Written by Alice StevensAlice Stevens is a language enthusiast, loves history, and enjoys traveling. She manages content for BestCompany.com specializing in finance, insurance, and car warranty.
Purchasing an extended warranty has three steps:
1. Evaluate whether or not an extended warranty is right for you.
2. Decide what kind of extended warranty to buy.
3. Choose an extended warranty provider.
We’ll focus on steps two and three in this article.
Choosing an extended warranty
Extended warranties fall into three main categories: powertrain, stated-component, and exclusionary. Each kind of extended warranty or service contract has different eligibility requirements and a different level of coverage.
There may be some slight variability company to company in eligibility requirements and specific coverage. However, the general coverage offered by each kind of warranty will be about the same.
While most companies make general coverage information easily accessible online, some companies don’t. Instead, potential clients must input their car information to see options tailored to their situation.
autopom! includes general coverage and some eligibility information on its website and offers a wide selection of extended vehicle service contracts.
CARCHEX also offers general coverage information on its website in addition to sample service contracts. The information from both companies is a helpful reference.
Powertrain extended warranty
Powertrain warranties typically cover the car’s engine, transmission, transfer case, and drive axle. Some companies include additional coverage for things like the supercharger, differential assembly, and air conditioning in their powertrain warranty plans.
Powertrain warranties cover the most essential parts of a car, which offers peace of mind and can save car owners money on expensive repairs. Because the powertrain warranties only cover the essentials, they tend to be less expensive than warranties that offer more coverage.
Eligibility requirements are trickier to pin-down for powertrain warranties. However, this kind of coverage can be purchased for low-mileage and higher-mileage vehicles. Most car warranty companies have a maximum mileage that they will service, so it’s important to check with each company directly to see what’s available for your car.
autopom!’s powertrain warranties offer coverage for an additional 36,000 to 100,000 miles (three to six years).
CARCHEX’s extended powertrain warranties can last as long as five to seven years.
"The powertrain usually becomes an issue in older and higher mileage vehicles. So if a powertrain warranty is offered, it is only with considering if you are buying an older car that has racked up plenty of mileage," says Jake McKenzie, Auto Accessories Garage Content Manager.
Stated-component extended warranty
Stated-component warranties cover the car’s powertrain and other parts specifically listed in the service agreement. These plans offer more coverage than a powertrain warranty and less coverage than the car’s factory warranty, so it’s a nice middle level of coverage. There is also more variety available with these named-component plans, which makes it easier for car owners to find affordable coverage to meet their needs.
Stated-component warranties are available for newer cars with lower mileage. For example, autopom!’s stated-component warranties end coverage at 100,000 or 125,000 miles (five to seven years). CARCHEX’s stated-component warranties are recommended for cars with over 60,000 miles and can last as long as five, seven, or ten years, depending on the plan and client’s situation.
If your car has fewer than 100,000 or 125,000 miles, a stated-component extended warranty could be a good option, especially if you want more coverage than a powertrain warranty.
"While most extended warranties do not cover general wear and tear, some stated-component coverage options do. If insuring your vehicle against standard wear and tear is important to you, a stated-component plan could be the best for you," says McKenzie
Exclusionary extended warranty
Exclusionary coverage is the most comprehensive coverage available once the original warranty expires. It covers most car parts, except for the parts listed in the contract. Parts not covered include things like lights, paint, and bumpers.
Exclusionary coverage is only available to newer cars with low mileage. For example, autopom!’s exclusionary warranty plans end after 100,000 or 150,000 miles (six to eight years). CARCHEX’s exclusionary warranties can last up to seven or ten years.
If you want comprehensive coverage and your car has under 100,000 or 150,000 miles, an exclusionary warranty is a nice option.
"Exclusionary coverage is best if you spend a lot of time driving or commuting and any interruption in your vehicle’s reliability would be detrimental to your life or business," says McKenzie.
Choosing an extended warranty provider
Once you know the kind of warranty you want, compare plans from several companies. Most plans will be similar, but some companies have more variety.
For example, some companies offer very basic powertrain warranty plans while others offer more comprehensive powertrain warranty plans. The more comprehensive plans will cover more parts and will usually be more expensive. Evaluating plans from multiple companies can help you find the best plan for what you want.
As you’re researching companies, consider the benefits included with many extended service contracts. 24/7 roadside assistance has become standard in the industry. Many companies also offer rental car and trip interruption reimbursement. The reimbursement is only available if the car needs covered repairs.
In addition to comparing plans and benefits, read customer reviews to be sure that you’re purchasing an extended warranty from a reliable and trusted provider. Reviews will give you insight to the level of customer service and quality of the extended warranty.
"Before purchasing insurance through a third-party be sure to know if they have a deductible and what the process would look like if damage occurred. Many third-party warranties will have you pay out of pocket and then file a reimbursement claim, this process can take months to complete. If you don’t have the funds on hand for this, consider the dealership warranty as a better option," says Jared Weitz, United Capital Source Inc. CEO and Founder.
An extended warranty is a financial commitment. It can protect your finances if your car needs a covered repair. Car repairs can be expensive, so an extended vehicle service contract can be an investment in your car’s continued function.
Purchasing a car warranty from a trusted warranty provider is also important. If you make a claim, you’ll want to be confident that your warranty company will pay.
Understanding your coverage needs, what your budget is, and finding a good extended warranty company will ensure that you purchase the right extended warranty for your car.
View Best Company’s Top-ranked Extended Warranty Companies