An extended car warranty can provide owners valuable peace of mind that expensive repair costs are covered in the case of a mechanical breakdown. Our team discusses what you can expected from your extended warranty, how to use your coverage, and our recommendations for the best third-party vehicle service contract providers.
What Is an Extended Car Warranty?
An extended warranty is a contract you can purchase that covers repair and replacement costs when your vehicle breaks down. These contracts are called extended warranties because they offer services that extend the protection you get under a factory warranty. They typically apply after your manufacturer’s warranty runs out, but it’s not impossible to have both types of coverage at once.
You can purchase extended coverage through two main sources: your vehicle’s manufacturer or a third-party company. Coverage through a manufacturer or dealership is known as an extended warranty, while third-party coverage is called a vehicle service contract. Regardless of the source, both provide similar coverage.
Types of Extended Car Warranty Coverage
Extended warranties specify exactly which vehicle parts will be covered in your contract. These typically fall under the umbrella of a couple different kinds of coverage, ranging from basic powertrain plans to comprehensive bumper-to-bumper coverage.
- Bumper-to-bumper warranty: Commonly known as exclusionary coverage, bumper-to-bumper warranties cover all vehicle components except ones specifically mentioned as exclusions. These plans are similar to the new car limited warranties you get from dealerships and often come with the highest price tags.
- Stated-component coverage: In contrast, named-component plans mention the parts of your vehicle that are covered rather than what isn’t. Typically, a stated-component plan covers most of your vehicle’s major systems and often includes coverage for some electrical components like your air conditioning.
- Powertrain warranty: The most basic and affordable level of warranty coverage is a powertrain plan. Sometimes referred to as a drivetrain warranty, a powertrain warranty only covers the most critical parts of your car such as its transmission and drive axles.
How To Use an Extended Car Warranty
No matter how reliable and well-kept your vehicle is, there’s always the chance a mechanical breakdown could occur. If that happens, it helps to know what you need to do to file a claim with your extended warranty.
- First, it helps to know exactly what’s covered under your warranty plan. Make sure you know what type of warranty you have and look at the fine print in your contract to see whether your repair need is covered.
- Take your vehicle to the repair shop. Most third-party companies allow you to take your vehicle to the ASC-certified repair shop of your choice, while most manufacturer warranties require you to take your car to a dealership.
- The repair shop will call your car warranty company or plan administrator to gain approval for the repair. If it’s covered under your plan, they’ll make the encessary repairs.
- The car warranty company typically pays the repair shop directly, minus your deductible. A deductible is a set amount that you agree to pay out of pocket for covered repairs, generally ranging from about $0-$200.
An extended warranty can make necessary repairs after a mechanical breakdown a much more hassle-free process, and they bring peace of mind that you don’t have to pay significant out-of-pocket costs unexpectedly.
Is an Extended Warranty Worth It?
Whether an extended warranty is worth it for you depends on your situation. On the one hand, it’s not uncommon for people who’ve opted for extended warranties to not need to use them. Also, if you’ve budget money for repair expenses and are financially prepared in case your vehicle needs a major repair, an extended warranty might not be worth it for you.
However, if your vehicle does experience a major mechanical breakdown, having an extended warranty can help save you money and protect you from costly repair expenses. An extended warranty can also help you budget wisely for the possibility of a significant expense through predictable monthly payments. Another advantage of an extended warranty is that many come with additional benefits like roadside assistance
Using a Car Warranty: Conclusion
An extended car warranty can provide vehicle owners peace of mind while on the road that they’re protected against unexpected high repair costs in the case of a breakdown. However, whether a vehicle service contract is right for you depends on your situation.
Recommendations for Extended Auto Warranties
A quality vehicle service contract from a reputable company can provide significant value for you and your vehicle. Based on our team’s extensive research, we recommend looking into extended coverage from Endurance and CARCHEX.
Endurance: Best Overall
After much research, we’ve named Endurance the Best Overall third-party car warranty provider in the nation. Along with being one of the biggest names in the industry, Endurance is the 2019 Inc. 5000 honoree backed by an AM Best A-rated insurance company.
Extended coverage from Endurance comes with a number of added perks to your chosen coverage plan. New members become an Endurance Elite member for one year, which includes the following benefits:
- Roadside assistance
- Rental car reimbursement
- Tire repair replacement
- Key fob replacement
- ID theft protection
- Collision discount
- Total loss protection
- Endurance Protect app
Check out our full Endurance review for more information.
CARCHEX: Best Reputation
As a BBB-accredited company with an A+ rating, CARCHEX is known for its superior customer service and positive reputation. The company also boasts endorsements from major auto industry leaders like Edmunds, CARFAX, and Kelley Blue Book.
CARCHEX protection plans include a variety of benefits, which include:
- Roadside assistance
- Rental car reimbursement
- Transferable contracts
- 30-Day Money-Back Guarantee
- Affordable contracts
- Direct payments for repairs
- Additional benefits
Choosing to protect your vehicle with extended coverage from CARCHEX is a great way to keep yourself off the hook for costly repairs. If you have trouble deciding between CARCHEX and Endurance, read our Endurance vs. CARCHEX review.
Our expert review team takes satisfaction in providing accurate and unbiased information. We identified the following rating categories based on consumer survey data and conducted extensive research to formulate rankings of the best extended auto warranty providers.
- Industry Standing: Our team considers Better Business Bureau (BBB) ratings, availability, and years in business when giving this score.
- Coverage: Because each consumer has unique needs, it’s essential that a car warranty company offers an array of coverage options. We take into account the number of plans offered by each provider, term limits, exclusions, and additional benefits.
- Affordability: A variety of factors influence cost, so it can be difficult to compare quotes between providers. Our team performs ongoing secret shopper analyses for different vehicles, mileages, warranty plans, and locations to give this rating.
- Customer Service: Reputable extended car warranty companies operate with a certain degree of care for consumers. We take into account customer reviews, BBB complaints, and the responsiveness of the customer service team.
*Data accurate at time of publication.
