Decide whether you need an extended car warranty using our helpful guide.
If you’re considering purchasing an extended car warranty, an important first step is to know exactly what a car warranty is and how it differs from car insurance.
In this article, our review team explains the differences between a car warranty and car insurance and then helps you decide whether or not an extended car warranty is right for you.
In This Article:
- What Is A Car Warranty?
- How Is A Car Warranty Different From Car Insurance?
- Is An Extended Car Warranty Worth It?
- Dealership Vs. Third-Party Extended Warranty
- Our Recommended Extended Warranty Providers
What Is A Car Warranty?
A car warranty is a contract signed between a consumer and a dealership or third-party warranty provider that protects a vehicle from certain costly repairs. The types of repairs that are and are not covered by a car warranty are detailed in a warranty provider’s contract.
There are two types of car warranties: factory warranties and extended warranties. A factory warranty covers a new vehicle for a specified period of time or miles, whichever comes first. These warranties are provided free of charge by car manufacturers to encourage prospective customers to buy new vehicles.
An extended warranty is an optional warranty intended to protect your vehicle once your factory warranty expires. These warranties can be purchased before or after your factory warranty expires from a dealership or third-party extended warranty company.
How Is A Car Warranty Different From Car Insurance?
A common phrase used for a car warranty is “car warranty insurance,” but that term is inaccurate because a warranty is different from insurance.
A car warranty is designed to pay for natural, mechanical breakdowns which happen over time as your vehicle ages and gains miles. These breakdowns include issues with some of these systems in your vehicle:
- Air conditioning and heating systems
- Electrical components
- Powertrain components (engine, transmission, drivetrain, etc.)
- Technological systems (center console, GPS, cameras)
- Safety components (seat belts, airbags, etc.)
The purpose of car insurance is a bit different. As you may know already, car insurance is designed to repair your vehicle if it’s damaged in a collision or for other unnatural reasons, including tornadoes, hurricanes, and theft.
Because the protection offered by car insurance is so different from the protection offered by a car warranty, many car owners choose to purchase both car insurance and a car warranty.
Is An Extended Car Warranty Worth It?
Whether an extended car warranty is “worth it” or not depends on your individual situation and personal goals.
For example, if you cannot afford an unexpected, costly repair between $2,000 to $4,000, it is recommended that you consider an extended car warranty.
Owning a car warranty will protect you from having to foot a large bill in case of a major mechanical breakdown in your vehicle.
On the other hand, if you have enough savings to easily afford a $2,000 to $4,000 repair, it is probably not worth it to purchase an extended car warranty. There is a good chance that you will pay more money in the long-term with an extended warranty than just paying the repair bill.
For more information on this topic, we recommend that you read our article on whether extended car warranties are worth it.
Dealership Vs. Third-Party Extended Warranty
Prospective customers who decide to purchase an extended warranty often want to know what company they should buy their warranty from. Car manufacturers, such as General Motors, offer extended warranties as do third-party extended warranty companies.
In general, purchasing an extended warranty from a dealership will cost much more than an extended warranty from a reputable extended car warranty company because of the name recognition. One advantage of purchasing an extended warranty through a car manufacturer is that they will cover your vehicle’s repairs with brand-name parts.
However, our review team has found that extended warranties from third-party providers work just as well for most customers and also save them considerable amounts of money.
In addition, third-party extended warranty companies allow you to receive free quotes and sample contracts online, and they often provide higher coverage limits than extended warranties from car manufacturers do.
For example, while Chevrolet’s extended warranty offers protection up to a total of 5 years/60,000 miles, Endurance offers protection up to a total of 20 years/ 200,000 miles.
Below are our review team’s picks for the best extended car warranties.
Our Recommended Extended Warranty Providers
Our review team has examined several warranty providers, and we believe that Endurance and CARCHEX are two of the strongest options for our readers.
Below, we discuss both of these providers and how to decide between them.
Best Coverage: Endurance
Endurance offers direct-to-consumer extended warranties, which means that warranty services and claims are handled directly by Endurance. There is no middleman or underwriting provider. We named Endurance as the Best Overall provider.
Here are a few things our review team likes about Endurance:
- Direct-to-consumer model: Our review team appreciates Endurance’s direct-to-consumer model, which avoids the complexity and inconsistency of third party warranty administrators.
- Treats its employees well: Endurance was named a Great Employer at the 2019 Stevie Awards. The company was selected due to its “impressive set of employee benefits and activities, particularly given the size of the enterprise.”
- Company growth: Endurance made the Inc. 5000 list in 2019 as one of the fastest-growing companies in the U.S. This quick growth demonstrates that Endurance’s plans are appealing to many customers and that the company is capturing market share in its industry.
Best Service: CARCHEX
CARCHEX offers a total of five extended warranty plans, each of which can be customized. All plans include 24/7 emergency roadside assistance, gas delivery, trip interruption services, and lockout services.
Here are a few reasons our review team recommends CARCHEX:
- Solid reputation: CARCHEX is an eight-time Inc. 5000 Hall of Fame Honoree and received a Top Workplaces Award by the Baltimore Sun for seven consecutive years.
- Strong industry partnerships: CARCHEX has partnered with leading industry companies such as CARFAX, Kelley Blue Book, and Edmunds.com. This is a strong indication that they are a top extended warranty provider for automobile owners.
- Sample contracts and free, customized quotes online: CARCHEX provides sample contracts online so you can learn exactly what their plans would offer before you purchase one. Likewise, CARCHEX also allows you to receive a free quote on its website so you can discover what an extended warranty would cost for your vehicle.
Deciding Between Endurance And CARCHEX
Are you struggling to decide between Endurance And CARCHEX? Read our CARCHEX vs. Endurance article.
Read our other guides: