What Does an Extended Warranty Cover?

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What Does an Extended Warranty Cover?

If you’re buying an older vehicle, the chances are good that it doesn’t come with any kind of warranty coverage. Manufacturers’ warranties typically don’t last longer than ten years, and even then, warranties that lengthy are rare. Even certified pre-owned cars will likely be fairly new, so if you’re looking at buying a car made in the mid-2000s or before, you’ll have to purchase coverage on your own.

What Is an Extended Warranty?

The term “extended warranty” is actually often misused. It’s not a completely inaccurate term because car manufacturers will entice buyers to purchase pre-owned vehicles by offering extended warranty coverage. But that’s the key — manufacturers offer warranties, which are included in the cost of buying a car. What most people refer to as “extended warranty coverage” is actually “service contract coverage” or “service agreement coverage.”

Extended Warranty Coverage vs. Service Contract Coverage

There’s not much difference between the two on the consumer’s end, but there are still some differences to be aware of when car shopping. Generally, because consumers are purchasing their own vehicle service agreements, they get more choice in what the service agreement coverage actually involves. It may or may not cover powertrain, rust/corrosion, hybrid car-specific parts, and other options.

How Do Extended Warranties/Service Agreements Work?

Functionally they’re very similar. Vehicle service agreements and warranties are not insurance. Insurance is coverage for accidents, and warranties/service agreements are covered in case parts on the car break. Say the fuel pump quits working prematurely. This breakdown could be due to a design flaw or a defective part. An issue like this would be covered under warranty/service contract coverage. If the fuel pump were destroyed in an accident, that would be covered by insurance. It’s also important to point out that warranties/service agreements generally don’t cover routine maintenance items like tires, brake pads, oil changes, and the like. They also usually don’t cover interior or exterior trim pieces that are expected to experience lots of wear. Your car’s seats, for example, will most likely begin to get stained and torn just from you getting in and out so much and will not be covered by a warranty or service agreement. You’ll also usually get roadside assistance with extended warranties/service agreements. If your car breaks down, you can get towed to a shop (though a car under warranty will probably get towed to the dealer specifically), and you can get other types of assistance such as:

  • Flat tires repaired/replaced
  • Dead batteries jump-started
  • Entry to a locked car
  • Refueling

And you’ll also typically be given a rental car until your vehicle is repaired. Now, let’s highlight the differences in coverage between extended warranties and vehicle service agreements.

What Do Extended Warranties Cover?

Since extended warranties are offered by manufacturers and only cover what they want to cover, they may cover powertrain parts only, which would be the engine, transmission, driveshaft, differential — basically any parts responsible for making the car able to move. A manufacturer’s extended warranty may cover more than this, but in most cases, they’re pretty limited. Also, once the extended warranty runs out, that’s it. It’s done.

What Do Vehicle Service Agreements Cover?

Since the vehicle owner is purchasing the agreement themselves, they can choose the level of coverage they want. When they live in a dry climate, they may choose not to get rust/corrosion protection. If they are adept at fixing mechanical parts — doing things like replacing the suspension or rebuilding engine components — but don’t have the ability to service electronics, they may not opt to cover the powertrain. It’s up to the purchaser. By purchasing a service agreement, a car purchaser can even get “bumper-to-bumper” coverage if it wasn’t originally offered by the manufacturer. This level of coverage can take care of vehicle components the manufacturer was unwilling to cover, mostly because a car repaired under a warranty agreement is beholden to using manufacturer parts. Under service agreements, the owner can go to any repair shop they prefer and get parts that may be an improvement on those from the original manufacturer. Another big plus for vehicle service agreements is that the purchaser can apply coverage to any vehicle they’re purchasing. They can also renew when coverage runs out. Plus, the owner can transfer the remaining coverage to another party should they choose to sell their vehicle. Service contracts can last for astonishingly long periods of time and mileage. Eight years or 125,000 miles is not unheard of.

Get Protection from CarShield

With CarShield, you’re the one in control of your coverage, not the car manufacturer. You can select your level of coverage, whether you want to be protected for a certain length of time or mileage, or you want to protect specific parts of the car. We offer peace of mind so you can keep hitting the road day after day and not worry about the next breakdown. If you're ready to get the protection you need, contact CarShield today!

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