Car Warranties: What Are Your Car Warranty Coverage Options?

March 15, 2012

Waiting until you need to a repair to find out if your car warranty covers it is a mistake. Learn how to evaluate car warranties on the front end.

If you take your vehicle in for car warranty service, you may be surprised to find the warranty does not cover everything you thought it would. Even if the vehicle is covered under a warranty, you still have to pay for certain aspects of the repair.

Car warranty coverage can be difficult to understand, and sometimes even misleading. This article will attempt to help you understand how car warranty coverage actually works and what it might really cost you.

Bumper-to-Bumper Coverage Often Misleading
If you purchase a brand-new vehicle or a costly extended car warranty, the company or dealership that sells you the warranty will often refer to the coverage as a bumper-to-bumper warranty. Unfortunately, most consumers are under the assumption this type of warranty covers any and all defects or repairs that may be needed for the vehicle. This is usually not the case.

While these types of warranties do usually provide coverage for most parts and repairs on a vehicle, they don't cover everything. Accessories or added options are typically not included in the items covered under the terms of the warranty contract. For example, if you break a mirror or the CD changer stops working, the replacement cost of the parts may not be included in your warranty. Regular maintenance items, like air and oil filters, brake pads and tires are usually not covered as well.

You Still Have to Pay Something
If you purchase an extended warranty, there is almost always some sort of deductible or service charge associated with the use of the warranty. Even with the most expensive extended car warranties, you usually have to pay a deductible amount before the coverage pays for parts or repairs.

When you purchase an extended warranty, carefully review the deductible for any maximum amount or number of occurrences. Regardless of the deductible type required, making a claim under your warranty contract will usually cost you something.

New Parts May Not Be Required
Not all plans or policies are the same. While many extended warranty contracts will pay for parts that are new, some contracts may allow the use of re-manufactured or used parts. This is typically a hidden aspect of really cheap extended car warranties. Before purchasing a warranty, make sure the provider will pay for brand new parts when repairs are needed.

Lower Cost Equals Reduced Coverage
As with almost anything else, you usually get what you pay for with an extended car warranty. Although you may be tempted to purchase a car warranty based on price alone, when shopping for an extended car warranty, always compare not only price, but coverage as well.

Really cheap warranties usually offer inadequate coverage or even contain hidden costs or the use of used parts. Although an extended warranty may potentially save you money on repairs, you should carefully review a warranty contract before buying one.

Basic Car Warranty Coverage Terms

Auto factory warranties can vary a great deal from one manufacturer to another. Some warranties are transferable if you choose to sell the car, and others are not. It's best to know about the lemon law and implied warranty.

The federal government has decreed that all vehicles are covered for five years or 50,000 miles on all parts of the emissions system. This is to protect the environment from the pollution.

There are four types of manufacturer warranties. Most vehicles are covered under at least the top two, while some coverage contains elements of all four types, depending on the warranty offered by the manufacturer. Most car warranties last for three years or 36,000 miles, but that also varies from one manufacturer to another with some warranties lasting up to 10 years. Most factory warranties do require regular maintenance at scheduled intervals. Not doing the maintenance as recommended will void your warranty.

  • Basic. Basic car warranty coverage, also known as bumper to bumper coverage, covers everything on your car except normal wear and tear items such as windshield wipers, hoses, belts and tires. Basic coverage often goes hand in hand with powertrain coverage
  • Powertrain. The powertrain on your car is everything that makes the car run. The engine, transmission, driveshaft and axles are usually included
  • Corrosion and rust. Car warranty coverage for corrosion and rust usually only applies if the rust goes all the way through the metal. If your vehicle develops surface rust or corrosion, it's not covered
  • Roadside service. Many car warranty packages include some parts of this coverage. It includes free towing, tire changes with your spare and jump starts. Some cover gas delivery if you run out of fuel and lock outs if you accidentally lock your keys inside. Some even cover rental car reimbursement if you have a major breakdown in your car

The best way to know what is covered is to read the auto factory warranty information you got with the car. Your local dealership can also help you to ascertain what is and is not covered.

Sometimes an extended warranty is offered through the dealership. Extended warranties can be tricky, however, and may not always give full value for the money. Seeking extended car warranty coverage bay be recommended, but you should always carefully read what is offered before you buy. You can often get the coverage you need at a much lower price without help from the dealer.

Although it is not difficult, understanding car warranty coverage is often overlooked until it is needed. Finding out that you could have had something fixed for free after you have paid is frustrating and expensive.

How to Get a Cheap Car Warranty Quote

When shopping for additional warranty protection, you should get a car warranty quote from as many sources as possible before making a buying decision. While the dealership will usually try to convince you that they are the best (or only) option for an extended warranty, there are many companies that can provide quotes for coverage.

Avoid Warranties You Don't Need
The absolute best way to save money on a car warranty is to avoid one that is not needed. If you're purchasing a brand-new vehicle, the car or truck will always come with the manufacturer's bumper to bumper warranty for at least three years or 36,000 miles. In some cases, the manufacturer's warranty may extend for even longer periods of time. Unless you are really sure that you'll be keeping the vehicle for a long period of time, an extended warranty may not be needed at all.

If you're purchasing a vehicle that is more than 10 years old or has a very high number of miles on the odometer, any additional warranty protection will be rather costly. In this case, simply setting aside a few extra dollars every month for potential repairs could save you a lot of money. Avoid extended warranties for really old cars and pay for them as they are needed out-of-pocket.

Shop Around
Regardless of what the dealership tells you, there are many companies that can provide extended warranties or car repair insurance. Don't believe the salesperson or sales manager when they tell you that only a certain company can provide coverage for your vehicle. Instead, search the Internet for car warranty companies and get quotes online from at least four or five providers before making a decision.

Check the Warranty Provider
Sometimes, a car dealership offers a warranty from a nationally known warranty company that also sells coverage directly to car owners. If this is the case, you will often find that the same type of warranty is available for purchase directly from the warranty provider, at a much lower price. Do research on applicable plans and policies before visiting the dealership. It could save you up to 50 percent or more.

Check with Your Car Insurance Company
Before making a decision, always contact your car insurance company. Many regular car insurance companies offer mechanical breakdown insurance that can easily be added to your current policy. If your car insurance company does offer this type of coverage, you will find that it often involves little cost up front and can usually be canceled at any time.

Consider Deductible Amounts and Types
Always check the warranty contract for details regarding the amount of any applicable deductible as well as how deductibles are applied. Some contracts that appear to be relatively inexpensive may require that you pay more than one deductible at the time of repair or service. Search for companies that offer a per incident deductible rather than charging multiple deductibles for various parts and repairs. This could save you hundreds of dollars when filing a claim for coverage under your warranty contract.

Avoid Really Cheap Warranties
The car warranty price matters. Generally speaking, you should avoid extended warranties that are much cheaper than others that you compare them to. There is almost always a reason why an extended warranty may be sold for much less than those offered by competitors. Really cheap warranty contracts often involve high deductibles, place heavy restrictions on where repairs are made and may even require that only remanufactured or used parts are used in repairs. Remember, you usually get what you pay for.

Avoid Vehicle Service Contracts
Sometimes dealerships offer vehicle service contracts to consumers. You should never confuse these with an actual extended car warranty. A vehicle service contract requires you to take your car to that particular dealership for repair and service. If the dealership closes its doors or goes out of business, the vehicle service contract will be worthless.

How to Transfer a Car Warranty

When buying or selling a second hand car, the question of it is possible to transfer a car warranty arises. There are a lot of types of warranties in the market, and each one has its own sets of rules and regulations.

Identify the Type of Warranty You Want to Transfer
If you are transferring an extended warranty, the transferability is dependent on the company issuing it.

When it comes to new warranties, there are fewer worries for both buyer and seller because the car warranty automatically transfers to the new owner of the vehicle. The warranty of a new car is identified via the VIN (vehicle identification number) of the car, and not by the name of the owner. When you transfer ownership of the vehicle, the warranty goes with it. This happens automatically because these new warranties are stored in the databases of the vehicle manufacturer.

Get a Contact Person to Assist you
If you are transferring an extended warranty, you have to contact the underwriter of the warranty policy and have the name changed to the new owner of the car. Sometimes, these extended warranties work like factory warranties wherein the warranty is automatically transferred to the new owner. Some third party warranties are not transferable at all. The important thing to do is make sure you talk to a person who knows how to deal with these matters to have a smooth transaction.

Consider Transfer Fees
Not all warranties have fees to get the transfer done, but it would be wise to contact the underwriter to make sure. Fees range from nominal surcharges to hundreds of dollars.

Understanding Car Warranty Law

The most common car warranty laws in the United States are the Lemon Law and Implied Warranty of Merchantability. Understanding them better will help you guarantee your rights as a consumer are protected.

What is the Lemon Law Buyback?
This law protects you from buying a defective vehicle. Vehicles which fail to meet the standards of this law are considered a lemon. Under the Lemon Law, the manufacturer of the vehicle is required to handle all the problems of the vehicle. If you buy a lemon, the manufacturer must buy back their car and fix it before selling it as a used car.

What Happens When I Buy a Lemon?
If you suspect that you have bought a lemon, the first thing you should do is check the Lemon Law implemented in your state to find the set criteria for a car to be classified as such. Then you need to inform the manufacturer. If the manufacturer refuses to take care of the problem with the lemon, you can take the issue to court. You are entitled to receive compensation in accordance with the cost of the vehicle and how many miles are on it.

What Is Implied Warranty of Merchantability?
This law gives the consumer the guarantee a product such as a car will serve as it is supposed to. All new cars and some used cars are covered under this law. This means if you buy a car, it is expected to run.

What Happens If there Is Breach of Warranty?
Every state has implemented this consumer protection law to protect the interests of every consumer from product defects. As a consumer, you have the right to ask for legal advice concerning product liability. You are entitled to make a claim for both physical and economic damages. Product liability is very helpful in keeping a variety of products safer for consumers. Because of this, manufacturers do their best to produce products which will pass the standards set by the law.

Aside from your house, your car is one of the most important investments you make. A car is expensive and takes a lot of your savings. This is why it makes sense to protect it from anything that can lead to a loss. With the right knowledge about car warranties and warranty law, you have the guarantee no one will take advantage of your rights when it comes to buying a car.