Extended Car Warranties

Everything You Need to Know Before Signing Up

What Is an Extended Warranty?

So, you purchased a new car from a dealership, and you notice it comes with an auto warranty that will cover replacement parts and repairs—for a limited period. This protection may come directly from the auto manufacturer or a trusted third party. This vehicle service contract includes the original warranty from the manufacturer as well as an extended protection plan.

The best-extended warranty products go above and beyond this limited time frame. It’s a service protection plan that extends the protection of your car for additional years or miles.

It’s important to note that an extended car warranty is also called a few other names among them being:

  • Service Agreement
  • Service Contract
  • Maintenance Agreement

Whatever providers call them, know it’s a prolonged warranty offered to vehicle owners in addition to the original or standard one. 

Car warranty deals can confuse even the most knowledgeable car owner. We will untangle the jargon so you can choose the best extended warranty to fit your lifestyle, car, and budget.

Read on to see what is covered, how each warranty works, and why you are better off choosing one over the other. If you don’t have the cash for bumper to bumper warranty, don’t worry. There is a service contract waiting with your name on it.  

Understand what you are paying for and how each warranty type can fit how you use your car. From new to a pre-owned vehicle, give yourself the mental TLC that comes with having your vehicle and your back covered.

Here are some common types of car warranties and their coverage:


Basic Warranty

Also known as “bumper to bumper” coverage, this is standard on new vehicles. Sometimes it can be transferred between owners if the car is sold while still under basic coverage.

Coverage length will depend on either a length of time or mileage. Common manufacturer coverage includes 3 years/36,000 miles, 5 years/50,000 miles, or even 10 year/100,000 miles of coverage. This will very much differ based on the manufacturer and is an important topic during the car buying experience.

  • Car parts that may break down due to wear-and-tear use or a manufacturing error
  • Parts that typically need replacements over time, such as batteries and tires
  • Damage caused by misuse
  • Routine services (oil change, etc)
  • Safety checks

Dealership Warranty

Car warranty types also include coverage from a dealership. Coverage here depends on the dealership and usually has stipulations. Terms and conditions are normally detailed in the contract and inform the buyer of what must be done to repair any parts that are eligible for coverage. Examples of conditions include having car services at the dealership where the car was purchased.


Adjustment Warranty

This is a type of dealerships warranty and covers issues that can occur in the first few weeks of car ownership. Typically this is a limit of 90 days, but that can vary based on dealership policies. Covered issues include small adjustments, brake alignments, leaks, squeaks, rattles, and other little hindrances. In this type of coverage, the dealership will need to be the one to fix the problem. That is an important factor if purchasing a vehicle far away from home.


Extended Warranty

This warranty is also known as an aftermarket warranty and covers the car for a period of time after the manufacturer warranty has ended. This warranty comes at an extra cost to you.

Types of extended warranties for cars will vary based on the company and may possibly not be offered at all. Each manufacturer website details the extended type and will almost always cover less than the original warranty. Some types of extended warranties for cars and their coverage levels include:

Highest level of coverage and is also known as comprehensive coverage

Second highest level of coverage and lists what is covered in detail.

This covers what isn’t included in powertrain (see below) and is typically based on length or mileage. When wrap and powertrain coverage combines, it equals exclusionary.


Powertrain Warranty

This is an example of a state component warranty because the policy will only list what is covered and exclude everything else. These types of car warranties can also cover major parts of the vehicle, including:

  • Transmissions
  • Engine
  • Transaxle Parts

In the event of a manufacturer error, these parts should be replaced at no cost to you. Companies sometimes offer this type of car warranty without a deductible, but a deductible is possible. Another name for this type is sometimes called the drivetrain warranty.


Rust and Corrosion Coverage

This is not typically included in basic warranties from dealerships, but can be found with some manufacturers. As the name suggests, it covers rust and corrosion, typically after rust has made a hole in the metal. This coverage can sometimes only be applied to specific parts of the vehicle, like from the window down, so knowing the coverage here is important.


Emissions Warranty

Any emissions issues from a certain time or mileage point can be covered under this type of insurance. It might be under the basic warranty or it might be offered separately. Finding this separate from the basic warranty is rare.


Statutory Warranty

Statutory warranty applies based on the purchase price of the vehicle. It is automatic when buying from a dealership but not in a private sale. It is a legal obligation so you’ll see it in used car contracts and coverages. It is one of the standard types of used car warranties. The length of coverage will depend on the age of the vehicle and mileage of the vehicle.

  • Cars, station wagons, campervans, motorcycles, etc.
  • Significant rust
  • Break defect
  • Oil leaks
  • Engine defects
  • Routine services
  • Tune-ups
  • Batteries
  • Tires
  • Any accessories
  • Defects from accidents or vehicle misuse

“Secret” Car Warranties

Depending on many factors, some car manufacturers’ have “secret” coverage policies unknown to customers. Sometimes they have the name “policy adjustments” or “goodwill service.” Essentially, if a major problem occurs outside of the factory warranty window, a phone call to customer service might be a fast route to find a solution. It helps if you are a loyal customer or if the make and model has had a history of this issue in the past.

Know Before You Go and Ask Questions

Yes, there was a lot just discussed and a lot to process. Walking into any dealership with at least this basic knowledge has already helped you get ahead of the game. Don’t be afraid to ask questions and really push to make sure you are getting the right amount of coverage for the best period of time at the right price.

A car is a significant investment and a warranty is a pledge to the life of the car. If a company is willing to cover a car for a longer period of time, not only are they committed to quality customer service, they are willing to attest to the value and longevity of the car’s ability to serve you. Know the basic types of car warranties before entering the dealership and you will walk out a happy and satisfied new car owner.

knowing what to expect at the dealership