A car warranty helps protect you from the cost of unexpected car repairs, especially if they’re the result of defective car parts. Warranties provide peace of mind and can save you thousands of dollars in repairs. Several different types of car warranties are available, but not all of them are worth it, especially since they come at an additional cost.

Here’s what you should know about car warranties, including different types, what they cover, and how to determine which type is right for you. This guide will help you decide if you need an auto warranty in addition to your car insurance.

What a car warranty covers

A car warranty is a contract in which a vehicle seller or manufacturer promises to repair certain vehicle defects that occur within a predetermined time frame. The specific coverages and time frame vary by manufacturer. A typical warranty may apply for up to three years or 36,000 miles, whichever comes first.1

Many vehicle manufacturers offer “bumper-to-bumper” coverage. They pay for all (or most) of the vehicle’s components from the front to the back bumper, including:

• Air conditioning/heating

• Brakes

• Drivetrain components

• Electrical system

• Emissions

• Engine

• Front-wheel/rear-wheel drive

• Powertrain

• Restraint system

• Steering

• Suspension

• Tires

• Transmission

The components above are common in a manufacturer’s warranty on a new vehicle, but your coverage will likely differ if you have a warranty for a used car. Warranties also won’t cover some things, including wear and tear.

What doesn’t a car warranty cover?

Your car warranty will cover most of your car’s components, especially if you’ve purchased a new vehicle. But warranties typically don’t include coverage for the following:

• Regular maintenance: A standard warranty doesn’t cover routine maintenance for your vehicle, such as oil changes, tire rotations, and other similar services.

• Wear and tear: Warranties don’t typically cover any damage or necessary repairs resulting from normal wear and tear, including tires and brakes.

• Accidental damage: If your car sustains any accidental damage, whether it’s from an accident, environmental factors, or something else, your warranty won’t cover it.

• Misuse, neglect, and improper maintenance: Most warranties exclude damage that’s the result of misusing, neglecting, or improperly maintaining your vehicle.

• Aftermarket parts: Your warranty likely won’t cover aftermarket parts, and using aftermarket parts may even affect your warranty coverage on original parts.

• Extra expenses: Unlike some other insurance policies, a vehicle warranty won’t cover your extra expenses, such as a rental car, if your covered vehicle needs repairs.2

Your warranty isn’t simply a catchall for any and all issues you may run into with your vehicle. Read and understand your vehicle warranty paperwork so you don’t encounter surprise out-of-pocket costs.

How do car warranties work?

Car warranties cover the repair or replacement costs related to vehicle defects within the specified time frame.

If you notice any defects or issues with your vehicle, here’s what you should do to make sure your warranty covers the repairs:

If you want to make sure your warranty covers defects, it’s important to stay on top of vehicle maintenance long before you notice any defects. Keep up with the manufacturer’s recommended maintenance schedule for oil changes, air filters, and tire rotations, and hold onto all records for any maintenance or repairs. Your manufacturer could deny your warranty claim if it identifies any neglect on your part.

Types of car warranties

Not all warranties are the same. Here are some of the most common types of car warranties, which provide different types of coverage:

• Manufacturer’s (factory) warranty: Usually included with your purchase of a new vehicle, a manufacturer’s warranty covers any defects.3 It typically provides coverage for up to three years or 36,000 miles.

• Powertrain warranty: A powertrain warranty covers vehicle components like the engine, transmission, and drive systems. Most powertrain coverage applies for five years or 60,000 miles.4

• Bumper-to-bumper warranty: A bumper-to-bumper warranty is a comprehensive manufacturer’s warranty that covers any defects on your vehicle, from the front bumper to the back bumper. A bumper-to-bumper warranty is the warranty type your manufacturer will most likely include when you purchase a new car.

• Extended warranty: An extended warranty, also known as a vehicle service contract, is an optional warranty you can purchase from your manufacturer, dealer, or a third-party company. This warranty comes with added costs and may only include certain parts and defects. Depending on who you purchase the warranty through, it may start after your manufacturer’s warranty ends or coincide with it. It typically lasts longer than a manufacturer’s warranty.5

• Certified pre-owned (CPO) warranty: When you purchase a CPO vehicle, you get more warranty protection than if you bought any other used car. CPO vehicles are in good shape and have had regular maintenance. Unlike with other used cars, the dealer or manufacturer offers a warranty for CPO vehicles. A CPO warranty may provide coverage for between six and 10 years, and usually up to 100,000 miles. It may also come with a limited bumper-to-bumper warranty.6

What’s the difference between a warranty and car insurance?

An auto warranty and a car insurance policy both protect your vehicle and your finances, but they do it in different ways.

A warranty covers defects in your vehicle, especially in the first few years after you purchase it. But it specifically excludes external damage, including from accidents and inclement weather. Car insurance, on the other hand, covers these hazards that a warranty doesn’t, including damage from collisions and non-collision incidents. Your insurance won’t cover defects or breakdowns.

Another key difference between the two is that most U.S. states require car insurance. At the bare minimum, you must have liability insurance to protect other drivers on the road from loss. Car warranties are optional, though they can save you a lot of money.

When comparing a car warranty and a car insurance policy, it’s not necessarily a question of purchasing one or the other. You may need both, especially when you buy a brand-new vehicle.

If you’re unsure if you need an auto warranty in addition to your car insurance, the table below can help you break down the important features and differences between them.

How much do car warranties cost?

The purchase price of a new vehicle typically includes the manufacturer’s warranty, so new vehicle owners don’t have an added cost. But you’ll have to pay extra if you want an extended warranty.

The average cost of a bumper-to-bumper extended warranty starts around $1,000 per year, but it could cost more. The cost of your warranty may vary depending on some key factors, including:

• Vehicle make and model

• Vehicle age and mileage

• Warranty provider

• Coverage level

• Warranty term length

• Deductible

In addition to the yearly premium, extended warranties may also have other added costs. For example, extended warranties may require a deductible for claims, similar to car insurance. Deductibles can range from less than $100 to hundreds of dollars.

Many extended warranties also have cancellation fees if you want to end your warranty early. Many providers offer an initial grace period of 30 to 60 days, during which you can cancel without penalties. But if you cancel after this period, you could be subject to fees.

Before buying an extended warranty, make sure to read the fine print so you understand what costs, penalties, and exclusions apply.

Do you need an extended car warranty?

Whether an extended car warranty is a good idea depends on your car’s reliability, age, and your preferences.

An extended warranty can protect you from surprise costs if something goes wrong with your car. You may prefer the guaranteed cost of a warranty to the possibility of surprise repairs, but the cost of an extended warranty often exceeds the annual cost of car repairs. Consider the advantages and disadvantages of an extended warranty below.

Tips for choosing the right car warranty

If you decide to buy an extended warranty, you’ll have many options to choose from.

Before purchasing anything, it’s important to compare warranty companies and understand each warranty’s price, coverage, and contract terms. Don’t hesitate to ask questions before purchasing a warranty.

Here are some things to consider when deciding on a warranty:

• Quotes: Get quotes from several companies to find out which provides the cheapest coverage.

• Coverages: Read each contract to learn about coverages and exclusions. Terms like “bumper to bumper” and “limited” can give you a clue about the coverage level.

• Deductible: Find out if the warranty has a deductible and how much you’ll pay out of pocket for each claim.

• Claims process: Make sure you understand the claims process, including whether the warranty company pays the repair bill directly or reimburses you for the cost.

• Customer reviews: Read reviews from current and past customers, specifically looking for any red flags about the company or its customer service.

• Company reputation: Read up on the company’s reputation and reviews, including its Better Business Bureau (BBB) rating and other online ratings, as well as any legal or consumer protection action taken against the company.

Car warranty FAQs