An extended warranty is one way to help plan for the unexpected costs of car ownership, but is it a good investment for your vehicle?
In this article, we’ll review everything you need to know about extended warranties and help you decide whether extended vehicle coverage is right for you. We’ll also introduce you to the best extended car warranty companies on the market so you can feel confident that you’re getting coverage from a reputable provider.
When purchasing an extended warranty, it’s smart to compare quotes from multiple providers. This way, you can ensure you’re getting the most comprehensive coverage at the best price.
You can start getting free, personalized quotes from our top recommended providers below.
What Does an Extended Warranty Cover?
An extended warranty, also called a vehicle service contract or vehicle protection plan, covers mechanical failures of various vehicle parts. If a covered component fails, your extended warranty will pay the cost of parts and labor to have it repaired or replaced.
While contracts differ among providers, most offer a mix of stated-component coverage and exclusionary plans. Stated-component contracts list each specific part that’s covered under your warranty, and exclusionary contracts only list the vehicle parts that are not covered.
The most basic stated-component plan is called a powertrain warranty. These contracts only cover the parts of your vehicle that make it move, including the engine, transmission and drive axles. Some providers also offer mid-tier extended warranties that cover powertrain components as well as select vehicle systems like the air conditioning, suspension, brakes and fuel system.
Exclusionary extended warranties provide the highest level of coverage. Also called bumper-to-bumper extended warranties, these plans cover nearly all mechanical vehicle components. Parts and systems that are typically excluded from these plans include:
- Wiper blades
- Brake pads and shoes
- Shock absorbers and struts
- Exterior trim
- Interior upholstery
- Lights and bulbs
- Catalytic converter
- Damage caused by misuse, neglect, improper maintenance, collisions or acts of nature
- Routine maintenance services
In addition to paying for repairs or replacements of covered components, most extended auto warranties come with benefits such as:
- Rental car reimbursement while your vehicle is in the shop
- 24/7 roadside assistance for services like fuel deliveries, battery jump-starts and lockouts
- Trip interruption coverage if you break down far from home and have to stay the night while your car is being repaired
- Towing coverage if your vehicle becomes inoperable and needs to be transported to a dealership or repair shop
How Do Extended Warranties Work?
Every extended warranty company has its own claims process, but most work the same way. After a breakdown, drivers must take their vehicles to an approved repair facility.
If you purchase an extended warranty from your vehicle manufacturer, you must have repairs made at a dealership. Third-party vehicle protection plans usually allow customers to have vehicles serviced at any repair shop certified by the National Institute for Automotive Service Excellence (ASE®).
The repair shop will perform a teardown diagnosis and contact your extended car warranty company with the results. Your provider will then consult your contract and authorize covered repairs. After repairs are completed, reputable warranty administrators will pay the repair shop directly and you’ll only be responsible for your deductible. Some companies, however, will have you pay the full price of repairs upfront and send you a reimbursement check.
Typical extended warranty deductible options are $0, $50, $100 and $200.
Extended Warranty Pros and Cons
An extended car warranty isn’t the right choice for everyone. Here are some benefits and drawbacks to consider when deciding whether to purchase coverage.
|Extended Warranty Pros||Extended Warranty Cons|
|Protect against sudden and unexpected repairs||Not every repair will be covered|
|Can be financed over months or years||Mechanics need approval from the claims administrator before starting repairs|
|Include benefits such as roadside assistance and rental car reimbursement||Cost of contract may not exceed the cost of covered repairs|
How Much Should an Extended Car Warranty Cost?
Our secret-shopper analysis shows that the average cost of an extended warranty ranges from about $1,700 to $4,000 for three to seven years of coverage. There are many factors that go into the cost of an extended warranty, including:
- Your vehicle’s model, age and mileage
- The level of coverage you choose
- The deductible you choose
- How long your contract lasts
- Your location
The best way to find the cheapest coverage is to shop around. Start comparing prices from some of our top-rated providers below.
The sooner you purchase coverage, the cheaper it will be. Manufacturer extended warranties can usually only be purchased while the vehicle is still covered by the manufacturer’s new vehicle warranty.
Manufacturer Extended Warranty vs. Third-Party Vehicle Service Contract
Drivers looking to purchase an extended car warranty have two options: a manufacturer-backed extended warranty or a third-party vehicle service contract. Some key differences between the two are outlined below.
|Manufacturer Extended Warranty||Third-Party Vehicle Service Contract|
|Typically must be purchased before the manufacturer’s new vehicle warranty expires||Can be purchased at any time|
|Requires that the vehicle be serviced exclusively at dealerships||Vehicles can generally be serviced at any ASE-certified repair shop|
|Typically more expensive||Typically less expensive|
|Typically offer more comprehensive coverage that’s tailored to vehicles’ unique needs||Plans not usually tailored to a specific brand|
|Term limits rarely exceed 100,000 miles||Term limits as high as 250,000 miles|
|Usually only one or two coverage levels||Usually three to five levels of coverage|
Depending on your vehicle, the benefits of a third-party provider may outweigh those of manufacturer-backed coverage, or vice versa. If you decide to go with an aftermarket car warranty, look for these features in a provider:
- Quality claims service
- Low prices
- Useful benefits
- Easy-to-understand contracts
Should I Buy an Extended Car Warranty?
Any vehicle – new or used – requires regular maintenance and repairs to run properly. But are extended car warranties worth it to cover these costs?
In worst-case scenarios, car owners can face hefty repair bills they can’t afford, leaving them stranded without reliable transportation. To avoid ending up in this scenario, many drivers choose to finance repairs over time through an extended car warranty.
However, an extended car warranty can be a pricey investment. Take time to consider if you should invest in coverage. On one hand, it may be more cost-effective to skip the extended warranty and save for the cost of repairs yourself. On the other hand, an extended warranty can bring peace of mind on the road.
Reasons You Should Purchase an Extended Warranty
- You can’t afford the cost of a sudden, unexpected repair.
- You want to plan for repair costs by financing them over a longer period of time.
- You are offered a low-priced plan from a reputable extended warranty provider.
- You expect your car to require frequent repairs.
- You drive a luxury vehicle that will require expensive repairs.
Reasons You Should Not Purchase an Extended Warranty
- You can easily pay for costly repairs out of pocket as they arise.
- You don’t anticipate the cost of vehicle repairs to be more than the cost of an extended warranty.
- You have an exceptionally reliable vehicle.
- You plan on trading in your vehicle before or shortly after your factory warranty.
5 Best Extended Warranty Providers
Our review team has examined every leading extended car warranty company in the industry. We’ve researched customer reviews, prices, contract options and company reputations. Based on our findings, we’ve determined the following companies to be among the best third-party vehicle service contract providers:
- Protect My Car
Here’s an overview of each provider:
|Superlative||Overall Rating||Levels of Coverage||Learn More||Get Quote|
|Endurance||Best Provider||9.6 out of 10.0||6||Endurance Review||Get Quote|
|CARCHEX||Best for High-Mileage Cars||9.4 out of 10.0||5||CARCHEX Review||Get Quote|
|CarShield||Most Affordable||9.0 out of 10.0||6||CarShield Review||Get Quote|
|Protect My Car||Best Long-Term Financing||8.7 out of 10.0||3||Protect My Car Review||Get Quote|
|autopom!||Runner-Up||8.5 out of 10.0||4||autopom! Review||Get Quote|
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.