Is Extended Warranty Auto Insurance Worth It?

When you're purchasing a new or used car or truck, at the time of the sale you will probably be offered extended warranty auto insurance for your vehicle. Extended warranty auto insurance is an insurance policy that covers the cost of repairs and parts for some types of mechanical breakdowns and failures. However, before you purchase extended warranty auto insurance, there are several things that you may want to consider.

New Cars and Extended Warranties

Many new car dealerships offer extended warranty auto insurance plans for new cars and trucks. These policies are designed to provide coverage in addition to the new car warranty provided by the car manufacture. Generally speaking, extended warranty auto insurance premium is simply financed into the price of the vehicle and many people feel they have purchased added security for their purchase at a minimal cost.

However, this is simply not the case—extended warranty plans are very expensive. Also, you should consider that you're paying for something that is by all accounts useless until the original manufacture warranty period has expired; therefore, when purchasing a new car—extended warranty coverage may simply be a waste of money.

Certified Pre-Owned Cars and Warranty Coverage

Certified pre-owned cars are used cars that have been inspected by certified mechanics. These mechanics have been trained and certified by the original car manufacturer to provide certifications on used vehicles that meet special criteria to be considered certified as dependable used cars.

Most of the time, these types of certified used cars will come with a manufacturer's warranty. Therefore, you should probably not consider purchasing an extended warranty auto insurance plan for certified used car—so long as it still has warranty coverage protection being offered by the manufacturer. However, you may want to consider an extended warranty once the manufacturer warranty has expired.

Extended Warrantees for Used Cars

The only time that you really may want to consider purchasing extended warranty auto insurance coverage would be when you're purchasing a used car that has no other type of warranty attached to it. However, you should be aware that most states require that used car dealerships offer some sort of basic warranty protection for used cars and trucks. While the warranty protection mandated by state laws is generally very minimal and may only last for as little as 30 days to 90 days, most state laws require that you are afforded some type of warranty protection.

Therefore, extended warranties for used cars can be a valid consideration or option. However, before you purchase an extended warranty make sure that you thoroughly understand the warranty contract and what the warranty will and will not cover. Meaning to say that some extended warranties include so many restrictions and policy exclusions that using the warranty may be very difficult and you may find that some of them are actually pretty worthless. Therefore, purchase only warranty contracts that do offers some significant value for their costs and will actually pay for needed repairs and services as they are needed.

If you're really considering the purchase of an extended warranty, you should sit down and evaluate the cost of the warranty versus the potential cost of future repairs. In many cases, you will find that the cost of the warranty is much more than many common repairs or services that will be needed. Also, you should consider that most used cars on the road today are much better than they were in the past. Vehicles manufactured in the last 10 or 15 years are of much better quality and have much fewer problems than those made years ago.