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Factory and Third Party: Is Your Factory Warranty Enough for Your Car?

New vehicles have a factory warranty. Many consumers opt for an extended warranty that is meant to cover maintenance and repair costs after the factory warranty expires. The extended warranty does not have to be purchased before the manufacturer’s warranty expires.

Not all extended warranties are bumper-to-bumper. It is essential to understand what an extended warranty covers and what it does not.

What Is Covered by an Extended Warranty?

Many consumers have the impression that all extended warranties are bumper-to-bumper coverage. A full-coverage plan is an option. Consumers can also choose a plan covering only the vehicle’s major systems.

Below is a list of common things an extended warranty covers

  • New and Used Cars
  • Major and Minor Parts
  • Additional Benefits

As used cars carry a higher likelihood of need significant repairs, the first major repair usually pays for the extended warranty. Maintenance plans help used car owners keep vehicles on the road longer.

New car owners focus more on protecting their investment and addressing small repairs that occur. A dent or ding is a major issue to a car owner who is interested in a premium auto protection plan.

Standard auto protection plans typically cover common repairs to minor and major vehicle parts. The vehicle service contract will likely include such things as transmission or engine failure and an air conditioner that breaks down.

Other services that may be covered are electronic components and brakes. Read the fine print of an extended warranty and choose a plan that includes what you need.

Some providers like Carchex offer additional benefits such as

  • No money down, low monthly payments
  • Plans customized to the customer’s driving habits and budget
  • Time frame and times suited to the needs of the customer
  • 24/7 roadside assistance
  • Hybrid component coverage
  • Easy to understand contracts

How Long Is an Extended Warranty in Effect?

When dealing with vehicle warranties, length of service is something to take into consideration. Some warranties cover the entire vehicle. Others place limitations on specific components and parts. Service contracts covering everything are more expensive.

Mileage Exclusions

Many protection warranties cover the vehicle for a certain length of time or a number of miles on the odometer. An example might be five years or 50,000 miles.

Waiting Period

It is not uncommon for a service contract purchased separately from a manufacture warranty to require 30 days or a thousand miles before it can be used.

How Are Claims Handled?

Similar to health insurance, warranty providers often have a network of repair shops and mechanics for owners to use. Repairs outside the system may be covered only to a specific dollar amount or not at all.

The FTC has a website that contains advice about filing a claim with a service contract provider. It is recommended to ask if prior authorization is needed for any towing service or repair work before selecting an auto repair shop.


An extended warranty is available for both new and used cars. New car owners want to protect their investment. Used car owners want to save money on necessary repairs. Not all warranties are alike in what they cover. They can be bumper-to-bumper or coverage for specific components or parts. Prices vary depending on the coverage. There are likely preferred networks that handle claims.

Peter Christopher

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