Extended Car Warranty Review
An extended car warranty, also known as a service contract, is designed to help automobile owners offset the repair costs of their new or used vehicle. These warranties are not the same as the manufacturer’s warranty, and instead kick in after the manufacturer’s bumper-to-bumper warranty.
So, what is an extended warranty? Simply put, it is a vehicle warranty that goes beyond the original warranty date that came with the vehicle you purchased. So, if you purchased a vehicle with a three-year warranty, the extended warranty would cover you in year four and on.
Most standard warranties last around three years or around 36,000 miles. An extended car warranty can be purchased to extend not only the time of that standard coverage once it runs out but to possible add different types of coverage for their vehicle. Extended warranties do not cover dent repair services but they do components that fail.
As an automobile owner, consumers will need to research and buy their own extended car warranty if they are looking for any type of coverage on their vehicle. However, not all extended car warranties are created equal. We have taken the time to thoroughly research numerous extended car warranties that are available on the market today and have compiled a list of the five best extended car warranties that are available today along with details on how customers can make sure they are getting a warranty plan that fits their needs.
Our List of the Top Five Extended Car Warranty Companies
Important Terms Every Consumer Should Know
When shopping for something like an extended car warranty, the more you know about what you are shopping for, the more informed of a decision you can make. One of the many things that throws consumers off about shopping for these warranties is the jargon that those in the industry use.
There are so many different terms and sayings that are completely unique to the car warranty industry, which is why understanding this vocabulary is so important. Here is a rundown of the terms and definitions you will likely encounter when researching extended car warranties.
AES Certified – When you see a company that has been “AES certified” it means that they have undergone testing from the National Institute for Automotive Service Excellence. This is a company that holds strict quality standard for those in the automotive industry.
Basic Warranty – This is another term used to describe the manufacturer’s warranty that comes with most vehicles when they are new. These warranties are typically very limited. For example, they may be 3 years/36,000 miles, which is the industry standard. A basic warranty will cover most issues with the vehicle except for automotive components that tend to wear down over time such as brake pads, tires and filters.
Bumper-to-Bumper Warranty – This is something consumers will see a great deal when shopping for extended car warranties. Bumper-to-bumper warranties have the most coverage of any type of warranty on the market. They also tend to be the most expensive. When you have a bumper-to-bumper warranty, it means that almost every part of the vehicle is covered. There is typically a very short list that comes with these warranties detailing what is not covered in the plan.
Certified Vehicles – A certified car is a pre-owned vehicle that has been inspected and repaired or restored, if necessary, and has been approved for resale either by the dealer or the manufacturer. When the manufacturer gives a vehicle a “certified” status it has typically gone through more rigorous standards.
Claims Reserve Account – When funds are set aside into this type of account, money is put there specifically for the customer’s future and current repairs. As you start to compare different extended warranty companies, pay attention to those that say they have claims reserve accounts. It shows that they are not only stable, but able to actually pay for their customer’s claims when they file the.
Component – This is any element on the vehicle that may or may not be covered under the extended warranty, such as the carbonator, power train or compressor.
Consumables – Also known as consumable items, these are components of a vehicle that are typically not covered by an extended warranty, simply because they need to be replaced often from daily use and wear and tear. Common vehicle consumers include oil, oil filters and wiper blades.
Corrosion Warranties – These warranties are not applicable to every state and aren’t always common, but you may find them if you are looking for coverage in a state with extreme cold temperatures. This type of warranty covers the cost of repairs for vehicles that may corrode on the exterior from extreme weather conditions.
Deductible – When car warranty companies talk about deductible, they are referring to the amount of money that the owner of the vehicle needs to pay out-of-pocked to cover the cost of repairs, should they need them. Sometimes the deductible is $0, other times it may be much more. Some companies even let you choose the deductible you want to pay. Typically, these deductibles are either classified by a per-visit amount or a per-repair amount.
Drive Train – AKA Powertrain. This is a very powerful and important component of any vehicle and is responsible for transferring the power throughout the engine. The main components of the drive train are the drive belt, running belt, motor, rollers and transmission. Nearly every extended car warranty covers the drive train, and there are even some simple warranty coverage options that only cover the drive train.
Emissions Warranty – This is an optional warranty add-on for some companies and while it rarely comes with most standard coverage options, it is an add-on that many consumers may consider. This warranty add on will cover the entire emissions control unit in the vehicle.
Exclusionary Coverage – This is another term for bumper-to-bumper coverage. Or the most complete type of coverage that you can typically buy. When buying exclusionary coverage, there will typically be a small list of items that are not include. Expect this list to be much shorter than the one of items that are included in your warranty.
In-Service Date – When filling out the paperwork for your extended vehicle coverage, you will likely be asked for your in-service date. This is the date that the vehicle was purchased and first driven off the lot.
Maintenance Guidelines – Every manufacturer has a specific set of guidelines regarding the proper maintenance and upkeep on their vehicles. This is a very important part of keeping up with your vehicle’s extended warranty. Automobile owners need to read their maintenance guidelines and information regarding things like tire pressure and oil changes. It is the car owner’s responsibility to cover these things and it is not covered by the extended warranty.
Named Component Coverage – As the name suggests, with named component coverage, only certain components that are specifically named are covered in the extended warranty. These types of plans will not include as many items as a bumper-to-bumper or exclusionary warranty does, meaning vehicle owners should be clear on what is and is not included in their new warranty.
Optional Coverage – This extended car coverage option can be added to an existing warranty package. These optional coverage components typically include things like extra parts, electronics or towing services. They are not necessary, and many vehicle owners opt not to pay for them, but they can be purchased as an add-on, if you want to be covered for expenses like this.
Powertrain Warranty – (also see drivetrain warranty) A powertrain, also known as a drive train, is one of the most commonly covered components in an extended car warranty. The powertrain warranty typically comes along with the standard warranty and lasts longer than most manufacturer’s warranties do. Many car owners purchasing extended warranties will also add an additional powertrain warranty to their vehicle as replacing or repairing this system can be quite costly.
Recall – When it is discovered that a certain component of a vehicle is defective and may be unsafe, the manufacturer of that vehicle will issue what is known as a recall on that specific part or item. When an item is recalled, it is important that you take it in to the manufacturer for a free repair, otherwise it may void certain elements of your warranty.
Repair Facility – The term “repair facility” often appears in extended vehicle warranty contracts. A repair facility is an ASE-certified body shop or mechanic that you can take your car into for repairs, should you need to have your vehicle repaired while it is under your extended warranty. Some contracts will say you can take your vehicle to your repair facility of choice, while others will have an extensive list of service providers you can choose from.
Rental Benefit – Car rental benefits are often included in extended car warranties. This is typically part of the benefits that come with warranties that include roadside assistance packages. These benefits may also be called car rental reimbursement clauses.
Roadside Assistance – Roadside assistance packages are part of many extended car warranties. There are typically limits on these roadside assistance packages as it is typically a 24-hour benefit, or a benefit that you can only use once every 72-hours. However, this amount can vary depending on the company and the plan that you choose. Some of the benefits that you can expect in roadside assistance packages are tire changes, towing, emergency gas and car rental or reimbursement.
Transferable Warranties – Most extended warranties can be transferred to the new owner whenever ownership of that vehicle is transferred. Not every warranty can be transferred but most extended warranties can be, especially bumper-to-bumper warranties. There are often stipulations that need to be met as part of the contract in order for the warranty to be transferred to the new owner.
Trip Interruption Benefit – This form of reimbursement may be included in certain extended warranties. When this benefit kicks in it will cover the cost of any trip that you cannot complete due to a vehicle breakdown covered in your warranty. This type of reimbursement can include everything from airline fees to hotel fees and other trip costs.
VIN – Your VIN number or Vehicle Identification Number is the number assigned to your car when it was manufactured. You will need this number when you purchase your warranty and should you ever need repairs on your vehicle.
A Basic Overview of How Extended Car Warranties Work
Armed with information on the basic terms used when detailing car warranties, here is a rundown of how these warranties work so you fully understand that product that you are buying.
As the name suggests, an extended warranty is an “extension” of the manufacturer’s warranty that originally came with your vehicle. Instead of having the warranty included free with your vehicle purchase, you will pay (typically a monthly amount) for this warranty, much like you would with car insurance.
There are some very unique benefits of extended car warranties that you should consider when shopping around for different products. One of the main reasons that consumers today turn to these warranties is that they can get specific warranties to fit their specific needs. For example, if you buy a vehicle that has a great powertrain warranty but a not-so-great bumper-to-bumper warranty, you can purchase an extension that would cover your vehicle longer.
Another reason that many people today will purchase these extended warranties is because typical manufacturer’s warranties often don’t cover some of the expansive technology that is included in many vehicles today. Certain warranties may not cover this technology or things like navigation systems, so you can purchase an extension to make sure that these expensive pieces are covered, should they fail.
Breaking Down Coverage Options
One of the most important things to look at when shopping for extended car warranties is the coverage option that is available. Every company is different, which means every coverage option available is different. These products vary from company-to-company, which is why you will need to look for a couple of key factors when deciding which coverage option is best for you.
While the actual coverage may vary, every company will likely have some variation of the following coverage options:
Powertrains are a common vehicle component to be included in an extended car warranty. When powertrains malfunction and need to be replaced, it can be a costly repair, which is why some car owners will only have their powertrain covered if it is the only thing they can afford. Some car owners may also choose to add powertrain coverage to an existing warranty, to make sure this important component is included.
With a mid-range coverage option, a long list of components of the vehicle will be covered under warranty, but the powertrain will not be included in that coverage. Make sure to pay close attention to what items are included in that list. This is also often called inclusionary coverage, which features a short list of components that are included in the policy.
Mechanical Breakdown Coverage
This type of coverage is fairly rare and can be expensive but it is one that many car owners consider. As the name suggests this coverage will include any type of mechanical breakdown in the vehicle, which can include a fairly extensive list of components. This also includes overheating, which can come in handy when it comes to damage to expensive systems such as your brakes.
Bumper-to-bumper coverage is perhaps the most coveted form is car warranty coverage out there. While it is desirable it is also typically more expensive. Also known as exclusionary coverage, most items in the car will be covered under the warranty plan. There will typically be a short list of items that are not included, but the list of components that are covered in the plan is going to be much larger.
Every single coverage option is going to differ slightly, so as a consumer the best thing you can do is think about the type of coverage you think you want and do a side-by-side comparison of what is included with each plan to make sure you are making a formed decision on the coverage you will be receiving.
Another variation to look at with coverage plans is the length of coverage. Depending on the company, you can expect your coverage to last for anywhere from a year, to several years.
Other Features to Look for When Shopping for Extended Warranty
In addition to paying close attention to your coverage options, here are other features to look for in any extended warranty plan. This includes:
- Companies that offer long-term protection. The longer the company offers coverage for and the more miles they include in their coverage the better.
- The ability to use a multitude of repair facilities. If you should need your car warranty coverage, you will want to make sure that getting your car to a repair shop is easy. The best warranty companies will allow you to go to any repair shop you like or offer you access to tens of thousands of repair facilities.
- Not having to do up-front payments. Quality coverage companies will let you use a monthly payment plan.
- A deductible that makes sense. You will want to make sure you look at the deductible before ever filing a claim. Some people prefer high deductibles and typically lower monthly payments while others would prefer low deductibles so everything is covered in the accident, but they typically also enjoy lower monthly payments.
- Make sure to look if the deductible is “per visit” or “per repair item.” For example, a per visit deductible means you only pay the amount of the deductible every time the car goes into the shop. So, if your deductible is $100 and it goes in for a visit, you would pay $100 out-of-pocket. However, if that is a “per repair item” deductible and the car actually needs four small parts repaired, you would pay $400 out of pocket.
- Access to 24/7 support and service from the warranty company.
- Accreditation with the Better Business Bureau. If the company is not accredited or you see a number of negative reviews, proceed with caution. It is important to trust something like an extended warranty to a company that can actually be trusted.
- A short list of components that are not Virtually every plan is going to have components that aren’t covered in the policy. The shorter this list is the better.
- A company that will pay claims for the life of the contract. There are some contracts that have hidden limits. In short, make sure that you read all the fine print. You also want to make sure that this warranty provider is insured by a major company, so you have some extra backing with your third-party warranty purchase.
Keep an eye out for features like these when shopping for any extended car warranty. While no one ever wants to have to use their insurance to cover the cost of repairs, it is important to know what you are paying for and to make sure that you are getting the best coverage possible should you need to use your warranty in the future.