An extended car warranty gives you peace of mind that your auto repairs will be covered. However, these warranties often come with a lot of fine print that could end up costing you. They may require a deductible, limit where you can get your vehicle fixed and only cover certain components. In addition, many of them will be void if you neglect routine maintenance or don’t keep proper records.
In addition to comparing costs, read reviews about the company that’s offering the extended warranty. Look for positives, such as quick and easy sign-up, helpful customer service and fast reimbursement of claims. Be wary of negative reviews that mention difficulties filing a claim or patterns of rejected claims.
A basic extended warranty is often called a “powertrain” or “drivetrain” warranty, and it covers the engine, transmission and other key parts of your vehicle. A more robust plan is usually referred to as a “bumper-to-bumper” warranty and covers nearly all of your vehicle’s mechanical components, including the brakes, transmission, electrical system and air conditioning. Most companies offer these plans, and they are available either separately or as a part of a new vehicle purchase.
Some warranty providers offer a hybrid of these two types. They typically start with the basic powertrain coverage, then add on bumper-to-bumper and other components to build a package that best fits your needs. Some plans also include roadside assistance and other add-ons, such as a rental car or towing service.
Consumer Reports tests and rates extended warranty plans to help shoppers make a wise decision when purchasing one. These ratings are based on the number of plan options, terms of coverage, the price per year and added benefits like roadside assistance. They are also based on what is and isn’t covered, as well as the company’s history of paying claims.
A vehicle service contract isn’t a necessary expense for every driver. But if you want the security of knowing that you’ll be protected from the expense of costly repairs, an extended warranty may be worth it. In general, you should be prepared to spend about $500 on a repair bill before the extended warranty provider will begin paying, but they’ll pay most or all of your repair bills after that point.