How Do Auto Warranties Work?

How Do Auto Warranties Work?

Image by Freepik

When purchasing a new or used car, one of the key considerations is the warranty coverage that comes with the vehicle. A car warranty is essentially a promise from the manufacturer or dealer to repair or replace certain components of the vehicle, should they break, within a specified period of time or mileage. Having a warranty in place can provide peace of mind and financial protection against unexpected repairs, but it’s essential to understand the different types of warranties available and what they cover. Here’s an introductory guide to help you navigate the world of car warranties.

Types of Car Warranties 

There are several types of car warranties commonly offered by manufacturers and dealerships.

  • Manufacturer’s Warranty: Also known as a factory warranty, this type of warranty is provided by the vehicle manufacturer and typically covers the vehicle for a specific period of time or mileage limit, whichever comes first. Manufacturer warranties often include a bumper-to-bumper coverage period and a separate powertrain warranty that covers the engine, transmission, and other essential components.
  • Extended Warranty: An extended warranty, also known as a service contract or vehicle protection plan, is optional coverage that can be purchased separately from the manufacturer or dealership. Extended warranties extend the coverage period beyond the manufacturer’s warranty and may offer additional benefits and services, such as roadside assistance or rental car reimbursement.
  • Certified Pre-Owned (CPO) Warranty: When purchasing a certified pre-owned vehicle, it may come with a warranty provided by the manufacturer or dealership. CPO warranties typically offer similar coverage to a new car warranty and may include additional perks such as extended roadside assistance and vehicle inspection reports.

Coverage Types

The specific components and systems covered by a car warranty can vary depending on the type of warranty and the manufacturer’s terms and conditions. Common items covered by warranties may include:

  • Engine
  • Transmission
  • Drive axle
  • Suspension
  • Steering
  • Electrical system
  • Heating and cooling system
  • Emissions components

It’s also important to carefully review the warranty documentation to understand what’s covered and which exclusions or limitations, such as the following, may apply:

  • Duration and Mileage Limits: Car warranties typically have a duration limit, expressed in years, and a mileage limit, expressed in miles. For example, a manufacturer’s warranty may provide coverage for 3 years or 36,000 miles, whichever comes first. Extended warranties may offer coverage for additional years or mileage beyond the manufacturer’s warranty.
  • Exclusions and Limitations: While car warranties provide valuable coverage for certain components and systems, they may also have exclusions and limitations that apply. Common exclusions may include wear and tear items such as brake pads, tires, and wiper blades, as well as damage caused by accidents, misuse, or neglect. Additionally, some warranties may require the vehicle to be maintained according to the manufacturer’s recommended service schedule to remain valid.
  • Transferability: In many cases, car warranties are transferable to subsequent owners if the vehicle is sold or transferred during the warranty period. This can enhance the resale value of the vehicle and provide added peace of mind for buyers. However, it’s important to review the warranty terms and conditions to understand any transferability restrictions or fees that may apply.
  • Claims Process: In the event of a covered repair or malfunction, the claims process for a car warranty typically involves taking the vehicle to an authorized repair facility or dealership for diagnosis and repair. The repair facility can communicate directly with the warranty administrator or provider to coordinate the repair and ensure that any covered expenses are paid according to the terms of the warranty.

Car warranties provide valuable coverage and peace of mind for vehicle owners by protecting against unexpected repairs and expenses. Be sure to review the warranty documentation carefully and ask questions if you’re unsure about any aspect of the coverage. With the right warranty protection in place, you can enjoy your vehicle with confidence and peace of mind knowing that you’re covered against unexpected repairs and expenses.

Resource Links

Car Warranty Guide: Everything You Need to Know” via Kelley Blue Book

What are the differences between a car warranty vs. car insurance?” via Progressive