Everything You Should Know About Extended Car Warranties
The most important, money-saving information on vehicle service contracts.
If you have ever sat in a dealership confused as the salesperson asks if you want an extended warranty on top of the factory one, don’t worry. You wouldn’t be the first person to wonder what an extended warranty actually is and whether it’s important or not.
The good news is, you don’t have to get confused when trying to understand the basic concepts and little details of extended warranties. You actually don’t need to know all that much to decide if an extended warranty is for you.
In fact, all you really need to know is this:
- An extended car warranty is just the warranty that lasts longer than the factory one. In some cases, it’s the exact same warranty as the factory; in others, it’s something new from a third-party provider.
So, if you want the extra coverage you enjoyed with the factory powertrain and bumper-to-bumper warranty, an extended warranty is the way to go. But what do you actually get with one? Are they really the same as factory warranties? How do you get the best one?
If you are searching for more information, read on for our extended guide that demystifies extended car warranties.
Extended car warranties aren’t something most gearheads spend a lot of time studying. Why review a lengthy service contract when you can spend the time fine-tuning or upgrading your ride? So, even if you have or want an extended warranty, there’s a good chance you don’t know that much about it.
The first thing to remember is that extended warranties are just like any other car warranty. Yes, there are some major differences between factory and extended warranties, but they all do the same basic thing: promise to repair or replace in certain conditions.
This is why it helps to know a thing or two about car warranties in general.
Car Warranties in General
It helps to know what a general car warranty actually is to know why an extended warranty may be beneficial. Automotive manufacturers and dealerships hype up the importance of warranties all the time without explaining what they are. This leads to a lot of confusion and misconceptions about what they actually cover.
On paper, car warranties are pretty simple in concept:
- Car warranties are written promises by the manufacturer or a third-party to repair or replace defects with the vehicle it sells to you.
A car warranty is meant to give you, the customer, some peace of mind. If something goes wrong with the vehicle, especially if it’s new, you have a way to get it fixed. Basic factory warranties, for example, allow you to bring the car to an authorized garage or dealership and get the issue fixed for free.
Of course, things are more complicated than this basic promise because all car warranties have certain limitations. Warranties don’t always cover repairs, and they don’t last forever.
Specific limitations of car warranties can include:
- Scope: Car warranties have certain parts they cover and certain parts they ignore. Known as inclusions (include) and exclusions (ignore), the scope of the warranty affects how much it covers overall. Comprehensive warranties, for example, cover everything between the bumpers. Typical powertrain warranties, on the other hand, only cover the most important parts to a vehicle, things like the drivetrain, engine, and transmission.
- Length: No warranty lasts forever. Factory and extended car warranties have length limits based on length and mileage. For example, common factory warranties last three years or 36,000 miles, whichever comes first. After the length limit is reached, the warranty no longer applies, and a new one will be required if you want to keep your vehicle covered.
- Issues: There is a lot that can go wrong with a vehicle. Car warranties don’t cover everything. If they did, providers would be paying out for every little problem caused by a vehicle’s owner’s need to customize their ride. Instead of everything, car warranties generally spell out what issues and causes they cover together. For reference, typical factory warranties only cover issues related to manufacturing and material defects.
The problem many people find with car warranties is the lack of information to understand what the warranty covers. It’s easy to be surprised when you discover that your car warranty doesn’t cover an issue you thought it did.
This is why it’s always important to know the basics of any warranty, factory or extended. The details of the coverage and the limitations it has will let you know what circumstances the warranty will apply and when you may be paying out-of-pocket.
This is especially true with extended warranties that differ from provider to provider.
Extended Car Warranties
For the most part, extended car warranties act just like any other type of automotive warranty. The promise to fix issues may come from the manufacturer or a third party, but the end result tends to be the same: If something goes wrong, someone will do something about it under the right conditions.
The complication with extended warranties is the different types many dealerships and third parties offer. While there is usually just one factory warranty you get with a new car, your options will grow dramatically if you are searching for an extended warranty.
Even a single manufacturer can have different service plans or extra services to add for an additional cost. Third-party providers tend to offer entire warranty lineups so you can choose the right plan and tailor it to your needs.
This is where an important difference comes in: true extended warranties versus vehicle service contracts:
- (Real) Extended Warranties: If you want the benefits of your factory car warranty to last a bit longer, you will need to go straight to the manufacturer. True extended warranties extend the coverage limits of a factory warranty. If the original warranty lasts three years and 36,000 miles, the automaker may extend it to five years and 60,000 miles. These tend to be rare since a majority of automakers offer other extension options, but some do offer warranties you may be able to extend even before the original runs out.
- Vehicle Service Contracts: Often marketed as an extended warranty, vehicle service contracts are new agreements between you and the automaker or third-party providers. The promise of fixing issues is still there, but this type of contract has nothing to do with the factory warranty. Even if it offers the same coverage and limitations, it’s still a different thing. The benefit of vehicle service contracts is the greater number of options and opportunities you get. Depending on the provider, you can choose from different plans, additions, limitations, and more. This is the most common type of extended warranty.
There are more similarities than differences between the two types of extension options, but it helps to know how they differ. At the very least, this information will help dispel some misconceptions and help you make the best choice for extending your coverage.
The Truth Behind Extended Car Warranties
The differences between true extended warranties and vehicle service contracts are just the tip of the iceberg of things that confuse countless vehicle owners. With so much information that is either conflicting or misleading, it’s easy to buy an extended warranty that won’t actually give you the coverage you want or need.
So, let’s set the record straight about a few things.
Factory Vs. Extended Car Warranties
Most people learn of the major differences between factory and extended warranties when the clock runs out on the original warranty coverage. If you know ahead of time what these differences are, however, you can make a smart decision about what you want to do when the time comes.
Keep in mind, there are plenty of similarities between the two as well. This is why things can be confusing when researching the two. So, to keep them separate, keep these major differences in mind:
- Provider: Factory warranties come strictly from the manufacturer. Like any new product, new cars are covered for a time to address any defects or mistakes made at the factory. Extended warranties can come from the factory, but there are plenty of third-party providers that also have something to offer.
- Coverage Variety: All factory warranties have bumper-to-bumper and powertrain warranties, along with a few variations you don’t choose like seat restraint coverage. Extended warranties, especially third-party plans, can give you more variety in coverage and limits. This makes it easier to personalize your extended warranty coverage to your vehicle and your needs.
- Scope Variety: Unless it’s a factory defect, factory warranties probably won’t cover the cost of a repair or routine service. This is where extended warranties take the cake: Different plans may include coverage for accidents, upgrades, or routine work.
- Restrictions: Factory warranties can be restrictive when it comes to where and when you can get issues fixed. Generally, they won’t accept any mechanic who isn’t manufacturer-approved. The same can be true for factory extended warranties, but third-party providers typically accept a larger number of mechanics, dealerships, and garages.
- Price: It may seem like factory warranties are free with the new car, but the cost is usually just hidden inside the final cost of the vehicle. This means you can pay for it with a loan or with cash, just like a car. Extended warranties have separate costs you will pay either yearly or (sometimes) monthly. This subscription type of payment will last the lifespan of the warranty.
In general, you can get better coverage with an extended warranty over the factory coverage. Some vehicle owners, in fact, choose to include an extended warranty even when the factory coverage is still in effect. That said, whether you should get one or not depends on several factors.
Is an Extended Warranty Necessary?
There is no law saying you need to have an extended warranty to drive on the roads with your vehicle. As long as you have the minimum level of automotive insurance legally required in your area, you can drive as much as you want.
The point of an extended warranty is to save you money—ideally, more money than what you would be spending on costly repairs out-of-pocket. This means an extended warranty can be valuable under certain conditions. For example:
- You have an older vehicle that is going to need more service as it ages.
- You have a newer vehicle that has a history of service needs.
- Your vehicle’s make and model has a history of service needs.
- You want to take advantage of extra perks like roadside assistance through an extended warranty.
- You buy a used vehicle that comes with an extended warranty already.
The challenge with extended warranties is that they aren’t valuable until you need them. Until they kick in and reduce repair costs, you are just spending money on the warranty itself.
That is why we recommend setting a budget and finding an extended warranty plan that balances the costs and coverage you want for you vehicle. It’s important to find a plan that you’ll actually use on a periodic or regular basis.
What Extended Warranties Do (and Don’t) Cover
All extended warranty plans are different in terms of what parts and repairs they cover. Some follow fairly strict standards that mimic factory warranties. Others may cover more parts and repairs if the plan is designed to be comprehensive.
Since all warranty plans are different, the best way to compare what they do and don’t cover is by looking at the list of inclusions and exclusions:
- Inclusions: This list breaks down everything that a warranty covers. If a warranty has a lot of exclusions, many providers will include an inclusion list to help you understand what is covered. Some warranty plans are very specific in the inclusion list, detailing the exact parts that are included. You may also find that some providers are more vague with the list by specifying general car components like the engine or drivetrain.
- Exclusions: Sometimes, it’s easier for a provider to just specify what a warranty doesn’t cover. This is where an exclusions list comes into play. Basically the opposite of an inclusion list, the exclusions lay out what parts aren’t covered by the warranty. If you need one of these parts repaired or replaced, you’ll likely have to pay out-of-pocket to get the work done.
In addition to the inclusions and exclusions, you should also look at the scope of the warranty:
- Causes: All problems are caused by something. Extended warranties will limit what types of issue causes they cover. If it’s a traditional factory extended warranty, for example, it’s unlikely to cover anything other than defects caused by the manufacturer. Some extended warranties do a better job of listing out what is and isn’t covered, but you may have to dig around the contract before you sign to get an accurate idea.
How Extended Warranties Work
Extended warranties are typically easy to use, especially compared to auto repair insurance, since there is less (if any) of a claims process. To take advantage of the coverage, however, you need to have it first.
Extended Warranty Costs
One challenge many first-time warranty buyers experience is figuring out the cost of a warranty plan. There is no golden standard for pricing in the extended auto warranty industry. Prices vary between providers, plans, and the individual customer.
The real challenge is the fact that extended warranty costs are extremely dependent on the individual customer and their vehicle. Providers will generally have a price range for each plan and algorithms that factor in different things to determine the final cost to the customer.
These factors can include:
- Type of Car: Some cars are just more expensive to cover with an extended warranty than others. While common types like sedans and trucks don’t vary too much, this depends on the individual providers. Specialty cases like commercial vehicles may call for a higher price or may even require a different warranty plan if commercial use isn’t included in the main plans.
- Age of Car: The age of a vehicle, in terms of both years and mileage, will impact a car’s eligibility in addition to the final cost of the warranty. In general, older vehicles are more expensive to cover. Depending on the automaker and its reputation for reliable vehicles, warranty providers set a price that reflects the likelihood of repairs needed to keep the vehicle running.
- Driving History: Some warranty providers take the vehicle owner’s own driving history into account when determining the final price. It may seem trivial, but the provider considers how well you treat your vehicle and how likely you are to get in an accident. This is common with auto insurance as well, where a good driving history can lower the cost of insurance policies.
- Coverage Scope: The repairs and parts a plan covers can influence the cost a provider feels is required to offer the plan in the first place. Basic plans with small inclusions lists, for example, are generally more affordable. Comprehensive plans tend to be the most expensive, given the large range of parts such plans actually cover. Specialty or uncommon inclusions, like electronics or hybrid drivetrains, can also drive up the cost.
- Length of the Warranty: Simply put, longer warranties are more expensive. If you want to keep an extended warranty for several years or thousands of miles past your vehicle’s current age and odometer, the cost will be higher than a simple, short-term plan. Providers that offer different coverage lengths make it easier to tailor the price to your budget by changing the expiration date.
While extended warranty pricing can seem fairly complicated given the number of factors, there are a few advantages to how things work. First, the large variety of factors give you some room to personalize a plan to fit your budget.
If you don’t need a lengthy coverage period or inclusion list, for example, you can keep costs down by finding a plan that offers minimal coverage. Your own driving history can also make a positive impact.
Second, there may be some room for negotiating the final price with the dealership or third-party provider. Like the price of a vehicle, dealerships have some room to negotiate with factory extended warranties. If you buy a used vehicle from a manufacturer dealership, this is a good time to negotiate.
Beyond decreasing the price of the warranty, negotiating with a dealership can also decrease your interest on an auto loan. Dealerships are allowed to combine the warranty cost with the price of the car so you pay everything at once. If you get an auto loan, you’ll pay interest on both the car and warranty.
Negotiating with third-party providers can be more difficult since it depends on the willingness of the individual company. In fact, getting a good price with a third-party provider typically doesn’t involve negotiating. Instead, it relies on the personalization the provider can offer to you.
Working with a service agent, the best providers make it easy to choose a plan and tailor it to fit within your budget. If a provider doesn’t offer this level of support, we recommend checking out its competitors until you find a company with better customer support.
Finally, you can sometimes drive down the cost of a warranty by shopping for mechanical breakdown or auto repair insurance at the same time. Since auto repair insurance will likely come from a competitor, the warranty provider may take an extra step or two to win your business over the insurance company.
Buying an Extended Warranty
Buying an extended warranty is typically straightforward. If you buy a manufacturer’s extended warranty, you will most likely get it through a local dealership. This is common for used vehicles that aren’t covered by a CPO warranty.
If you purchase a third-party extended warranty, this is usually done online. Third-party options allow you to shop around more and compare different options. Some providers will even give you a free quote to predict how much it will cost.
Getting Repairs Covered
If and when the time comes to get your car repaired, using your extended warranty will involve a claims process to get the repairs approved ahead of time. The warranty provider may deny the claim, in which case you will have to pay out-of-pocket or explore other options. If the repair is in the warranty’s inclusions, however, this is less likely to happen.
Denials can happen for a number of reasons:
- The repair isn’t covered by the warranty.
- The cause of the issue isn’t covered by the warranty.
- Regular maintenance hasn’t been maintained.
- A pre-existing issue wasn’t disclosed at the time of the warranty purchase.
- The issue was caused by modifications to the vehicle.
It helps to keep track of regular maintenance (keep records) and to avoid modifying the vehicle unnecessarily. If you like to tinker with your vehicle or use it for specific purposes like racing, you may need a specialty warranty for coverage.
Once a claim is approved, you can then take your vehicle to an approved auto shop to get the work done. Unlike insurance that typically reimburses you for the repair costs, you likely won’t have to pay anything to an approved auto shop that works with the warranty provider.
Other Things You Should Know
Extended auto warranties can be difficult to understand partly because of the amount and complexity of the information and partly because you don’t know what you don’t know. These information gaps are hard to identify on your own.
So, this section is all about the random things you should know about extended auto warranties that may help you decide if it’s the right option for you and how to find the right one.
It can be tempting to buy an extended car warranty when your vehicle actually has some repair work that needs to get done. Why not? If the warranty covers the expense, the amount that you pay for the warranty should be tiny compared to the potential repair cost.
Unfortunately, this logic doesn’t pan out, much to the dismay of uneducated warranty buyers. The problem is that warranties don’t cover pre-existing conditions. In other words, if your vehicle already has some issues with the engine, for example, you won’t be able to use a new warranty to reduce or eliminate the repair costs. Any issue that develops after you have the warranty, however, is fair game if it’s covered.
Warranty providers enforce this pre-existing condition policy by implementing a waiting period after you buy the warranty. Commonly, you have to wait a whole month before you can use the warranty coverage for repair costs. In this time, the provider can see if your vehicle functions normally.
This can feel like a disadvantage since you have to wait to use something you just bought, but there is a silver lining to the waiting period. The average 30-day wait time also tends to include a 30-day, money-back guarantee policy so you can change your mind. The waiting period also eliminates the need and cost of hiring an inspector as well.
Extended Warranties vs. Auto Insurance
Don’t get confused with auto repair insurance, mechanical breakdown insurance, extended car warranties, and vehicle service contracts. It’s easy to think they are all the same, and some providers even advertise one as the other. In reality, however, these differences can impact your costs and coverage.
The differences you need to remember include:
- Auto Insurance isn’t the same as an extended warranty or mechanical breakdown insurance. Auto insurance gives you basic coverage for medical, legal, and repair expenses when incidents like accidents happen.
- Mechanical breakdown insurance and vehicle service contracts are different. Both of them will cover the cost of repairs under certain conditions, but vehicle service contracts may not be regulated like mechanical breakdown insurance. VSCs also tend to offer higher limits up to 300,000 miles.
- Mechanical breakdown insurance can only be sold through a licensed insurer or broker. Extended warranties can be sold through third-party companies or from the automaker itself.
- Extended warranties are typically better for older vehicles. MBI plans only go up to around 100,000 miles before they expire, meaning older vehicles don’t have many options for auto repair insurance. This is why it’s easier to find a vehicle service contract to cover a vehicle past the 100,000-mile mark.
- Paying for an MBI plan vs. a VSC plan is different. MBI, like all insurance, has a deductible and monthly premiums. VSC plans are generally paid on a yearly basis. Although, some providers do offer monthly payment options.
The bottom line is to know what you are buying when you seeking out coverage options for your vehicle. It’s important to know if you are buying an insurance policy or a vehicle service contract so you can manage your expectations, costs, and needs accordingly.
Maintaining Your Warranty
It’s not uncommon for factory extended warranties to require you to follow a specific maintenance schedule to maintain your coverage. This is done to make sure your vehicle will continue to run, keeping costs low for you and the factory.
It’s important to understand the specific requirements of the scheduled maintenance. Some automakers, for example, will only allow you to get the maintenance work done at an authorized car repair shop or dealership.
The good news is that regular maintenance isn’t time-consuming or costly compared to the price of mechanical repairs. Your local dealership should provide a simple go-to source for any information you need in terms of what work or inspection must be done at what time.
Routine Maintenance Costs
Extended warranties offer a lot of coverage for different types of issues and repairs, but almost all have one major gap: maintenance costs. The same is true for most auto repair insurance policies as well.
When it comes to preventative, routine maintenance, both extended warranties and MBI policies leave it out since they cover mechanical repairs. In other words, if something goes wrong and the issue is covered by the policy, you’re good to go. If you want to prevent an issue from happening with routine maintenance, the expense is on you.
There are certain steps you can take to lower maintenance costs. Doing some of the tasks yourself, like changing your own oil, takes away labor costs. You can also shop around for different prices and deals available at different garages.
You should also keep in mind that routine maintenance is cost-effective in the long run. The more you upkeep your vehicle, the less likely it is to break down in the future.
Finding the Right Extended Warranty
The best way to find the right extended warranty is to think about your needs and research the options ahead of time. The process can be slow while you take the time to consider your options, but it’s not difficult. In fact, all of the work can be done from the comfort of your own home.
Researching and comparing warranty providers is a must. Unless you know what different companies offer, you won’t have the best understanding of what’s available to you. Once you have this information, however, you’ll be in a great position to decide where to spend your money.
The best place to start is by taking stock of your needs out of an extended warranty. The most useless warranty is one that doesn’t cover your needs. So, knowing what they are ahead of time will let you consider different options the smart way.
Your starting point will largely depend on what kind of car you are trying to cover. All vehicles have different needs in terms of service and repair costs they may have. This depends on the make, model, history, and age of the vehicle.
Most people find themselves looking for an extended warranty when buying a used vehicle that has an expired manufacturer’s warranty. This is common for many vehicles older than three years or that have more than 36,000 miles on the engine. While some warranties last longer, these limits are the most common in the industry today.
When you have a used car, this is the perfect time for getting a used car extended warranty. This is especially true when you aren’t quite sure about the condition of the vehicle. If you feel like the car may have some unexpected issues in the future, an extended warranty may be a good blanket.
For used cars, we recommend plans that:
- Offer broad, bumper-to-bumper-like coverage.
- Have high coverage limits (around five years and 100,000 miles for newer used vehicles).
- Have good roadside emergency assistance services.
An extended warranty for a typical used car should cover unknown issues more than anything else. Depending on the age of the vehicle, you may find extra plans like powertrain warranties can also keep the most important parts of a vehicle protected as the vehicle gets older.
Many high-mileage vehicle owners experience difficulties finding warranty coverage once the vehicle hits the 100k-mile mark. At that point, nearly all factory warranties have expired. For extended warranties, the options shrink to third-party providers that have one or two high-mileage plans.
While the pickings get slimmer, the quality of the plans is still high from reputable providers. Better still, these plans are better suited for the issues high-mileage vehicles typically experience when they age, especially around the powertrain. This means you will likely get more use from the right plan.
Make sure a high-mileage plan includes:
- High coverage limits (ideally up to seven years and 250,000 miles).
- Extensive coverage of powertrain components.
- Extra perks, like roadside assistance, free towing to a local repair facility, rental car reimbursement, etc.
The main idea of a high-mileage extended warranty is to cover the vehicle for common issues all older cars develop. A plan that covers these issues will save you money on repairs that can add up in a vehicle’s later years.
At first, it may not make sense to find an extended warranty for a new vehicle. Since all new vehicles come with a factory warranty, what is the point? There is some truth that extended warranties aren’t as valuable for new cars as for older vehicles, but they are still worth considering.
Depending on the plan, extended warranties may cover more issues than the factory warranty itself, especially for things not related to manufacturing and material defects. The extra perks each provider offers may also add some value since factory warranties tend to be bare in extras.
The best extended warranty plans for new cars include:
- Useful extra perks.
- More causes of common vehicle issues.
The decision to buy an extended warranty for a new vehicle is a bit of a coin toss. You aren’t losing out if you don’t have extended coverage, but it might not hurt to have it either. Ultimately, you will have to weigh the cost of a plan against its potential usefulness.
Vintage and antique cars are difficult to get covered with an extended warranty. Most warranty plans cap off the maximum limits at ten years and 250,000 miles. This will automatically disclude any true classic car that is 25 years or older.
Like high-mileage cars, the pickings may be slim, but they do exist. You’ll likely need to find a specialty provider that has a plan designed specifically for old vehicles. Keep in mind, however, these plans tend to only cover newer classic vehicles.
A classic car extended warranty needs to have:
- A high age limit (at least 20 years).
- Extensive powertrain coverage.
It’s worth taking some extra time to research your options for classic car extended warranties because of the lack of options. You may need time to find specialty warranty providers that actually offer a good plan. If nothing shows up, alternatives like classic auto insurance are also available.
Where do you go to actually find different warranty providers? This is something all vehicle owners struggle with when they make the decision to buy an extended warranty. With so many options to consider, it can be a challenge to know who is more reputable than others in the industry.
This is also a challenge we face when writing our warranty reviews. Since we want to provide accurate, helpful reviews to our readers, we take some extra strides to vet the information on each company we review.
As a result, we’ve developed a helpful list of go-to resources and tools you can use. Besides just using your favorite search engine, these resources will often point you in the right direction towards reputable providers. Best of all, these resources will help you compare and assess the providers you find.
It helps to have a third-party resource to get unbiased reviews of different extended warranties and their providers. While provider websites are a good source of plan-specific information, you can’t count on the company to be unbiased when presenting the important information.
This is where third-party sites give you an advantage.
We use a number of third-party reviewers when checking out the latest extended warranty options or new companies that enter into the mix every now and then. A good majority of these sites are solely focused on reviews, meaning they cover a large swathe of services and companies in and out of the automotive space.
Some of our favorites include:
- ConsumerAdvocate: A website focused solely on matching readers with reputable companies (and their goods and services), ConsumerAdvocate takes a transparent approach to evaluating car warranty providers. In addition to hours and hours of research, the company is clear about who it works or advertises with and what kind of steps it takes in its evaluation process.
- ConsumerAffairs: ConsumerAffairs is a unique review site since it actually gathers its own user reviews on products, services, and entire brands or companies. The site also acts as a bridge for customers and companies, inviting both to leave feedback, answer questions, and otherwise interact in a productive way. This means you can find some personal insights and user experiences with different warranty providers here.
- Retirement Living: Don’t let the name fool you. Yes, Retirement Living is targeted at people preparing for or living out their retirement. If you don’t fall into the site’s target demographic, however, there’s still a lot of value to get from its warranty provider reviews. We like this site because it does a good job of comparing competitors and highlighting the strengths and weaknesses of each one.
- Best Company: The thing that Best Company does better than almost anyone else is showing the world how they review companies. Skipping the usual “pay-to-play” model where review sites force companies to spend more to rank higher, Best Company makes it clear how user reviews, company input, and industry expertise all factor into the final ranking, including reviews on auto warranty providers.
- Better Business Bureau: There is no more extensive resource than the Better Business Bureau. The BBB does a good job of rating companies on an individual basis. While you won’t find too many comparison reviews, its individual auto warranty lists are a great resource for finding local providers you can trust.
As you research different warranty providers, we recommend using as many of these resources as possible. Having a single independent take on warranty providers is great, but multiple reviews will give you a larger picture of what users and review sites like or dislike about them.
Different third-party sites also tend to have different review processes or areas that they consider. In other words, you’ll get a more in-depth understanding of a third-party provider through multiple reviews that look at different things.
While we don’t recommend using provider sites for assessing a company’s reputation or customer service, they are invaluable for finding plan-specific information. In fact, there’s no better resource for plan information than the actual provider itself.
All great third-party providers have a website that lists out the available plans and coverage/limitation details. If a provider doesn’t offer this information in a clear and understandable way, it’s probably best to avoid them altogether, since it’s important to have the details upfront.
The best sites also have a free quote option, so you can get information that is personalized to you. Since plan costs are always dependent on your specific vehicle, driving history, and other factors, a free quote can give you a better idea of what you might pay personally. It’s also the only reliable way to compare the prices of different plans.
What does an automotive news site have to do with researching extended car warranties? We like to think a lot. At The Drive, we often look beyond the fancy, speedy cars to research and review the accessories and policies that make them better. The same goes for factory and extended warranties.
One thing that we like to do differently is to look closer at individual warranty plans. You’ll find a number of our in-depth reviews around the site for both factory and extended warranty options. If you want to know exactly what you’ll get with a Dodge warranty, for example, we have you covered.
As you continue to research your extended warranty options, check out these in-depth reviews to get a sense of the specific details and major differences between these options. You can also use our large swathe of warranty informational content to learn the things automakers aren’t telling you about their warranties.
If your research goes well, you will likely have a number of warranty providers to consider in addition to the individual plans each provider offers. We recommend taking some time to compare each provider before looking at individual plans so you know you are going with a reputable company.
More importantly, you’ll also know you are going with a customer-friendly company. Extended warranty providers are usually the first point of contact when you have an issue you want to fix under the warranty.
In general, you need to ask:
- Who is the provider? This may seem straightforward, but many people buy an extended warranty without thinking about where it actually comes from. It’s important to research who the provider actually is. More importantly, you should know if you are buying the warranty from the administrator itself or from a broker. This will let you know who to talk to if issues with the warranty come up in the future.
While some warranty providers just pass you along to the administrator of the warranty, the best help you every step of the way, especially if they offer their own plans directly. This is why it pays to take the time to look at warranty providers in-depth.
When checking out a warranty provider, consider the following:
- Broker/Administrator Relationship: One thing most people don’t know about extended warranty providers is the fact that a good majority sell warranties indirectly. In other words, these providers are just middlemen between customers and warranty administrators, the companies that actually own and maintain the warranty service. These are also the companies you will ultimately contact when you need service completed. We recommend considering providers that either sell their own plans directly (cutting out the middleman) or that at least partner with reputable administrators that are well-known in the industry.
- Plan Selection: The number and type of plans a provider has will dictate how likely you’ll be to find something that fits your needs with them. More plans means more options, but this isn’t always the best thing. A plan needs to have the coverage you need and the limitations you can live with. So, even if a company doesn’t have a large selection of plans, if it has one that’s right for you, that’s good enough in the end.
- Reputation: A third-party warranty provider is just like any other company selling a product or service. Some companies are better than others when it comes to the quality of these products and services. It’s helpful to look at a provider’s reputation among experts and customers. Pay attention to the things people like or dislike about the provider or what makes the provider stand out (good or bad). Quite often, people’s impressions about a company come from personal experiences.
- Customer Service: Taking advantage of a warranty means you will have to communicate with someone from a warranty provider or administrator at some point. Good customer service makes a major difference when you need to get help quickly. Even when a provider is just a broker between the customer and administrator, it helps to have good service to connect you with someone from the administrator. The basics of good customer service include clear points of contact (website, phone number, email, social media, etc.) and knowledgeable service people who have experience with common problems.
- Size: The size and scale of a company isn’t as important as the service and quality they offer, but these qualities can help you get a sense of a company overall. Larger providers, for example, tend to offer more plans, deal with more customers, and work with more administrators. This can be good in terms of options but may make it difficult to get quality customer service help quickly. Smaller companies are more limited in plan offerings but generally have a more personal touch and some specialty plans the big players don’t offer.
A company’s website is a good place to start to begin assessing some of these qualities. You can get a sense of the company’s size and plan selection just from the website alone. Third-party review sites can also help with assessing a company’s reputation and user experiences with the plans.
We like to get in touch with third-party providers as well. Speaking with someone from a company’s customer support will give you an idea of how difficult or easy it is to get in touch with a human and receive important information quickly.
Finally, keep in mind that no company will be perfect. There’s also no golden, foolproof approach to assessing companies. You may find that a company looks good on paper but just doesn’t quite “hit” you right. So, pay attention to your gut feeling in addition to everything you find.
At some point, you will need to actually sit down and start considering different warranty options. In other words, you need a few plans to really look at and compare against each other. This way, you’ll begin to see the similarities and differences between different options and which one makes more sense for you.
Comparing warranty plans can be relatively straightforward if options are drastically different, but expect to do a little digging for similar plans. When plans have a coverage or limitations, for example, they can appear almost equal until you look at the minute details in the inclusions or exclusions.
Here are a few points you can check out to compare different plans:
- Type: The warranty type is determined by the coverage and limitations of the plan, so it offers a good big-picture view of what different plans offer. If you are looking for a basic warranty that mimics something that comes from the factory, comparing the type of warranty is a good way to assess different plans. Many plans, for example, have the same inclusions as typical comprehensive or powertrain warranties. Others may be customized for high-mileage vehicles, classic cars, or other specialty uses.
- Issue Coverage: In order for a warranty to cover a repair, it needs to include the issue and its cause as well. Outside of factory warranties that only cover common manufacturing defects, you will find many plans with different issues they cover. Choosing one plan over another can come down to selecting the one that covers the issues you may encounter the most.
- Limitations: The basic length of a warranty in terms of age and mileage determines how long you can use the warranty coverage before it expires. Comparing two plans isn’t as simple as picking the longest warranty, however. This comparison partly depends on the age of your vehicle and how long and often you can realistically use the warranty.
- Inclusions/Exclusions: For nitty-gritty plan comparisons, you will likely find the minute differences in the inclusion and exclusion lists. This is a simple but lengthy way to compare different plans: If one plan covers a part that the other doesn’t, you may have a winner. In general, we don’t recommend basing your decision solely on the inclusion and exclusion differences since the quality of the coverage and provider are all important, but it can be helpful when plans look equal.
Like warranty providers, comparing different plans may come down to minute details or the gut feeling you have with one over another. The best plans fit your specific vehicular needs, so take your time to really consider your options if possible.
Making the Final Decision
For some people, choosing an extended auto warranty is a simple matter; some choices can be obviously better than others or one plan just might hit all of the checkmarks the vehicle owner has. For others, however, the decision isn’t so easy.
Most people find the choice difficult when the plans are similar enough that there’s no clear winner. This is extremely common with typical extended warranties that mimic factory powertrain and comprehensive options.
If you find yourself struggling to figure out what the best option is, there are a few steps you can take to really make the decision clear:
- Prioritize inclusions and exclusions. If comparing the included and discluded components between plans doesn’t give you enough information to make a decision, the next step is to prioritize which components are most important to keep your vehicle running. It’s common to prioritize powertrain parts since a vehicle can’t keep going without a functioning engine, drivetrain, or transmission. You can also prioritize parts based on what’s actually in your vehicle to choose one plan over another. If you have extensive electronics (i.e. infotainment console or built-in navigation), for example, plans that cover these components may be more attractive than others.
- Compare quotes. Price comparisons have been a go-to solution for shoppers weighing different choices for centuries. For auto warranties, comparing the costs will help you stay within your budget and understand how each provider approaches the pricing. It’s hard to compare the prices of multiple plans until you have a set of free quotes in hand that apply directly to you. Getting these quotes is easier once you have two or three plans you are considering, so it’s best to do this after you have done the bulk of your research.
- Talk with service agents. It’s natural to have more questions or need more information than a provider’s website can provide. This is why talking with a real human being can be helpful. Service agents are the best resource for questions that help you understand the specifics of a particular plan. The helpfulness of a service agent is also a good representation of the provider itself. If an agent just tries to keep selling you a plan without giving you the information you need, the company probably isn’t worth your time. If they listen to your questions and actually directly and thoroughly answer them, this is a good sign the company has your interests in mind.
It’s important to have as much information as you need to feel like you understand the warranty options available to you. This way, you are more likely to feel confident in your decision and won’t be surprised by unexpected details or limitations that may come up when you need to apply your warranty.
Alternatives and Additions to Extended Warranties
It can be difficult to realize it given the different names, terms, and conditions, but there are actually other options to keep your vehicle covered when mechanical repairs are necessary. More importantly, you can use many of these alternatives in addition to an extended warranty for extra coverage.
Keep in mind that no solution will cover your whole car in all events and scenarios. So, it’s helpful to know how these options differ from each other to get the best coverage for your vehicle.
All vehicles operating legally on the road have some form of automotive insurance as a basic level of coverage. Auto insurance tends to kick in when accidents happen to address costs related to mechanical repairs, litigation, and medical issues.
The tricky thing with auto insurance is that it comes in several different forms that you can stack on top of each other for different levels of coverage. Some forms cover mechanical repairs, but others have nothing to do with fixing a car.
The types of auto insurance that cover certain vehicle repairs are:
- Collision: This coverage kicks in when your vehicle experiences damage after a collision with a car or another object (i.e. guardrail or wall) when you are at fault. Many coverage policies also cover damage caused by the driving conditions like unseen potholes. This coverage doesn’t, however, cover defects, mechanical failure, or normal wear and tear.
- Comprehensive: Going beyond mere collisions, comprehensive auto insurance covers your vehicle from damage caused by other uncontrollable incidents. Fire, flood, vandalism, hail, and falling rocks and trees are all usually covered under this type of auto insurance. Once again, comprehensive insurance doesn’t extend to mechanical failures or the wear and tear that develops as a vehicle ages.
- Glass Coverage: Focused on the windows of a vehicle, glass coverage covers repairs and replacements for the windshield, side windows, rear windows, and even sunroofs.
For reference, the most common forms of auto insurance that don’t involve vehicle repairs are:
- Liability: This is the most basic form of auto insurance that most states require you to have in order to drive. Liability insurance covers things like property damage and medical and legal costs caused by your vehicle (whether you are driving it or not). It typically pays out to others, protecting you from having to pay out-of-pocket.
- Personal Injury Protection: If you or any passengers get injured in your car, this protection will reimburse you the costs of medical expenses. Some insurance policies also cover lost wages and random expenses related to your physical recovery period.
- Uninsured Motorist Coverage: In the event that you get into an accident caused by an uninsured motorist, this type of coverage will reimburse you for expenses normally covered by another’s insurance plan. This coverage also kicks in in the event of a hit-and-run where the responsible party is unknown. Related to uninsured motorist coverage, some providers also offer underinsured motorist coverage for when another driver has insurance but lacks adequate coverage.
As stated above, any car driving legally will have some form of auto insurance. Unfortunately, none of these coverages will help if your vehicle experiences issues with normal aging or work that you’ve done on the vehicle.
Mechanical Breakdown Insurance
Mechanical breakdown insurance (MBI), also known as auto repair insurance, is a type of vehicle protection insurance policy that actually gets closer to the coverage of an extended warranty than normal auto insurance. Some people choose MBI over an extended warranty or in addition to a warranty because of the extra coverage.
The first thing to know is that MBI isn’t normal auto insurance. Instead of covering medical, legal, or incident-related vehicle repairs, MBI kicks in when a vehicle experiences unexpected issues. This means you don’t have to be in an accident to get use out of an MBI policy.
Other important details about MBI include:
- You will have a deductible. Like other forms of insurance, most MBI plans have a certain amount of money you’ll need to pay before the insurance takes over. This amount is known as a deductible, and it varies from plan to plan. Usually, this range is between $0 and $500.
- You pay on-the-go. Unlike extended warranties that tend to get paid on a yearly basis (unless the provider has a monthly plan) or all upfront with a vehicle purchase, MBI has monthly insurance premiums. This means you will pay a fixed price each month for as long as you keep the insurance policy or until it expires.
- You will likely be reimbursed for costs. If you need to cover mechanical repair costs with your insurance policy, you’ll likely pay out-of-pocket initially and then file a claim with the insurance company. If the company approves the request, they will then pay you back. This differs from most extended warranty providers that cover the costs from the very start if you get work done at an approved garage or dealership.
- You can cancel at any time. There are rarely any minimum time or mileage periods that you are required to have with an MBI policy. Since MBI isn’t legally required in order to drive your vehicle, you can have, keep, or cancel the insurance policy whenever you want.
- Not all cars are eligible. Like many extended auto warranties, cars have to qualify for MBI. Many insurance providers favor newer vehicles that are under 15 months old and have under 15,000 miles on the engine. Some providers, however, offer insurance plans geared for older or even classic vehicles.
We don’t recommend trying to tackle major mechanical repairs on your own, but routine DIY maintenance can actually save you a lot of money on future, major issues. Small things like regular oil and filter changes keep things running smoothly.
More importantly, regular maintenance is also likely required to keep your warranty. Many warranties require a maintenance schedule to rule out issues developing from improper maintenance of the vehicle.
Despite the complexity of major components like the engine and drivetrain, there are actually plenty of things you can do in your own garage. These include:
- Basic inspections: The easiest thing to do with your vehicle is a periodic once-over to try and catch anything that looks out of the ordinary. Typically, anything that doesn't look or sound natural probably isn’t and can be an early warning sign of a major issue that’s developing. The process of inspecting your vehicle is easy: start at one end and work your way to the other. Check out the air pressure, tire treads, body panels, windows, under the hood, etc. Listen to your car from the outside as it runs as well.
- Check/replace the oil and oil filter: If there is one thing most people learn (or should learn) how to do early on, it’s changing the oil. While you can get it changed at a local garage, you’ll always be paying more or receiving the budget oil. Oil changes regularly keep the engine and its components running smoothly while reducing wear and tear. You can check the oil using the dipstick or the car’s built-in electronic gauge to see if the oil needs changing. Some people also maintain a routine replacement schedule every 5,000 or 10,000 miles.
- Check and replace fluids: There are many fluids around the vehicle that allow it to operate safely and need to be changed periodically. The antifreeze and wiper fluids are the two that should be more frequently replaced. The power steering and coolant fluids are less common to change but should be checked regularly. In fact, learning to check the various fluid levels in the vehicle is an important skill to have when inspecting your vehicle. Most fluids are accessible through the engine bay.
- Check and replace air filters: Modern vehicles use various filters to clean out the air inside the engine and cabin. Cleaning the air keeps the cabin comfortable and the engine running smoothly. Most vehicle manuals list out when you should replace each filter since they get dirty and less effective over time. These filters are usually accessible enough to check and replace if necessary.
- Replace the spark plugs: The spark plugs are one of the key components of any engine, igniting the fuel/air mixture to produce the energy needed to drive the crankshaft. Over time, spark plugs get worn out and will need to be replaced. This is something you can do in your own garage with the right tools and skills, but be sure to follow the manual’s recommendations and instructions.
- Swap the windshield wipers: If you are looking for an easy maintenance task that doesn’t require specialized tools or skills, replacing your windshield wipers fits the bill. Like other wear parts on a vehicle, windshield wipers degrade around the rubber edges. Over time, you’ll start to notice streaks or hear squeaks as this wear progresses. Most windshield wipers are designed to pop right off so you can easily replace them when the time comes.
- Maintain the battery: The 12-volt battery in your car will eventually wear out to the point that it can no longer hold a charge, but there are several steps you can take to maximize its lifespan. Basic checks for leakages and mineral buildup are important to make sure the battery is in working condition. If you have a low battery, a charger can help to bring it back up to an optimal power level. If you do have to replace the battery, this process simply involves swapping it out and connecting the cables to the right terminals.
There are certain things you can’t inspect or maintain on your own, but this list covers a good majority of steps you can take to reduce maintenance and future repair costs. As long as your warranty provider doesn’t rule out DIY maintenance, these steps will also keep your provider happy with the condition of your vehicle.
Q. What is the average price of an extended warranty?
A. Prices can range between $350 to $1,000 a year on average. This is a wide range since prices vary widely between providers and the individual plans they offer. Pricing depends on the vehicle type, vehicle condition, your driving history, and the particulars of the plan. Getting a free quote and speaking with a service agent are the best ways to know the exact price you’ll pay for your warranty.
Q. Can I negotiate my extended car warranty?
A. Warranties from the factory tend to be open to negotiation in terms of price. You can haggle with the dealership to get the price lowered, but we recommend doing this after you have negotiated the price of the vehicle. Third-party extended warranties don’t have as much room for negotiation, but many providers make it easy to personalize the plan that fits your particular budget.
Q. Can I get an extended car warranty through my insurance provider?
A. Most likely, no. Insurance providers deal with insurance policies instead of true extended car warranties like you’d get from the factory. You can probably find a good mechanical breakdown insurance policy, however, that covers a lot of the same issues and even offers more perks like roadside assistance. Many major and certain specialty insurance providers offer different MBI plans for different vehicles and uses.
Q. Can I get an extended warranty on a new car?
A. Yes. In fact, some dealerships try to sell you an extended warranty even when you don’t really need it for a new vehicle purchase. If you want the extra coverage, we generally recommend seeking out a third-party warranty that will include different components and extra perks the extended factory warranty will likely lack.
Q. Can I add an extended warranty if the factory warranty has long expired?
A. If your car meets the eligibility requirements of a particular warranty plan, yes. Most providers don’t require continuous warranty coverage. Instead, your vehicle will have to be under the age and mileage limits of the plan and be in a satisfactory condition for coverage. All providers and many plans have different requirements, so it pays to shop around before you apply for a particular warranty.
Q. When should I consider a factory extended warranty?
A. While third-party extended warranties generally give you more options and extra perks, factory extended warranties shouldn’t be ignored. If you are satisfied with your car’s factory warranty coverage and just want to expand it past its original expiration date, this is the perfect time to check out the manufacturer’s extension options.