What is a car repair warranty, and do you need one? In this article, we’ll provide basic information on what’s covered by a car warranty, how much they typically cost and whether coverage is worth it. We’ll also give you recommendations on where to get the cheapest protection.
Our researchers have compiled information on every major car repair warranty provider on the market, evaluating price data, plan information, customer reviews and more to rate and rank the best extended car warranty companies.
Start getting free, personalized quotes below so you can compare coverage for yourself.
What is a Car Repair Warranty?
A car repair warranty is one way to finance the cost of unexpected car repairs. You can purchase coverage through your vehicle manufacturer or a third-party company. Your car repair warranty administrator will pay for the parts and labor required to fix covered vehicle parts after they fail.
Car repair warranties are also called extended warranties, vehicle service contracts and vehicle protection plans. It’s important to note that car repair warranties are not insurance. Car insurance covers damage after a collision or act of nature, and auto warranties cover certain repairs in the event of a mechanical failure.
The specific components covered by a car repair warranty will vary depending on the particular contract. Most providers offer a range of options. Two common levels of warranty protection are powertrain warranties and bumper-to-bumper warranties:
- Powertrain warranty: Covers vital powertrain components such as the engine, transmission, drive axle and transfer case
- Bumper-to-bumper warranty: Covers nearly all vehicle components, including electronics and navigation systems
Car Repair Warranty Fine Print and Exclusions
The details of each car repair warranty differ from provider to provider. However, most extended warranty contracts have similar conditions and exclusions.
Typically, to keep warranty coverage valid, vehicles must be serviced in accordance with their factory-recommended maintenance schedule. Car repair warranty contracts do not usually cover damage that is caused by improper maintenance, misuse or neglect. They also do not cover scheduled maintenance, so these services will need to be paid for out of pocket.
Additionally, certain wear-and-tear components are almost always excluded from coverage. Examples of commonly excluded components are:
- Brake pads and shoes
- Shock absorbers and struts
- Wiper blades
- Headlamps and bulbs
- Interior upholstery
- Catalytic converter
- Exterior trim
- Aftermarket components
How Long Do Car Repair Warranties Last?
The length of coverage for a car repair warranty can be anywhere from three months to 15 years. Most contracts cover vehicles between three and seven years.
Typically, contracts can be canceled at any time. If you decide to sell your vehicle before your coverage expires, it may be able to be transferred to the next owner.
Should You Buy a Car Repair Warranty?
Unlike car insurance, a car repair warranty is not required by law. In some instances, however, car repair warranties are required for leased or financed vehicles. If a car salesperson tells you a warranty is required for financing, make sure to contact your lender to verify this before purchasing coverage. According to the Federal Trade Commission (FTC), falsely claiming that a car repair warranty is necessary for financing is a common dealership practice.
Though they are not required, many customers choose to purchase and are happy with their extended car repair warranties. In a recent survey by Pegasystems, Inc., 60% of drivers who owned vehicle service contracts had benefited from them in the past year. But be sure to weigh the pros and cons of extended car warranties before you decide to purchase one.
Reasons to Purchase a Car Repair Warranty
A car repair warranty is one way to help finance the cost of car ownership over a long period of time. Rather than pay lump sums for potentially high repair costs as they arise, a car repair warranty can be paid in monthly installments.
Having a warranty can provide peace of mind to customers, knowing that expensive repair costs are covered in the event of an unforeseen breakdown. The best warranties reduce the hassle of planning for repairs.
Most vehicle service contracts also include useful benefits with their coverage plans. Typical perks include:
- 24-hour roadside assistance
- Towing reimbursement
- Rental car reimbursement
- Trip interruption coverage
Reasons Not to Purchase a Car Repair Warranty
A car repair warranty isn’t right for everyone. It can be more economical to start a personal repairs savings fund, as some customers end up paying more for the cost of their car repair warranty than the warranty pays out in covered repairs.
Other reasons to skip a car repair warranty are:
- Your vehicle is still covered by its original manufacturer’s warranty.
- You don’t intend to keep your vehicle for long.
- You have an especially reliable car.
If you do decide to purchase a car repair warranty, be sure to carefully research your options. The worst providers offer poor service, making breakdowns even more of a headache. But reputable extended car warranty companies alleviate the stress of needing vehicle repairs.
How Do Car Repair Warranties Work?
Car repair warranties may work differently from provider to provider, but most have a similar process for filing claims. Typically, you’ll need to take your malfunctioning vehicle to a dealership or certified repair facility, authorize a diagnosis and have your mechanic contact your warranty administrator before repairs begin.
Your warranty administrator will then determine whether or not your repair is covered. In some cases, this may involve sending a claims adjustor out to inspect the vehicle.
Assuming the claim is covered, a reputable warranty administrator will pay the repair shop directly, minus your agreed-upon deductible. Deductible amounts range from $0 to $200, with $100 being the standard.
How Much Does a Car Repair Warranty Cost?
Our researchers have collected quotes from dozens of aftermarket car warranty providers. Our data shows that the average full-coverage car repair warranty for a new vehicle (with fewer than 30,000 miles) costs between $1,700 and $4,000.
High-mileage vehicles are not always eligible for full coverage but can typically be protected by a powertrain plan, which only includes protection for powertrain components such as the engine, transmission, drive axle, and transfer case. The average cost of a powertrain warranty for a vehicle with more than 80,000 miles is between $1,900 and $4,000.
The final cost of your car repair warranty will depend on your provider as well as a number of other factors. The most important factors that impact the cost of a vehicle service plan include:
- Vehicle age
- Vehicle mileage
- Vehicle make and model
- Coverage level
- Coverage term length
Our Recommendations for Car Repair Warranty Providers
There are plenty of reputable car repair warranty providers on the market. The best way to get the cheapest, most comprehensive coverage for your vehicle is to seek out reliable providers and compare quotes. Two of our top recommended providers are CARCHEX and CarShield.
CARCHEX: Best for High-Mileage Cars
CARCHEX is an industry leader. It has been around for over 20 years in an industry where many companies last less than a decade. The company offers competitive pricing and comprehensive coverage options. When we asked CARCHEX for a quote on a Titanium plan (the highest level of coverage) for a 2018 Toyota RAV4, we were offered the following terms:
- Term length: 7 years/125,000 miles
- Financing: $190 for 18 months
- Down payment: $342.00
- Deductible: $100.00
- Total cost: $3,420.00
We also requested a quote for a basic powertrain plan, CARCHEX Silver coverage, on a 2012 Chevrolet Equinox with 90,000 miles and were offered the following terms:
- Term length: 5 years/75,000 miles
- Financing: $225 for 18 months
- Down payment: First month’s payment
- Deductible: $100.00
- Total cost: $4,050.00
Learn more about the provider in our complete CARCHEX review, and reach out for your own free, personalized CARCHEX quote below.
CarShield: Most Affordable
CarShield is another of our top recommended providers that offers generous pricing plans. We asked CarShield to supply a quote on the company’s highest level of coverage, called the Diamond plan, for a 2018 Toyota RAV4 and were offered the following terms:
- Term length: 5 years/100,000 miles
- Financing: $88.78 for 18 months
- Down payment: $295.00
- Deductible: $100.00
- Total cost: $1,893.04
We also requested quotes for CarShield’s Gold powertrain plan for a 2012 Chevrolet Equinox with 90,000 miles. We were offered a 4-year/100,000-mile plan with $127.67 monthly payment for 18 months and a $100.00 deductible.
Read our full CarShield review for more information, and see how much a CarShield car repair warranty would cost you by getting a free quote below.
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.