In this article we’ll review the differences between car warranties and car insurance, and look at whether an extended warranty or added insurance is better.
Our review team has researched and rated the best extended car warranty companies available. In our industry-wide review, we considered customer feedback, scrutinized contracts and compared contract costs. Click below to start comparing free quotes from our vetted picks.
Are Car Warranty Insurance and Auto Insurance the Same?
Car warranty insurance and auto insurance do not offer the same coverage. Both are contracts that promise to help customers pay for repairs under certain circumstances. Standard car insurance takes effect only after an accident. Car warranties cover specified parts and components in the event of mechanical failure.
Car Warranty Vs. Car Insurance Differences
While there are some overlaps and similarities car warranties and car insurance both cover quite different things:
|Car Insurance||Car Warranty|
|Regulated by state insurance commissioners,|
and can only be sold by companies licensed
to deal property and casualty insurance
|Not subject to state insurance regulations (in most states)|
|Pays for car repairs after an accident||Pays for repairs to specified components|
after a mechanical failure
|Often includes a deductible||Often includes a deductible|
|Typically purchased on an annual or semi-annual basis||Contract terms typically range between 3 and 10 years|
|Will pay to fix any part of a vehicle damaged in an accident||Will only pay for the repair|
or replacement of specified components
If you are in a collision, an insurance policy will pay for repairs. Most auto insurance companies will not pay to replace a cracked engine, malfunctioning navigation system or broken air conditioning unit unless these components are damaged in an accident. However, these types of repairs are covered by an extended car warranty.
Extended Warranty or Insurance?
While liability insurance is required by law, an extended warranty is an optional form of protection. If you wanted to purchase additional car insurance for your vehicle, you could always purchase collision insurance for extra protection for your vehicle in the event of an accident, an extended car warranty protections you against costs that you are more likely to incur because every driver pays for mechanical breakdowns at some point. If it came down to collision insurance vs. an extended car warranty, the warranty will almost always give you the better bang for your buck.
How Much is Car Warranty Insurance?
The cost of an extended warranty depends on a few key factors, including:
- Vehicle make and model
- Vehicle age and mileage
- Coverage level and deductible
- Coverage terms
- Existing coverage
Probably the most consequential factors in determining car warranty insurance costs are vehicle age and mileage. Older, higher-mileage vehicles are more likely to experience mechanical failures, making them expensive to cover. It’s generally best to purchase a long-term contract on a newer vehicle.
Our researchers have reached out to several leading extended car warranty companies to request cost information. The data below shows estimated costs for high-level vehicle service contracts on a low-mileage vehicle (around 30,000 miles).
|Provider||Bumper-to-Bumper Plan||Term||Deductible||Total Cost|
|Endurance||Supreme||5 years/100,000 miles||$100||$2,951.15|
|CARCHEX||Titanium||7 years/125,000 miles||$100||$3,420.00|
|CarShield||Diamond||5 years/100,000 miles||$100||$1,893.04|
|Protect My Car||Supreme||4 years/100,000 miles||$100||$96.95 monthly|
|autopom!||Exclusionary Plan||7 years/70,000 miles||$0||$2,125.50|
Coverage for older vehicles can be more expensive, even for a lower level of protection. The chart below shows quotes we received for powertrain warranties for a high-mileage vehicle (over 80,000 miles). These contracts cover components such as the engine, transfer case and transmission,
|Provider||Powertrain Plan||Term||Deductible||Total Cost|
|Endurance||Secure Plus||5 years/50,000 miles||$100||$3,626.83|
|CARCHEX||Silver||5 years/75,000 miles||$100||$4,050.00|
|CarShield||Gold||4 years/100,000 miles||$100||$2,398.05|
|Protect My Car||Driveline||4 years/75,000 miles||$100||$67.22 monthly|
|autopom!||Powertrain Plus||4 years/48,000 miles||$100||$2,620.00|
Find and compare free quotes specific to your own vehicle by clicking below.
Who Has the Best Extended Car Warranty?
Car warranty insurance is another name for an extended car warranty. This type of coverage is also sometimes referred to as a vehicle protection plan. Despite its name, warranty insurance does not offer the same protections as auto insurance.
There are no one-size-fits-all auto warranties, but there are a few reputable extended car warranty companies that stand out from the competition. Based on our examination of cost, customer experience, contract information and industry reputation, Endurance and CARCHEX are our top two picks for extended warranty coverage.
Endurance: Best Provider
In addition to providing some of the most comprehensive contracts, Endurance offers a wide range of added perks, including:
- Rental car reimbursement: $30 per day reimbursement up to $150 total
- 24/7 roadside assistance: Includes towing, battery jump-starts, mechanical first aid, tire repair services and fuel deliveries
- Trip interruption reimbursement: Covers meals and lodging if your car breaks down more than 100 miles from home
- Endurance Elite Membership: Provides customers with a $250 entertainment voucher, 24/7 roadside assistance, ID theft services, key fob replacement, tire repairs and replacements, and access to a personal concierge service for one year at no additional cost
Read more about the provider in our full Endurance warranty review, and click below to get a free quote.
CARCHEX: Best for High-Mileage Cars
CARCHEX offers some of the longest-lasting contracts in the industry, making it an excellent option for high-mileage vehicles. While plan benefits are not as extensive as those offered by Endurance, they are convenient. In addition to warranty protection, CARCHEX customers get:
- 24/7 roadside assistance: Includes emergency tire services, lockout services, battery jump-starts, fuel deliveries and winching
- Towing: Receive up to $75 per occurrence
- Rental car reimbursement: Pays up to $40 per day for a maximum of $160 per occurrence
- Trip interruption reimbursement: Covers meals and lodging if you’re more than 100 miles from home
CARCHEX is a trusted company backed by industry leaders like Kelley Blue Book, Edmunds.com and CARFAX. Read more about the provider in our CARCHEX review, and click below to get a free, no-obligation quote.
Mechanical Breakdown Insurance vs Extended Warranty
Mechanical breakdown insurance is a cover that takes effect at the same time as the extended warranty. However, this insurance lacks liability coverage. It only covers the parts of the car that fail during routine use of the car. Therefore, the insurance company will pay for the repairs.
Mechanical breakdown insurance may cover all parts of the car. The insurance product has an extended duration and mileage. The product can be purchased alongside the insurance coverage hence making it easier and cheap.
Mechanical breakdown insurance may be cheaper and more convenient than an extended warranty due to state oversight of all insurance deals. Besides, it offers much flexibility in terms of repair facility, unlike extended warranties in which repairs are done at specified dealerships.
Since mechanical breakdown insurance cover takes effect after the expiry of the factory warranty, it covers only new vehicles. Therefore, old cars have to be covered by extended warranties. Consequently, a car owner has to make a wise judgment of mechanical breakdown insurance vs extended warranty since they both have benefits and limitations.
Car warranties are among the economical methods of maintaining or repairing a car, although they are not required by law. On the other hand, car insurance is a mandatory legal requirement, which ultimately offers financial protection to car users.
Warranty Vs. Insurance Basics
Moving machines always experience wear and tear. Therefore, constant maintenance is needed to maintain the performance of the machine. For instance, cars need regular maintenance even without a collision or breakdown. Consequently, a car warranty is one of the alternatives to service a car.
A car warranty is a business agreement made between a car owner and the manufacturer or vehicle factory to fix the parts of the vehicle in case of a breakdown. The contract may cover mechanical or electrical aspects of the car for a given period or mileage. Therefore, the warranty covers the cost of repairing or replacing the parts and labor.
Extended warranty and manufacturer’s warranty are the two common types of car warranties. The manufacturer’s warranty is an offer from the manufacturer that guarantees that the car is in good working condition. It covers all the costs related to replacements and repairs in case of a breakage or failure to function; therefore, the warranty covers new cars.
However, if the buyer damages the car, the manufacturing company will not be liable; hence no replacements or repairs.
In contrast, an extended warranty covers replacements and repairs, but it comes into effect on the expiry of the manufacturer’s warranty. The extended warranties can be offered by the manufacturer or other car warranty companies. Consequently, original equipment manufacturer extended warranties are offered by the car manufacturer.
Besides, the aftermarket extended warranties are provided by different car warranty companies apart from the manufacturer. If a customer purchases an original equipment manufacturer warranty, they will be offered a range of products to choose from; hence, an advantage over the manufacturer’s warranty.
Car insurance is an obligatory legal requirement in many countries. On the other hand, a car warranty is not a legal requirement but a wise economic decision. Therefore, it is not a debate of car warranty vs car insurance since both are essential.
Car insurance is a contract made by a car owner with an insurance company to offer financial protection. The contract protects the passengers, motorists, pedestrians, and drivers. Therefore, the law requires that every car should be insured; consequently, a legal requirement for all states in the U.S.
Car insurance options vary from one provider to another. Each insurance company has policies that dictate the premiums and covers. Some providers may offer basic coverage that will only cover the harm the vehicle will cause to people and property and not the damage sustained by the car. However, some companies offer a comprehensive cover that can cover the car and people harmed.
The government requirements influence the coverage offered by insurance companies. The choice of a particular coverage depends on many factors. Thus, one has to weigh all the benefits and risks before choosing. For instance, liability coverage covers the medical expenses of causalities, while collision covers damage to the vehicle.
Car insurance and a car warranty are beneficial; they both over financial protection. For instance, if a vehicle gets involved in an accident, the insurance company will give monetary compensation to repair the vehicle and cover any hospital bills for casualties. On the other hand, a car having a wear-and-tear warranty can be serviced at no additional costs. The cost result will be friendly, unlike if the car were serviced on a direct payment or pay-per-service.
The manufacturer’s warranty coverage may be bumper-to-bumper where the items in the car are covered. However, it does not cover any items outside the vehicle, for instance, tires. On the other hand, it covers the engine, drive systems, and transmission if it is a powertrain warranty.
Extended warranties and some factory or manufacturer warranties can offer other covers in addition to bumper-to-bumper and powertrain. They include wear-and-tear, which covers the deterioration that comes from continuous use. Also, a maintenance plan which covers various services such as maintenance, inspections, and oil changes can be covered.
Other warranties offered by car insurance companies include:
- Corrosion or rust warranty
- Emission warranties
- Factory accessory plans
An extended warranty, in many cases, covers only mechanical and electric breakdowns. On the other hand, car insurance covers the damages caused by the vehicles to people or property. Therefore, unlike extended warranties, which take effect on regular vehicle use, car insurance comes into effect when there is an accident. Consequently, both services charge a fee. The fee varies between providers.
It is noteworthy that extended warranty policies and benefits may not cover everything. For instance, the warranty does not cover faults of the car at the time of purchase. Therefore, preexisting conditions may not be handled by car warranty companies. Besides, unlike mechanical breakdown insurance, extended warranties are not linked to car insurance policies. Therefore, they are purchased separately. Interestingly, some car insurance companies can offer packages that cover repairs; hence extended warranty vs car insurance judgment is essential.
In this article we looked at the differences between car warranties and car insurance and situations when each form of coverage is most advantageous. We also looked at the best car warranty providers in the industry for those seeking repair insurance.
Frequently Asked Questions
What is the best car warranty insurance?
In our industry-wide review, we named Endurance the Best Provider for extended car warranty coverage. Car warranty insurance can also be referred to as an extended car warranty, vehicle protection plan or vehicle service contract. Endurance customers can choose between six comprehensive coverage plans at an affordable price.
Are car warranties worth it?
Car warranties cover repairs caused by defective parts after your factory warranty expires. They offer peace of mind and an easy way to budget for your vehicle’s repairs. However, if you own a highly reliable vehicle or feel comfortable footing the bill for repairs, an extended warranty may not be a worthwhile investment.
What does the car warranty cover?
A car warranty covers defective materials and workmanship. It does not cover wear-and-tear parts, like brake pads, nor does it cover damage caused by an accident, the environment or misuse.
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.