When you buy a new car, many things go beyond financing, car insurance and car maintenance. Your vehicle warranty also plays a crucial role. A car warranty is a contract provided by either the manufacturer or a third party that covers certain repairs for a specific period or up to a certain mileage limit.
Car warranties can provide peace of mind by protecting you from high repair costs. Extended warranties, which are optional add-ons, can extend this coverage after the original warranty expires.
There's a lot to consider when deciding whether an extended warranty is right for your vehicle. In this guide, we'll walk you through what an extended warranty is, what it covers and whether it's a good fit for you.
What Does an Extended Warranty Cover?
Extended warranties typically cover vehicle repairs beyond the manufacturer's vehicle warranty. There are typically two types of coverages:
- Named component: This type covers only the specific components listed in the policy. Coverage is offered at different levels, sometimes named bronze, silver and gold. Each higher level covers more auto parts than the previous level.
- Exclusionary: These policies cover the majority of the vehicle components and list anything excluded from coverage.
What is covered by the extended warranty will depend on the type of coverage and the specific plan you choose. However, below are common components that are covered and not covered by an extended warranty.
Covered
A bumper-to-bumper extended warranty typically covers the following:
- Engine
- Drivetrain
- Transmission
- Fuel system
- Air conditioning system
- Electrical system
- Steering system
- Suspension system
Remember that the above may not be the full list of your extended warranty offerings, so always consult the specific extended warranty.
Not Covered
While an extended warranty covers more than the original manufacturer's warranty, it does have its limitations. It typically doesn't cover the following:
- Wear and tear
- Pre-existing conditions
- Cosmetic damage
- Car tune-ups or maintenance
- Accidental damage
It's important to carefully examine the terms and conditions of an extended warranty before purchase. This will help you understand what is covered and its limitations.
Pros and Cons of an Extended Warranty
There are definite benefits to having an extended car warranty, but there are also drawbacks to consider. Understanding both sides of the equation can help you make a more informed decision about whether it's worth purchasing.
| Pros | Cons |
| Protects from unexpected repair costs | Require higher upfront costs |
| May provide coverage for specific components | May have coverage limitations |
| Offer peace of mind for the driver | May not be necessary |
Pros:
- Protects from unexpected repair costs: An extended warranty can shield you from the financial burden of expensive repairs that arise after the manufacturer's warranty expires.
- May provide coverage for specific components: An extended warranty may offer coverage for additional components that the manufacturer's warranty doesn't cover.
- Offer peace of mind for the driver: Knowing you have coverage for repairs beyond your control can provide peace of mind.
Cons:
- Require higher upfront costs: Extended warranties can be expensive and you may end up paying more for the warranty than you would have spent on repairs.
- May have coverage limitations: All extended warranties have limitations, so it's crucial to review the terms and conditions to understand exactly what's covered. You may realize after the fact that an expensive repair isn't covered and will require you to pay out-of-pocket.
- May not be necessary for your car: if you plan to trade in your car soon and/or have a reliable car, an extended warranty may not be worthwhile in the long run.
Is an Extended Warranty Right for You?
When considering purchasing an extended vehicle warranty, several factors can help you decide if it's the right choice for your vehicle. First, consider the following:
- Planned ownership: Consider how long you plan to keep the car. Extended warranties are more valuable for long-term ownership, protecting you from potential future repair costs.
- Risk tolerance: If you want to protect yourself from possibly paying for high-cost and/or unexpected repairs, then an extended warranty may be a good purchase.
- Personal choice: Some consumers prefer to buy an extended warranty for every qualifying product they purchase, while others choose not to spend the additional money.
Before making a decision, examine the details of the extended warranty itself. When examining an extended warranty before purchasing, check to answer the following questions:
- What, if any, out-of-pocket expense will you incur for a repair or replacement part? Does the coverage require a deductible, or do you pay upfront and then submit expenses for reimbursement?
- Where can you take the vehicle for auto repair service?
- Is there a waiting period before the extended auto warranty goes into effect, for example, 30 days and 1,000 miles? It's important to note the and in the example. To mitigate fraud, this policy goes into effect after 30 days, and a vehicle must travel a minimum of 1,000 miles.
- Is cause and effect covered? Let's say a water pump fails, causing the engine to overheat, which in turn causes additional damage. Some policies will only cover the failed water pump, not the resulting damage.
To make the most informed decision about extended warranty coverage, carefully weigh the factors above and compare warranty options before you buy.
Extended Warranty Coverage FAQ
Below are commonly asked questions about extended car warranty coverage.
What Is the Difference Between a Warranty and a Vehicle Service Contract?
While warranties and vehicle service contracts (VSC) can both help cover repair costs for your vehicle, there are some key differences:
- Cost: Warranties are typically built into the price of your new car. Vehicle Service Contracts (VSCs) are add-ons that come with an additional payment, such as a monthly fee or a total upfront cost.
- Coverage: Warranties usually cover a shorter period, typically between three and five years and generally include repairs for manufacturer defects. VSCs, on the other hand, can provide extended coverage for a wider range of repairs, depending on the specific contract plan you purchase.
- Regulation: Warranties are generally regulated by car warranty sales laws. Some states consider a warranty an insurance product, requiring it to be filed with and regulated by the state's insurance commission. VSCs might be subject to additional insurance regulations in some states, particularly if they offer specific guarantees. Some states may require filing and oversight by the insurance commission for certain VSC plans.
Understanding the differences between a car warranty and a VSC can determine which option best suits your needs.
What Might Make a Vehicle Ineligible for Coverage Under an Extended Warranty?
Purchasing an extended warranty for your vehicle can provide peace of mind by mitigating the burden of expensive repairs. However, there are situations where coverage might be unavailable.
- Timing: Extended warranties can typically only be purchased while the manufacturer's original warranty is still in effect. If your vehicle is out of warranty, you cannot obtain an extended warranty from the manufacturer. However, you can explore coverage options from third-party providers.
- Condition: Extended warranties generally exclude pre-existing conditions. This means any problems your car already has before the warranty purchase are not covered for repairs. Similarly, wear-and-tear-related damage is typically not covered.
Therefore, consider these situations before deciding if an extended warranty is right for your vehicle.
What Is the Difference Between a Standard and an Extended Warranty?
Standard warranties typically come included with your vehicle purchase and cover manufacturer defects for a short, predefined period. Extended warranties, on the other hand, are purchased separately and extend the manufacturer's coverage for a longer period and potentially include additional benefits.
Find a Trusted AAA Repair Facility
Suspect a manufacturer issue with your vehicle, like your vehicle is failing to start? Put your extended coverage to good use at an AAA-Approved Auto Repair facility!
As an AAA member, you'll enjoy additional benefits at these approved facilities, including special auto repair discounts, extended warranties on parts and labor (if applicable to your extended warranty plan), and AAA's support in resolving repair issues.
Get peace of mind with trusted options for your vehicle's repairs.