What Is an Extended Car Warranty? And What Does It Cover?

What’s peace of mind worth to you? An extended car warranty can be just the thing to keep drivers from worrying about unexpected automotive costs down the road. When a new car’s warranty has lapsed, an extended car warranty is one option that some may find worth the investment. Here’s what you should know about extended car warranties.

This article will cover:

  • What is a car warranty?
  • What is covered in a car warranty?
  • What is an extended car warranty?
  • What is the difference between car insurance and an extended car warranty?
  • What does an extended car warranty cover?
  • Who offers extended car warranties?

What Is a Car Warranty?

A car warranty is a promise from the automaker that the vehicle’s specific components will last for a specified amount of time or mileage. These contracts state that the factory will pay for specific and covered repairs on components that don’t live up to reasonable—and specifically spelled out—expectations.

What Is Covered in a Car Warranty?

A car warranty is in place to cover the cost of the repair bill or the replacement cost when you need to take your car to be repaired due to a mechanical failure. It will cover the mechanical defects, but not necessarily damage that occurred outside of these. A car warranty does not cover the repair or replacement of items for what’s commonly referred to as “normal use wear and tear.” A warranty will usually pay for the labor charges incurred to fix warranted items.

Basic Car Warranties

Although most automakers cover the basics—engine, gearbox, suspension, transmission, and steering—there are differences. The typical automaker’s warranty usually has a three-year/36,000-mile limit, whichever occurs first. And as mentioned above, these warranties do not include typical wear and tear items like tires, brakes, and other regular maintenance items. Cosmetic damage is almost always excluded, but occasionally it is included if it is determined to be a manufacturer’s defect rather than wear and tear.

Comprehensive Car Warranty

A comprehensive warranty covers virtually everything else in the car—even the heating, air conditioning, audio system, and electrical components—as long as it’s a manufacturer’s defect that fails and not something that the new car owner broke or damaged because of negligence.

Examples of Car Warranties

Some of the best new car, factory comprehensive (sometimes referred to as bumper to bumper) warranties today include:

      • Hyundai: 5 years/60,000 miles
      • Kia: 5 years/60,000 miles
      • Genesis: 5 years/60,000 miles
      • Mitsubishi: 5 years/60,000 miles
      • Volkswagen: 6 years/72,000 miles for 2018 and 2019 models (4 years/50,000 miles for 2020-and-newer models)
      • Jaguar: 5 years/60,000 miles
      • Infiniti: 4 years/60,000 miles
      • Lincoln: 4 years/50,000 miles
      • Tesla: 4 years/50,000 miles
      • Cadillac: 4 years/50,000 miles

      Powertrain Warranties

      But on that same list of vehicles, differences exist in coverage on items like the powertrain factory warranty:

          • Hyundai: 10 years/100,000 miles
          • Kia: 10 years/100,000 miles
          • Genesis: 10 years/100,000 miles
          • Mitsubishi: 10 years/100,000 miles
          • Volkswagen: 6 years/72,000 miles – (4 years/50,000 miles for 2020-and-newer models)
          • Jaguar: 5 years/60,000 miles
          • Infiniti: 6 years/70,000 miles
          • Lincoln: 6 years/70,000 miles
          • Tesla: 8 years/mileage varies by model
          • Cadillac: 6 years/70,000 miles

          Corrosion Warranties

          When the warranties for corrosion coverage are compared, there are many differences:

                • Hyundai: 7 years/unlimited mileage
                • Kia: 5 years/100,000 miles
                • Genesis: 7 years/unlimited mileage
                • Mitsubishi: 7 years/100,000 miles
                • Volkswagen: 7 years/100,000 miles
                • Jaguar: 6 years/unlimited mileage
                • Infiniti: 7 years/unlimited mileage
                • Lincoln: 5 years/unlimited mileage
                • Tesla: 12 years/unlimited mileage
                • Cadillac: 6 years/unlimited mileage

                What is an Extended Car Warranty?

                Extended car warranties are actually “Mechanical Breakdown Insurance” (MBI) or “Vehicle Service Contracts” (VSC). MBIs are regulated in California, while VSCs are used generally throughout the rest of the U.S. Canada and other countries have their own regulations and requirements. A reputable company providing these “extended warranty solutions” should only offer you the program that is legally available in your state. In most cases you can travel outside the state or country you live in and still be covered, no matter where your MBI or VSC was purchased.

                These extended car warranty solutions are usually available on vehicles that are no longer covered after the initial warranty periods expire due to mileage or time limits. Some may be purchased as additional protection to pay for mechanical breakdowns as a result of a defect over and above the manufacturer’s warranty. These usually cover the cost of repair and/or replacement of the parts. Sometimes an MBI or VSC can be more comprehensive than a manufacturer’s warranty in terms of what is covered. However, both are only as good as the company that backs them. It is important to check out the MBI or VSC company’s reputation with the Better Business Bureau and other review sources before choosing the best solution for your needs.

                Visit olive.com for more on extended car warranty solutions.

                Car Insurance vs. Extended Car Warranty: What’s the Difference?

                MBIs and VSCs are very different from car insurance, and subsequently they offer protection for different things, as well. Car insurance helps pay for damages to people and property caused by collisions, fire, vandalism, hail, and other weather-related damage. It’s also required to have car insurance to be driving your vehicle legally in the U.S.

                An extended car warranty (MBI or VSC) covers the costs of mechanical breakdowns due to defective parts that have nothing to do with being in an accident or another event covered by car insurance. You are not required by law to have MBI or VSC coverage on your car, but some drivers choose to buy these for the peace of mind they provide.

                Tip: Most car insurance policies include roadside assistance, so paying your MBI or VSC for this specific feature may be a waste of money. Make sure you ask your MBI or VSC provider if you are being charged extra for roadside assistance, or if you can eliminate roadside assistance to save money on your MBI or VSC.

                What Does an Extended Car Warranty Solution Cover?

                MBIs and VSCs coverage details vary from company to company, and some companies may offer different levels of coverage for the same car with different pricing and deductible options.

                Basic coverage is often similar to the powertrain level coverage found with the original manufacturer’s car warranty. It covers many of the major parts of the engine, transmission, and drivetrain, without covering suspension, steering, braking systems, AC, heating systems, electrical components, instrumentation, power windows, power liftgates, power seats, power mirrors, rearview cameras, emissions, or safety systems. A comprehensive plan, sometimes referred to as a bumper-to-bumper warranty, often covers just about everything except the wear and tear items such as oil changes, brake pads, and rotors. Sometimes, plans offer a level of coverage between the two, as well.

                The bottom line is that it is vital to get detailed terms of conditions from the MBI or VSC provider so you know what is covered with each of their plans.

                Who Offers Extended Car Warranty Solutions?

                People generally find and purchase extended coverage against mechanical breakdowns from two sources:

                    • From the car dealership where the vehicle was purchased.
                    • From a third-party provider.

                    Advantages and Disadvantages of Buying an MBI or VSC from a Car Dealership

                    The advantage of buying from a car dealership is the one-stop shopping convenience this provides, and in many cases the dealer’s program may be a good one. However, you may be asked to make the decision right on the spot, if for no reason other than to roll it into your auto loan. The problem with adding it to your auto loan is that if you later discover you don’t like the program, getting any sort of refund is challenging.

                    Like most savvy car buyers, you probably researched the car you purchased before you purchased it (perhaps using MotorTrend‘s Ultimate Car Rankings and Car Match services). Taking the time to research available MBI and VSC options should make you feel better about buying the right service. If you don’t purchase at the dealership, you still have time to research and make the right decision after the fact.

                    Advantages and Disadvantages of Buying a MBI or VSC from a Third-Party Provider

                    Buying from a third-party provider enables you to research the full gamut of options available for your vehicle, choose the right one for you, and, in some cases, purchase the program on your own terms. It gives you the opportunity to consider different coverage levels, review terms of conditions, and choose to pay for the coverage in a way that suits your needs. In some cases, it’s easier to cancel an MBI or VSC if you don’t need it or you decide to sell your car.

                    The downside of buying from a third-party provider is that most providers do not publish their pricing online, they use misleading advertising, they may robocall you, and they may use different tactics to pressure you into making a purchase right away over the phone. They may also require you to pay $1,000 or more upfront, making it difficult to cancel if you sell your car or if you do not get the service you thought you were going to get.

                    Tip: Make sure they offer transparent online pricing, easy monthly payments, immediate coverage, a cancel-anytime policy, and NO Robocalls. If you have a vehicle that’s 10 years old or newer with less than 140,000 miles, you should be able to get an instant online quote from Olive and not have to worry about being robocalled.

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