Best Car Warranties Based on In-Depth Reviews

What is a car warranty?

A car warranty covers repairs to specific car parts or systems, typically caused by manufacturer defects or issues with installation. Unfortunately, they generally don’t cover regular maintenance or normal wear and tear. 

New cars come with a factory warranty, or manufacturer’s warranty, which usually covers these repairs for around three years or 36,000 miles, whichever comes first. However, you can also purchase extended car warranties from an after-market warranty company that will last for a longer period of time after the manufacturer’s warranty ends.

How do car warranties work?

Car warranties work similarly to car insurance in that you will need to file claims to access your benefits. You first need to bring your car to a repair shop. Most car warranty companies allow you to bring your car to any ASE-certified shop, but others have limited networks, so you need to find an eligible shop to do the work.

When a mechanic figures out the issue and estimates costs, they contact the warranty company to get the repairs approved. In some cases, an adjuster will need to see your car in person. In addition, some warranty providers will make you file a claim and wait for a check to be mailed, which can lengthen the time it takes to perform the work.

However, the best car warranty companies will send payment directly to your mechanic to get the repairs done as quickly as possible.

What does a car warranty cover?

Car warranties differ from car insurance in that they don’t cover damage due to car accidents or other events. Instead, they focus on damage caused by manufacturer defects during the normal use of the vehicle. Each warranty has its own list of parts, systems and services that it will cover. The main types of car warranties include:

• Bumper-to-bumper warranty: Covers just about everything except commonly damaged items due to normal wear and tear, like brakes, tires or windshield wipers.
• Powertrain warranty: Covers the engine, transmission, driveshaft, transaxle, axle shafts, differentials and transfer cases
• Corrosion warranty: Covers body panels that are rusted through, although some will cover superficial rusting as well
• Hybrid or EV warranty: Covers the electric motor and batteries in hybrid or electric vehicles
• Emissions warranty: Covers emissions control components, such as the catalytic converter or control modules

Many car warranties also offer perks like roadside assistance or rental cars.

Car warranties vs. service contracts

Consumers should be aware that extended car warranties aren’t really warranties, but rather service contracts that take effect right after a car’s manufacturer warranty ends. Manufacturer warranties are generally included in all new vehicle purchases and cover specific repair costs during a specified period or mileage.

Manufacturer warranties typically come with two policies: bumper-to-bumper, which protects almost everything from the front to the back bumper of your car, and powertrain, which covers the car’s engine and transmission.

Warranties remain valid until your car reaches a certain mileage or years, with bumper-to-bumper typically lasting 3 years or 36,000 miles and powertrain lasting five years or 60,000 miles, whichever comes first. Once the warranty expires, customers are left without protection, which is where extended car warranties, or rather, vehicle service contracts, come into play.

These service contracts offer to extend the same coverage a manufacturer warranty would cover but at an additional cost and are sold by car dealers and third-party companies alike, offering different plans at different prices depending on the one you purchase.

Car Warranties vs. Car Insurance

Extended car warranties differ from car insurance in that they cover repair costs from your car breaking down, while car insurance is meant to protect your automobile from theft, vandalism, disasters, and accidents, including any damage you cause to other car owners, public or their property. Additionally, all cars are required to have car insurance by law in the United States, while extended car warranties are optional.  

Who Benefits from an Extended Car Warranty?

Any car owner whose manufacturer’s warranty is about to expire can benefit from an extended car warranty. Whether your car is new or old, or whether you are keeping or selling it in the long run, having an extended car warranty can protect your car from the unexpected.

When Is the Best Time to Buy an Extended Warranty?

It’s important to mention that you can buy an extended car warranty at any time before or after your car’s manufacturer warranty expires. There is no rush to buy this service, especially since all new cars and most certified pre-owned cars come with warranties. Don’t feel forced to buy an extended warranty from the dealer and take your time to research extended car warranty companies and their policies.

However, it might be cheaper and more secure to buy an extended car warranty before the original warranty ends, since overall costs depend on a car’s age, mileage, make and model. This means that the older a car is and the more mileage it has, the harder or more expensive an extended car warranty will be.

Think Before You Buy

Depending on your particular situation and on how long you plan to keep your car, getting an extended car warranty might not be the best idea. For example, when buying a new car, if you plan to sell or trade it in after five or six years, getting an extended car warranty wouldn’t be a good choice since manufacturer warranties usually last that period of time.

But suppose that you want to buy a certified pre-owned car (CPO), which come with at least a one-year warranty, once that warranty expires, you’d be on your own if your car malfunctions. Getting an extended car warranty would be a good choice.

If you conclude that an extended warranty coverage isn’t for you, a great alternative would be to save up a specified amount every month and deposit it into an emergency fund. This would prepare you for the worst, although you’d have to wait a while until you have enough money to pay for unforeseen repairs.

A Breakdown of Car Warranties

Now that we know the difference between an extended car warranty, a manufacturer’s warranty, and car insurance, we can look at the specifics of what an extended car warranty is. There are many elements you need to keep an eye on when looking for an extended car warranty plan that works for you, including plan coverage, exclusions, limitations, warranty length, transferability policies, enrollment period length, and refund policies.

Plans

Companies that sell extended car warranties commonly offer three types of plans, although coverage, exclusions, and limitations of these plans vary by company.

• Powertrain warranty: the most basic of all extended car warranties, covering only the main vehicle components that generate power in a car, such as the engine, transmission, and drive axle assembly. It is the cheapest option but the most limited.  

• Inclusionary warranty: also known as named parts warranty, this option only covers parts that are listed in the terms of the contract. If any other part not listed in the contract fails, then the consumer must pay for its repair out-of-pocket. These types of plans are middle-tier, being more inclusive in coverage but still limited in scope. Inclusionary warranties are best for car owners who want to cover specific parts of their car and prefer to spend less in the process.

• Exclusionary warranty: also known as bumper-to-bumper, it works just like a manufacturer’s warranty, covering so many parts that it’s much easier for the contract to state which aren’t covered, hence the name. This is the most complete coverage that an extended car warranty offers.  

Exclusions

No matter what type of plan you choose for your car, there are a number of things that extended car warranties usually don’t cover. It’s common for plans to exclude anything that deals with a car’s routine maintenance, including tune-ups, any adjustments, alignments, tire replacement, oil and filter changes, and fluids like coolant and refrigerants. Additionally, parts that can break due to wear and tear, like brake pads, tires, and clutches are usually not included, or they can be added into the plan at an extra cost. Additionally, contracts might deny claims from parts that were damaged by oil leaks, frost, blockages from sludge or other materials, and any type of contamination.  

There are also some exclusion clauses that prevent parts from being fixed. The two most noticeable are “betterment” and “consequential loss” clauses. Betterment refers to parts that, if added, would improve the condition of your car while increasing its value, and consequential loss means any damage to a part that’s covered that was caused by a part that isn’t covered.

Finally, extended car warranty plans usually don’t cover cars used for commercial means, such as taxis, commercial delivery vehicles, and cars used for Uber, but some offer it at an additional cost.

Premiums & Deductibles

When it comes to extended car warranties, premiums and deductibles will always depend on the company you choose, and on the make, model, age and mileage of your car. A standard deductible costs around $100, and are charged either on a per-visit or a per-repair basis. Deductibles can be lessened or even waived depending on a company’s contract terms. Just like with other warranties, the cost of a premium and a deductible can be agreed upon by you and the extended car warranty provider, a high deductible leading to lower premiums and vice versa.   

Contract Renewal

You should know that extended car warranty companies can reserve the right to renew or suspend your contract, so it’s a contract renewal is neither automatic nor guaranteed, and most companies have the same eligibility requirement for renewals as they do for new policies. If for any reason your vehicle no longer meets one of the requirements for the extended warranty, you may be out of luck.

Prices Are Negotiable

Extended car warranty costs aren’t set in stone and can be negotiated between you and the dealer, especially since they aren’t included in the total cost and are considered add-ons to a car’s purchase. Whether you are buying a new or a used car, remember to always negotiate the car’s price before negotiating any extended warranties, since some companies usually tag costs together to mask prices and prevent you from negotiating.

To have the advantage on this negotiation, you should have at least two or three quotes from different companies so that they have to compete with the prices you’ve found. If you haven’t done your research and you are about to strike a deal on your car, you can mention that you’ll do some comparison shopping first, since you’re not required to buy an extended car warranty on the spot. Always try to lower the cost of an extended warranty, since the first quote companies or dealers give you is never the lowest.  

Used Cars

Extended car warranties can be very useful with used cars, since older vehicles have higher chances of breaking down than new ones, especially if the make or model are known to cause troubles during later years. The problem is that, depending on the age or mileage, used car might have a harder time getting an extended warranty, or might end up being an expensive venture.

Vehicles outside of their original manufacturer warranty with less than 100,000 miles driven will generally have no problem obtaining an extended policy, but beyond this number, it’s up to the warranty provider to approve or deny coverage, and its overall costs can end up being expensive.

If you’re interested in getting an extended car warranty on a used car, the first step is to check the level of coverage your vehicle qualifies for, and if the cost is justifiable. If you are buying a used car, you should also check the car’s physical condition to see if there are any red flags. You should also search the vehicle’s history to see if it has been in any accidents or has had any title problems.

Certified Pre-Owned (CPO) vs. As-Is

Car dealers can sell you two types of used cars: CPO and as-is. Although both are used vehicles, they are far from similar. CPO vehicles are often limited to newer used car models, and they go through a certification process managed either by the manufacturer or another qualified certifier. During the certification process, a used car is inspected and refurbished to meet specific manufacturer standards, meaning that the vehicle will be sold at almost new conditions. When a car is sold as CPO, its history and all benefits are included in its “buyer’s guide” sticker.

CPO vehicles certified by manufacturers cost more than those certified by independent entities, but they all come with added benefits like manufacturer or extended warranties, roadside assistance and special financing. For example, the Mitsubishi CPO program grants certified vehicles a 10-year/ 100,000-mile powertrain warranty, roadside assistance and a 5-year/60,000-mile bumper-to-bumper warranty.

On the other hand, vehicles that are sold as-is rarely come with any benefits, and they are sold, as the name implies, as they are. The legal term “as-is” means that the buyer is purchasing a used vehicle and liberating the seller from any liability of the car’s physical and mechanical conditions. Although buying a used car “as-is” may not seem as ideal as a CPO, these vehicles are less expensive and they can benefit from extended car warranties, although they aren’t included in the price and must be bought separately.

What To Watch Out For When Buying A Car Warranty

Keep Maintenance Records

This is one of the most important things to keep an eye on with your extended car warranty, since not having an organized record or being unable to provide accurate information about your vehicle and its maintenance will result in the denial of any coverage. Companies require you to do routine maintenance based on the manufacturer’s recommendations, described in the car’s owner manual. Since each manual has different servicing recommendation, and since all are based on specific driving habits and weather conditions, it’s important for you to read them thoroughly and carry the one that applies to you and your driving. Keep receipts from all of your routine checkups, oil changes, and any other maintenance requirements, since companies will ask for proof that you’re keeping up with maintenance.

State Requirements 

During our research we noticed that almost every company had its own state clauses and limitations in their service contracts. The clauses amend certain aspects of the contract, including cancellation protocols and refund policies, claim protocols, and limitation and liability amendments. Because not every company offers their services in every state and because they all have different contracts and policies, it’s important to check on this section to see how any amendments apply to you as a customer.  

Read and know your car warranty contract

Always read your contract carefully, since this document will determine everything about your experience as a customer. Know what it covers and up to what limit, and know all exclusions so that there is no confusion when deciding when and when not to file a claim. Compare contracts from different companies and see which one benefits you and your vehicle most. 

Be Careful with Dealer Sharks and Scammers

Just like with other service industries, the extended car warranty business suffers from aggressive sellers wanting to meet their quotas and from scammers wanting to take advantage of unsuspecting customers.  To help you avoid a negative experience when searching for an extended car warranty, you can take some preemptive measures.

Be careful with dealers or representatives that pressure you into buying a warranty. These representatives use pressure tactics to make customers think that they are missing out on a great deal if they don’t agree to an offer on the spot. Techniques include speaking fast, which leads customers into buying a plan without room to ask questions, and limited-time offers, which they use to create a sense of urgency on the customer.  Remember that extended car warranties are not obligatory and that you can buy one at any time, so there is no hurry when buying one.

Be wary of phone scams, whether they are done by a real person or an automated system, also known as robocalls. In these calls, scammers will pose as representatives of your car’s manufacturer or a service contract company and will state that your warranty is about to expire and that you should immediately renew it. During these calls, you will be asked to provide personal information like your credit card and social security numbers, which is already a red flag. Never give any personal info by phone, especially if the call seems suspicious. Instead, check for yourself to see if your warranty is about to expire, and contact your provider directly.

Hassling Quoting Process

You might think that getting an extended car warranty quote is as easy as inputting and submitting your information online, but car warranty companies tend to make the experience harder than it should. Because they want to lure customers into a sale, companies usually don’t send you a direct quote to your email, but rather urge customers to call them for one. From our experience, only one company, Autopom!, sent us an online quote without the need to call them afterwards. 

Once they have you on the phone, they will break down the warranty costs and try to convince you to subscribe, arguing that all plans have a 30-day money back guarantee, so you need to be prepared in case this happens. We experienced this with all of the companies we vetted, including those in our top list, so this tendency isn’t exclusive to some companies.

Unfortunately, even after you decline a subscription, it doesn’t mean that companies won’t call you, since the industry is infamous for its follow up calls. From our experience, no matter how we handled a phone call (let it go to voicemail, decline an offer, or call for information), we were called more than twice by each company, with extremes weighing as much as four calls a day for three days straight. Unfortunately, you have to be willing to accept these calls if you want a quote, since submitting or calling for one grants companies the right to call your phone at any time. 

Always get 3 car warranty quotes before buying a plan

We always recommend customers to shop around when deciding on any type of warranty. Never settle for one company, but rather get quotes from at least three companies to evaluate in terms of policies and pricing. Since policies from the extended car warranty industry are so diverse, and since pricing varies depending on the age, mileage, make and model of your car, getting quotes from different companies will help you pin down a policy that best works for you.