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Car Shopping Help :: Extended Warranties

Extended Warranties Explained

Extended warranty coverage
Extended warranties are NOT double coverage, they simply extend the term of the warranty the manufacturer provided on the vehicle.

Once the manufacturer's warranty expires, an extended warranty takes over to protect you from unexpected, costly repairs.

It's important to buy it early, especially before your original factory warranty expires.

This is when it will be the least expensive. Similar to purchasing life insurance, the longer you wait, the more it will cost.

Extended warranties fall into three classifications

  1. Warranty gap policy
  2. Mechanical breakdown coverage
  3. Mechanical plus “wear & tear” coverage

Warranty gap policy - A gap policy fills in the holes in the standard manufacturer coverage. For example, you might have longer coverage on the powertrain than on the rest of the car. A warranty gap policy extends your mechanical coverage to match the longest term of the manufacturer’s warranty.

Mechanical breakdown coverage - Under a "breakdown" warranty, coverage is extended only to parts that break. Not all parts fail due to breakage; some need to be replaced because they've worn down over a period of time. A "wear & tear" warranty extends coverage to worn-down parts in need of replacement.

Mechanical plus “wear & tear” coverage - These are the preferred policies because they cover almost everything and generally have a wide range of repair shops to choose from in any given locale. Always read the coverage limitations on any extended warranty to be sure of exactly what you’ll receive when you need the coverage.

Extended warranty tips
Look for extended warranties with these features:

  • Choice of deductible
  • Wear & tear coverage
  • Transferable to new owner
  • Cover “overheating” problems
  • Cover advanced systems like ABS brakes
  • Provide service at any ASE certified repair shop
  • Clearly defined coverage starting and ending points
  • Contract is underwritten by top-ranked insurance company
  • Warranty provider pays repair shop (no reimbursement wait)

Manufacturer extended warranty scams
Manufacturers are infamous for the things they excluded from their warranty coverage. Most manufacturers will not cover any damage from “overheating” even if a part failure caused the car to overheat in the first place.

You’d think that every item in your car would be covered, right? Particularly when the salesman uses the phrase “bumper-to-bumper” coverage.

Instead, most manufacturers do NOT provide warranty coverage for things such as your air conditioning, advanced electronics like engine sensors, ABS brakes, or any type of “wear & tear” coverage.

Even worse, your manufacturer warranty almost always doesn’t cover towing or rental cars. Both of those are a considerable expense when your car does breakdown.

Dealer extended warranty scams
Dealers often sell extended warranty policies at huge markups that have severe limitations.

For example, their warranty coverage might specify that repair work be performed only at the dealership where the car was purchased.

Or, it might be limited to the original owner only and it will provide no additional benefits at all until the original manufacturer warranty expires.

Don’t believe a dealer who claims that their extended warranty will pay for a rental car while yours is in the shop under the manufacturer’s warranty.

Read the fine print and you’ll find that your extended warranty coverage specifically doesn’t begin until AFTER the manufacturer coverage expires.


Best warranty sources
The two best sources for extended warranty are:

Warranty Direct - Offers warranty gap coverage as “PowerWrap+” which matches everything else with your powertrain warranty. In addition, “PowerWrap+” also covers the powertrain components excluded from the manufacturer’s warranty.

Also provides various levels of true “bumper-to-bumper” coverage that includes “wear & tear” as well as rental car and towing coverage.

All of Warranty Direct’s plans pay the repair shop directly so you don’t have any out of pocket expense beyond your deductible.

1SourceAutoWarranty - Provides warranty coverage that is clearly spelled out, easy to understand, and extremely comprehensive.

They have policies that provide all the usual coverage plus:

  1. Roadside protection
  2. Trip interruption insurance
  3. Dent & ding repair
  4. Windshield replacement
  5. Tire/road hazard
  6. Lost key/lockout coverage
  7. Hi-tech electronic components
  8. Car video systems
  9. Money-back guarantee

1SourceAutoWarranty delivers excellent coverage and always spells out clearly what is NOT covered.


Used car extended warranty coverage
You can get extended warranty coverage on just about any vehicle subject to mileage (150,000) and age (10 years) limitations.

These can be a good value since they are transferable to new owners. That can be an extra selling point when you go to trade-in your car or sell it yourself.

Just like life insurance, an extended warranty costs less the earlier the coverage is put into place.

Look into warranty coverage on your new or used car today.