When you buy a car at a dealership, a salesperson will likely offer you the option to purchase an extended warranty for your new ride. But are protection plans worth it?
In this article, we’ll go over the ins and outs of car protection plans, help you decide whether added coverage would be worth it for your vehicle, and let you know how to find a reliable plan from one of the best extended car warranty companies.
For some, car protection plans can bring peace of mind and provide a financial safety net. For others, extended warranties may be an unnecessary expense. When deciding whether you should purchase extra vehicle coverage, consider your car’s reliability and what your cost options are.
The best place to start is to figure out how much a plan might cost you. You can start comparing free quotes from the industry’s highest-rated warranty providers below.
Best Extended Car Warranty Companies
We reviewed every major warranty company for coverage, affordability and more. Here are our recommendations.
What is a Car Protection Plan?
A car protection plan, also called a vehicle service contract or extended warranty, is a contract that promises to pay the cost to repair or replace specific car components. There are typically two types of contracts: exclusionary and stated-component coverage.
In an exclusionary plan, every part of the car is covered except for a specified list of exclusions. Common exclusions for these types of plans are:
- Wear-and-tear items like wiper blades, brake pads and shock absorbers
- Non-mechanical components such as exterior trim, upholstery and tires
- Damage caused by improper maintenance or misuse
- Damage caused by an accident or act of nature
Stated-component contracts specifically list each item covered and typically cover fewer parts than exclusionary, bumper-to-bumper extended warranty contracts.
For both types of contracts, customers are instructed to take their vehicles to certified repair facilities if unexpected repairs are needed. The repair shop will contact your plan administrator with the damage details, and the administrator will pay the repair costs, minus any deductible.
Should You Buy a Vehicle Protection Plan?
Whether a car protection plan is worth it for you depends on your car’s reliability and your personal financial situation. If you drive an unreliable vehicle that’s more prone to mechanical breakdowns, an extended warranty may be a great investment. But, if you’re able to set aside money in your own personal vehicle repair savings account, you may end up saving in the long run.
Extended Warranty Pros and Cons: Are Car Protection Plans Worth It?
The chart below describes some reasons you may or may not want to purchase a protection plan for your vehicle.
| Pros | Cons |
|---|---|
| Shield against sudden and expensive repair bills | May end up paying more for your warranty than you would pay out of pocket for repairs |
| Provide peace of mind on the road | All contracts have exceptions, so not every component and breakdown is covered |
| Help you plan and finance vehicle repair costs over a longer period of time | Need prior approval for repairs and may find poor service if you pick the wrong company |
| Include benefits like roadside assistance, trip interruption coverage and rental car reimbursement | May never use the coverage you pay for |
Drivers that decide to purchase an extended auto warranty should be sure to look for a reliable provider.
What to Look For in a Car Protection Plan
When looking for a vehicle protection plan, cost and company reputation are among the most important factors to consider.
Vehicle protection plans are designed to reduce the financial stress of car ownership. It’s important to compare costs from multiple providers to find what works best for you. You can also check your vehicle’s average annual repair costs on a site like RepairPal to determine if the price of a contract is worth it.
We found that the average cost for an extended car warranty can range anywhere from $1,700 to $4,000 depending on the vehicle, coverage level and term length. Savvy customers should try not to pay more than $700 per year of coverage. For example, if you have a five-year contract, you shouldn’t shell out more than $3,500 total. A low-mileage vehicle that’s still under its original manufacturer warranty should cost no more than $600 per year to cover.
In addition to price, be sure to research your potential warranty company’s customer satisfaction by reading online reviews and looking at Better Business Bureau (BBB) profiles. Take into consideration the volume of complaints and negative reviews a company has received. A certain number of unhappy customers is to be expected, especially for a large company that administers tens of thousands of contracts. But if a smaller company has received tons of negative feedback, it may be best to choose a different provider.
Keep in mind that most every extended warranty company will have a number of customer complaints about denied claims. Take these with a grain of salt, as they can result from customers not reading or understanding their contracts correctly. The best extended warranty companies take care to address these complaints to the customer’s satisfaction.
Are Protection Plans Worth It?
Car protection plans may be a good idea for drivers who want a financial safety net and added peace of mind on the road. In fact, a recent Pegasystems Inc. survey showed 60% of drivers who own a car protection plan had benefited from coverage within the past year.
It can cost upwards of $4,000 to fix certain components, and an extended warranty can act as a guarantee that you’ll be protected against such a high, unexpected bill. However, if you’re able to save money on your own, it may be a more cost-effective option, as not all drivers will experience major breakdowns.
Top Recommendations for Extended Car Warranties
As mentioned, you shouldn’t purchase an extended car warranty without first researching your provider options. We’ve reviewed every major extended warranty provider, collecting data on costs, customer reviews, and contracts to rank the best companies. Two good places to start searching for extended warranties are Endurance and CARCHEX.
Endurance: Best Provider
Endurance offers the highest-quality plans in the industry, as well as the most robust benefits package. Drivers who choose Endurance warranties not only get standard benefits like roadside assistance and trip interruption coverage, but they also get a free year of special perks like tire replacements, identity theft protection and personal concierge services through the Endurance Elite Membership program.
To get an idea of how much an Endurance warranty costs, we reached out to the provider for a quote for a 2018 Honda Civic with 30,000 miles on it. We were offered the following terms for a Supreme plan, which is the provider’s exclusionary, bumper-to-bumper warranty.
- Term length: 6 years/71,000 miles
- Financing: $74.60 per month for 36 months
- Down payment: $161.35
- Deductible: $100.00
- Total cost: $2,846.95
- Cost per year of coverage: $474.49
You can learn more about this provider in our full Endurance warranty review. To see how much an Endurance plan would cost for your vehicle, get a free quote below.
CARCHEX: Best for High-Mileage Cars
CARCHEX is an industry leader with an established reputation and notable partnerships with companies like Edmunds.com, CARFAX and Kelley Blue Book. This provider offers five levels of coverage, including a specialty plan for high-mileage cars.
When we asked CARCHEX for a quote on a Titanium plan – its highest level of coverage – for the same 2018 Honda Civic, we were offered the following terms:
- Term length: 7 years/125,000 miles
- Financing: $107.25 for 24 months
- Down payment: First month’s payment
- Deductible: $100.00
- Total cost: $2,574.00
- Cost per year of coverage: $367.71
Read more in our comprehensive CARCHEX review, and get a free, personalized quote from CARCHEX by clicking below.
Methodology
The Detroit Bureau collects data from every major car warranty provider to formulate rankings of the best warranty companies. Our in-depth rating system takes into account coverage, pricing, transparency, customer satisfaction and ratings from industry experts. Each provider is given a weighted score in five categories, as well as an overall score out of 10.0.
We recommend auto warranty companies based on these rankings, but we also encourage you to perform your own research and compare quotes to find the best coverage.
