Auto Warranty 101
Down the road when that new car smell fades away and it doesn’t quite drive like it used to, you’ll want to know the extent of your auto warranty coverage. Knowing what parts, tune-ups and repairs will be covered — and for how long — will give you a complete picture of how to minimize your costs and what kind of insurance you’ll need in the long run. Here’s what you need to know to save you money and get the best service for your car when you need it.
Auto warranty 101
An auto warranty is a promise made by a manufacturer or dealer to cover repairs and defects over the course of a certain amount of time and certain amount of mileage. Most basic warranties are guaranteed for at least three years or 36,000 miles, but may vary according to the manufacturer.
Warranties are essential a legally binding pledge to fix or replace any parts that have broken down or are inherently faulty, including defective parts. Warranties do not cover regular maintenance and will not cover breakdowns caused by accidents, acts of nature, lack of proper maintenance, contamination of fluids or fuels, collision, fire, theft, negligence or abuse.
There’s a basic checklist of questions all consumers should have answered before purchasing a car warranty, according to the Federal Trade Commission, including length of the warranty, the point of contact for service, what parts and repair problems are covered, as well as any conditions or limitations on the warranty.
What’s covered?
Different levels of warranty coverage exist, so it’s important to understand the limits and umbrella of coverage before purchasing. These are the most typical types of warranty your car dealer will offer:
Basic “bumper-to-bumper” warranty: This is the most general coverage that pays to repair defects in factory-installed parts.
Drivetrain/Powertrain warranty: Covers the engine, transmission and transaxle parts. This warranty tends to last longer than bumper-to-bumper.
Roadside assistance: Covers towing costs and tire changing if the car breaks down during travel.
Rust or corrosion warranty: Covers rust in sheet metal parts of the car.
Federal emission warranty: Covers repairs needed to correct defects in parts that would cause the car not to meet Environmental Protection Agency standards.
How drivers can maintain their warranty
Regular car maintenance and inspections are necessary to guarantee that a warranty won’t be voided. Typically, routine maintenance includes oil changes, tire rotations, fluid checks and flushes, brake pads, belt replacement, etc. A warranty will remain valid no matter who performs the repairs, meaning you can use your own mechanic or shop — not just the dealer’s service department.
What does auto insurance do that car warranties don’t?
Under car warranties, the manufacturer makes a guarantee to the car buyer regarding the condition of its product. In case car parts do not function as intended, a warranty will cover the costs to repair or replace the part, as well as car rentals due to repairs, and potentially corrosion/rust.
Insurance, on the other hand, is an obligation on the part of the insurer to take on financial protection or reimbursement for the risks that are inherent with driving. Every state in the U.S. except for New Hampshire requires drivers to purchase some level of auto insurance to cover accidents, collisions, car rentals and possibly roadside assistance.
Service contracts or “extended warranties”
When a warranty runs out, car owners may choose to purchase a service contract to provide repairs or maintenance. Vehicle manufacturers, auto dealers and independent providers sell the contract separately from a warranty.
Service contracts will not provide benefits until after the initial warranty expires. Rates for these contracts depend on the life of the car — those with fewer miles and past repairs will get a better deal.
These contracts, while often referred to as “extended warranties,” are not actually warranties. Drivers who are interested in purchasing a service contract should practice due diligence to find the most trustworthy source, particularly from third-party companies.
However, since service contracts are optional and car warranties end, it’s most critical for car owners to purchase insurance that will be the most affordable, provide adequate coverage and be the best fit for their specific car.
Best and worst warranties on the market
There are three vehicle brands that standout for providing the best in basic and power train warranties: Hyundai, Mitsubishi and Kia. Each brand offers five years or 60,000 miles new vehicle limited warranties, and 10 years or 100,000 miles powertrain warranties.
Brands like BMW and Cadillac offer four years or 50,000 miles basic warranties and five years or 100,000 miles powertrain warranties. Other big brands such as Chrysler, Chevrolet and GMC all offer three years or 36,000 miles new vehicle limited warranty, and five years or 100,000 miles powertrain limited warranty
The most standard warranties on the market are offered by Honda, Nissan, Toyota, Ford, Mazda and Subaru with three years or 36,000 miles new vehicle limited warranty, and 5 years or 60,000 miles powertrain limited warranty.