those repairs. Think of a car warranty as an extra life for your vehicle.

Before purchasing extended warranty coverage, it's important to understand what kinds of protection plans warranty companies offer and if purchasing a car warranty is the best choice for you. Then, it's important to be able to evaluate extended car warranty companies so that you can find the best extended warranty provider for you.

Types of Car Warranties

New cars come with a factory warranty. These warranties offer 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, and bumper-to-bumper 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, 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 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. 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 contract covers repair costs for a limited number of items, like the engine and transmission. So, this kind of warranty covers the powertrain components, or everything that makes the car move. Powertrain coverage is for the most essential car parts, which are also some of the most expensive car parts. Because powertrain warranties offer the least coverage, they tend to be cheaper and can have a longer contract length than other kinds of extended warranties.

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 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 major repairs from unanticipated vehicle part malfunctions and some mechanical breakdowns for pre-owned cars or after the original warranty has expired. 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. 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 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 buy your vehicle protection plan from a reliable, reputable warranty provider. Beware of car warranty scams. Companies listed on are not scams. If a company is found to be a scam, it will be 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 go through a verification process to ensure authenticity.

Additionally, consider how 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 about what the payment plans are, how the claims process works, and what the cancellation process is. 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 is by including estimated out-of-pocket expenses.

Car owners purchasing warranties should be sure to 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.

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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.