The sections below serve as a guide to help drivers looking for an extended auto warranty find the best coverage to fit their needs and budget.
what is an extended warranty?
An extended auto warranty, also called a vehicle service contract or aftermarket auto warranty, is an optional service plan that helps cover the cost of certain auto part repairs or replacements. An extended service plan usually takes effect after your manufacturer’s factory warranty has expired, although the two warranties sometimes overlap.
Reading: Extended car warranties reviews
The main difference between a manufacturer’s warranty and an extended automobile warranty is that the manufacturer’s warranty is included at the time the vehicle is sold. extended auto warranties, on the other hand, cost an additional fee.
extended warranty coverage
extended auto warranties cover repairs and replacements for breakdowns that result from normal use. Depending on your plan, it may cover your powertrain, electrical system, air conditioning, and other systems.
Most extended warranties do not cover routine maintenance on your vehicle. Things like oil changes, brake pads, and tires are usually the owner’s responsibility. The best auto extended warranty providers have several coverage options, so you can select a plan that meets the needs of your vehicle.
types of extended warranty coverage for automobiles
Like manufacturer warranties, aftermarket auto warranties generally fall into three main types: powertrain, bumper-to-bumper, and designated component. Here are some of the basics for each type of warranty:
- Powertrain: Powertrain warranties cover the powertrain of your vehicle. this includes most of the internal parts of the engine and transmission. extended powertrain warranties are generally recommended for high mileage or older vehicles.
- bumper-to-bumper: Bumper-to-bumper warranties often offer the most comprehensive coverage. most include the car’s major mechanical systems, except for certain excluded items. components excluded from an extended bumper-to-bumper warranty must be listed in the warranty details.
- Named Component: You might consider a Named Component contract as the opposite of a full warranty. Instead of a list of excluded parts or services, a designated component service contract provides you with a list of included parts. everything else is considered not covered.
- convenience: If you have a problem covered by your service contract, you’ll know exactly who to call to fix it. Most warranty providers allow you to choose your own mechanic or repair center. the best companies will even pay your repair shop directly.
- Risk Mitigation : While some vehicles cost less to repair than others, recurring problems, or even a single expensive repair, can quickly add up to a hefty repair bill. an aftermarket car warranty alleviates the cost of repairs as your vehicle ages.
- additional benefits: Many of the best extended car warranty companies include benefits with their protection plans, such as roadside assistance, rental car reimbursement, or towing services.
- deductible
- vehicle age, make, model and mileage
- existing coverage
- location
- provider
- exclusionary coverage: This type of auto warranty plan covers all parts of your vehicle in the event of a mechanical breakdown, except for a short list of excluded parts and components.
- Designated Component Coverage: This type of auto warranty, also known as inclusion coverage, is essentially the opposite of exclusion coverage. your contract will specifically list the parts and systems covered. Any part not listed is not covered.
- High Declared Coverage – This is the highest level of declared coverage – all covered parts are listed in the contract. this type of plan can cover hundreds of separate components.
- Medium Coverage: This level typically covers most of the car’s major systems, including items such as air conditioning, steering, and electrical components.
- Low Coverage: Also known as a “powertrain plus” plan, it covers the powertrain and some major systems.
- Basic Powertrain – This is typically the lowest level of protection offered by an extended warranty company and is comparable to a powertrain warranty. covers engine, transmission and transmission repair costs. these can be expensive repairs, so it’s a good idea to protect them on high mileage cars.
read the fine print on your warranty or look at a sample contract to make sure you know what type of service contract your aftermarket car’s warranty covers.
benefits of extended car warranty
extended auto warranties keep your car covered in the event of a mechanical or technological failure. depending on the type of car you have and how much it costs to own over its lifetime, this could save you money.
In addition to protecting your vehicle after the manufacturer’s warranty expires, the best extended auto warranties provide benefits such as:
automobile extended warranty exclusions
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Extended automotive warranties only cover components that break down as a result of normal use. damage resulting from an accident, misuse or improper maintenance will not be covered. certain items are not covered under any circumstances. these typically include non-mechanical parts such as bumpers, glass, trim, and upholstery. Items that wear and tear, such as tires, brake pads, wiper blades, and shock absorbers, are also typically excluded from coverage.
extended car warranty vs. mechanical breakdown insurance
Some auto insurance providers offer mechanical breakdown insurance (mbi). This is an add-on that covers mechanical issues similar to an extended car warranty. however, mbi often requires you to visit a small dealer network and generally doesn’t last as long as the plans of the best auto warranty providers.
extended car warranty cost
According to our research, extended warranties that last between three and six years cost between $1,600 and $4,500 on average. Bumper-to-bumper warranties tend to be more expensive, since they cover more components. longer-lasting coverage also increases the contract price. Other factors that affect car warranty costs include:
what is a good price for an extended car warranty?
A good price for a comprehensive extended auto warranty is between $2,000 and $3,500 total. prices vary based on the coverage and limitations you select. many companies offer monthly payments ranging from $80 to $125.
can you buy an extended car warranty after purchase?
You can purchase an extended warranty from a trusted third-party vendor at almost any time after purchase. Manufacturers, on the other hand, usually require you to purchase an extended warranty before the factory warranty expires. some only allow you to purchase one when you purchase the vehicle.
how do extended warranties work?
An extended warranty helps protect you by covering the cost of certain repairs if a mechanical or electrical component breaks down. exactly which parts are covered depends on your contract. There are generally two types of coverage plan options: exclusive coverage and designated component coverage.
car warranty plans
within named component coverage, you can find various plan levels, such as:
car warranty extended waiting period
After you purchase your contract, most warranty providers require you to go through a waiting period until you can use their coverage. This helps protect the provider from someone buying a warranty right after discovering a problem with your car. most extended warranties require you to wait 30 days and 1,000 miles before filing a claim for auto repairs.
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If you experience a covered breakdown after your waiting period ends, you will file a claim with your warranty provider. Depending on your contract, you may need to use a dealer network, or you may be able to use your favorite repair center. most plans require you to pay a deductible, and the extended warranty covers the remainder of the repair cost.
how to cancel an extended car warranty
reputable extended auto warranty companies will allow you to cancel a warranty for a full refund within 30 days. they will also provide prorated refunds after that. you will need to contact the contract administrator and provide a written odometer statement to cancel the extended car warranty.
how to avoid car warranty scams
Unfortunately, some providers take their business practices to new levels and are outright scams. here are a couple of ways to avoid these companies:
ignore unwanted calls
The Federal Communications Commission (FCC) reports that there are a number of auto warranty scams in which a car owner receives a sales call stating that their warranty is about to expire. during these calls, the scammer may pose as an employee of a legitimate company and may even provide specific information about the recipient’s car, further tricking the recipient into thinking the call is from a reputable company.
However, the caller is usually looking for personal information, so please do not provide any sensitive information. If you think you have been contacted by one of these scammers, you can report it to the FCC.
recognize unreliable companies
Aside from these phishing scams, there are vehicle warranty companies that will simply make getting the coverage you’re paying for impossible or an outright nightmare. Red flags to look out for when researching an extended warranty company include a lack of industry support, significant limitations in coverage, and low ratings on popular review sites.
bbb lists consumer complaints on its site, so it’s a great place to look. Ideally, you’ll want to look for a company with a relatively low volume of complaints that is also accredited by bbb, although there are many legitimate companies that do not have bbb accreditation.
Are Extended Auto Warranties Worth It?
You may never have been in an accident, but you still need car insurance. The reasoning for an extended car warranty follows the same principle. you may not need it today, but if you ever do, you’ll be glad the protection was available.
according to aaa, 64 million Americans don’t have the funds to cover unexpected auto repair costs. instead, they would go into debt to cover the bill. an average repair bill runs between $500 and $600, but when a major component breaks, you could be paying much more.
Here are some average prices for expensive auto components based on data from repairpal.
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