How to Buy an Extended Car Warranty
Find out if you’re getting ripped off on your car insurance in less than two minutes.
No long forms · No spam · No fees
An extended car warranty can be useful. Depending on the policy, it can cover repairs that are not covered by the factory warranty. An extended car warranty can also cover repairs needed after the factory warranty runs out. This is a tricky type of insurance to buy, though. There are lots of scammers out there who try to take your money in exchange for a useless warranty. Here’s how to buy the right type of warranty from a good, reputable company.
Determine what coverage you need
Step 1: Read over your factory warranty. It will usually cover only certain parts like the drive train or parts that were indisputably defective from the factory.
Do not buy an extended warranty from the dealership when you buy your car. Just say “no thanks” and buy elsewhere. They charge too much for minimal coverage.
Step 2: Decide if you will be selling the car before the factory warranty runs out. Lots of people trade their car in for a new one every couple of years.
If the factory warranty will still be in effect, you may not want to bother with an extended warranty.
Step 3: Think about what type of coverage you will use. You should get a warranty that covers mechanical breakdown and wear and tear. If you only get mechanical breakdown, the car warranty provider could claim the mechanical breakdown was due to wear and tear and refuse to cover it.
There is also bumper-to-bumper coverage, which may or may not cover wear and tear (read the fine print carefully). Other common options are drivetrain/powertrain coverage, roadside assistance, rust or corrosion and Federal Emissions warranties.
Get quotes from extended car warranty companies
Step 1: Go online to get quotes from at least half a dozen companies. Get quotes on each type of warranty you might want.
Also, get quotes for $0 deductible and the next lowest deductible offered. Most of the time you should go with $0 deductible. The extra cost in premiums is usually worth it.
Step 2: Take some time to weigh your options. Do not buy right away. Do a little research on the warranty companies who give you the best rates.
Saving money on premiums won’t do you any good if the company doesn’t come through when you need them. Following are some of the more highly recommended car warranty companies:
- Consumer Reports has a list of the top 15 extended warranty companies.
- Kelley Blue Book likes Warranty Direct.
Buy your extended car warranty
Step 1: Contact your chosen extended car warranty provider. Make sure the policy has the following benefits:
- Coverage starts on the day you buy it
- Warranty is transferable if you sell the car
- Covers engine overheating and ABS brakes (if your vehicle has ABS brakes)
- Covers car rental expenses
- Covers repairs done by any ASE certified mechanic (as opposed to only a car dealership)
- Pays the shop for the repairs (as opposed to reimbursing you after you pay the bill)
Step 2: Negotiate a lower premium, if you want to. Car warranty providers will often lower their premiums to make a sale.
Step 3: Make sure you get a copy of the warranty. Car warranty providers will usually send you a copy of the policy and all the information you need, but don’t assume. Confirm that you will get a copy in the mail.
Step 4: Get instructions for filing a claim. This is usually spelled out in the policy, or on a separate sheet that accompanies the warranty, but it doesn’t hurt to get the telephone number for claims reporting.
An extended car warranty is not car insurance. You still need to have a regular car insurance policy. If your car is brand new you probably have a manufacturer’s warranty and might only need liability insurance. But if you don’t have a warranty and only have the minimum liability coverage, a warranty might protect you against mechanical failures. Note that if you have an accident, you’ll need extra insurance.