What to Look For in a Vehicle Extended Warranty

A vehicle extended warranty can provide peace of mind by covering repair costs in the event that a major mechanical problem occurs. But before you buy one, you should know what to look for.

Extended warranties can be bought from a wide variety of third-party sellers, or through dealerships that partner with the manufacturer to offer them to customers. They typically cover the same repairs as original car warranties, but tend to be cheaper because they don’t include a dealer markup. They may also cover additional parts and services, such as roadside assistance or towing.

The reputable, established companies we recommend—CarShield, Endurance, and CARCHEX—offer five or more customizable plans that let you pick the coverage you need for your budget and vehicle’s predicted reliability. They provide a comprehensive range of coverage options, including the full bumper-to-bumper and powertrain protection offered in OEM car warranties. They have excellent customer service and many added perks.

A good warranty will include the cost of parts and labor for covered repairs, leaving you responsible only for a modest deductible and the plan’s monthly payment. However, the less-established sellers you’ll find on TV and in robocalls often skimp on this. You’ll pay a lot of money upfront to get only the bare minimum of coverage.

Nat Pope, an associate professor of automotive engineering at Purdue University, has spent much of his academic career studying extended auto warranties. He says the ones advertised on television and in robocalls rarely make financial sense for most drivers. He says it’s important to study the contract carefully and consider what would happen if the company that sold the warranty went out of business. It’s also crucial to make sure that the warranty covers cause and effect—for example, if a water pump fails, it can damage other components in the engine.

Another thing to keep in mind is the age and mileage limit of the policy. Some warranties expire at a specific age or when the car reaches a certain number of miles, and you’ll have to pay for any additional repairs beyond that point. Also, find out whether the warranty has a deductible—as with car insurance, you’ll have to pay for repairs up front and then submit receipts for reimbursement.

Dealership-provided and manufacturer-backed extended warranties are generally less expensive than those from independent third parties because the dealers take care of the paperwork and the car manufacturers pay the repair shops directly. They’ll also usually allow you to take the car to any authorized repair shop in the country, eliminating the restrictions that can be found in some third-party warranties. These warranties don’t cover commercial use or “acts of God,” but they do cover wear items like tires and lubrication that typically wear out over time. They may exclude some types of damage, however, such as those caused by neglect or owner abuse.

What to Look For in a Vehicle Extended Warranty

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