Updated: April 2016
If your car carries a warranty, it may help protect against certain types of problems with your car — separate from what your car insurance policy covers. However, it's important to know that your car warranty and your car insurance are two very different types of protection. It's good to understand the difference between the two so you're not confused if you need to use either one.
The biggest difference between a car warranty and car insurance is the kind of protection each typically offers. A warranty is designed to pay for certain types of mechanical breakdowns (parts and labor costs), according to Edmunds. These could be malfunctions due to manufacturing defects or issues with certain car parts, says Edmunds.com. Car insurance, depending on the coverage you choose, may help repair your vehicle if it's damaged in a collision or by some other cause, such as theft, fire or a natural disaster.
There are a couple of different types of warranties: a new car warranty, usually issued by the car's manufacturer, and a used-car or extended warranty that you may be able to purchase from either your car's manufacturer or a third-party company.
A new car warranty is the car manufacturer's promise to help pay for replacement parts or covered repairs during your specified warranty period, according to Kelley Blue Book. This warranty is usually automatically included in the initial cost of your car. According to Edmunds, new car warranties can last from three years or 36,000 miles to 10 years or 100,000 miles. Exactly what is included in the warranty can vary from company to company, so it's important to read your warranty documents carefully, suggests Edmunds.
New car warranties usually consist of two parts: "Bumper-to-bumper" coverage typically includes items like your car's electronics or air conditioning system. This part of your warranty typically won't cover items that wear out due to regular use, such as tires and brake pads, explains Edmunds. The "power train" portion of the warranty typically covers the car's engine and transmission.
An extended warranty is a policy you can buy to extend the length of your new warranty or to cover a used car. These warranties may be offered either by the car's manufacturer or an outside company. Depending on the policy, says Edmunds, you may find that some of the items that commonly wear out on cars (wiper blades, tires, brake pads) aren't covered. Your warranty may also require you to pay a deductible before the warranty begins paying out for repairs.
No matter what kind of warranty you have, it isn't a license to stop taking care of your car. Warranties typically won't pay for routine maintenance, like oil changes and fluid top-offs, according to Angie's List. In order to keep your warranty in force, the Federal Trade Commission (FTC) recommends servicing your car at all the required intervals and keeping good records of all the work that's been done.
Car insurance may help pay for damage to your car as the result of collision or some other cause, like a fire or theft. Your policy likely won't cover problems due to mechanical or equipment breakdowns.
Car insurance may also help cover much more than just damage to your car. Consider the following coverages that are typically available on a car insurance policy:
- Liability coverage: May help pay for someone else's medical bills or damage to their property (such as their car or house) caused by an accident where you are at fault.
- Collision coverage: My help pay to repair or replace your car if it's damaged in a collision with another car or object, regardless of fault.
- Comprehensive coverage: May help pay for damage to your car caused by things other than a collision, such as fire, theft, vandalism, hitting a deer or falling objects.
- Uninsured or underinsured motorist coverage: May help pay for damage to your car if you're hit by a driver with inadequate insurance or no insurance at all.
- Medical payments coverage: May help pay for medical costs to you and passengers in your car in case of an accident.
- Personal Injury Protection (PIP): May help pay for medical bills if you're injured in a car accident. (Not available in all states.)
Along with your car warranty and auto insurance, another "safety net" you may want to consider is roadside assistance. This type of program may help tow your car if it breaks down, or offer services like battery recharging, flat-tire repair and more.
You may be able to access roadside assistance on an as-needed basis, through a membership program or via optional towing coverage as part of your auto insurance policy.
For more details on the differences between car warranty and car insurance coverage, talk to a local insurance agent.