Car Extended Warranty: Choosing the Right New or Used Vehicle Warranty

A vehicle extended warranty is just like an insurance policy. A person may never need to use the extended warranty or the repair costs may exceed the price paid for the extended warranty. Either way, it’s a gamble. Just like a cars insurance policy, the contract should be read word for word. Often the fine print will have exclusions that will not cover certain components or repairs that can add up to a healthy repair bill.

What’s Covered in the Car’s Extended Warranty?

Always look to see what vehicle components are covered and what’s not covered. Most vehicles extended warranties have a price scale for different policies. As the price of the extended warranty increases, the amount of components that are covered increases.

Some policies may not cover gaskets and seals. If certain gaskets and seals fail it could result in a costly repair. For example, if a car or trucks head gasket fails, it could result in thousands of dollars in repair costs. Buying an extended warranty that won’t cover gaskets and seals is not recommended.

Read the fine print. Some contracts may list an engines cylinder head as a covered component for example, but will it cover the cylinder head gasket? There may be stipulations that the vehicle must be maintained in accordance with a routine vehicle maintenance program. If maintenance records aren’t available to the claims adjuster, the repair could be declined.

Extended Powertrain Warranty

One of the least expensive extended warranty policies is the powertrain warranty. A word of caution, some new cars, and factory certified used cars automatically come with a powertrain warranty. Purchasing a powertrain warranty is this situation is redundant and a total waste of money.

Normal Component Coverage for a Powertrain Warranty

  • Engine
  • Transmission
  • Driveshaft
  • Rear Axle
  • Front Axle

Even though these are the normal components covered by a powertrain warranty, some components attached to the covered component may not be covered. For example, the throttle body that’s attached to the intake manifold on the engine may not be covered if it fails.

Comparing and Shopping Vehicle Extended Warranties

  1. Coverage – The first thing to decide for comparison of policies is what component coverage is needed. Components to consider are powertrain, electrical, fuel, chassis, luxury components, emissions and maintenance items. Also, make sure the consequential damage is covered. As an example, if the thermostat fails and damages the cylinder head, is the cylinder head also covered.
  2. Deductible – Most vehicle extended warranties have a deductible. As a general rule of thumb, the lower the deductible the higher the price of the policy. The deductible amount is a consideration in comparing prices of different policies.
  3. Place of Repair – Some extended warranty policies may require that the vehicle is taken to a specific auto repair shop. If traveling, this could be a problem.
  4. Rental Car – Does the policy pay for a rental car? If the policy does cover a rental car, how many days and what is the allotted dollar amount? Some polices may have a low dollar amount that won’t cover the total cost of the rental. Also, some policies may only cover the rental for the amount of time the repair takes. If an auto repair shop is backed up or is having problems getting parts, a 1-day repair could turn into a 5-day repair or more.
  5. Towing – Does the policy cover towing? If it does is there a dollar cap or a mile cap? These are all considered when shopping and comparing vehicle extended warranties.

Just like an insurance policy, having a vehicle extended warranty gives the vehicle owner a little peace of mind. When looking for an extended warranty, always compare a few different warranty companies policy. If a salesperson claims that a policy covers the car bumper to bumper, don’t take his/her word for it. .Always read the entire contract and the fine print so there are no surprise when the vehicle needs repairs.

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