As you drive your new or used car off the dealership lot, you're likely to be presented with the option to protect your vehicle beyond the manufacturer's warranty. It's a decision that can spark debate among car owners and enthusiasts alike. Is it a wise investment or just an unnecessary expense? In truth, it depends on your unique situation, among other factors. To learn more, join BrokerLink as we dive into this topic below.
What is extended warranty?
An extended car warranty is a kind of protection that goes beyond the original guarantee offered by the manufacturer. It is also known as a vehicle service contract or an extended vehicle service contract. While the manufacturer's warranty typically covers repairs for a specified period or mileage, an extended warranty starts working after this initial coverage expires.
Common types of extended warranties in Canada
In Canada, there are different types of extended warranties that car owners should be aware of that typically fall under the original factory warranty and a third-party warranty. Let’s take a closer look at each below:
1. Manufacturer warranty
Powertrain warranty
This kind of warranty usually includes coverage for the expensive and necessary parts that power a car, like the drivetrain, engine, and transmission. Major mechanical systems are the focus of powertrain warranties. Make sure to read the fine print on powertrain warranties, as there will be some exclusions with this type of contract.
Comprehensive warranty
This coverage, sometimes referred to as a bumper-to-bumper warranty, goes outside of what is offered by a powertrain warranty. It includes the electronics, air conditioning, and other parts. Nonetheless, some wear-and-tear products might still be excluded with bumper-to-bumper warranties.
2. Third-party warranty
As we briefly touched on earlier, third-party warranties can be purchased alongside the original factory warranty that becomes valid once your warranty period expires. There are many different warranty providers out there. So, it's essential that if this is something you're interested in purchasing, you partner with a reputable company that has your best interests in mind.
What do extended car warranties cover?
Depending on the company and the particular plan you select, extended auto warranties can have different levels of coverage. Nonetheless, the following typical parts and systems may be covered by numerous extended warranties:
- Powertrain parts like the engine, transmission, and drive axles.
- Drivetrain parts, including the transfer case and differential.
- Fuel system, which includes the fuel pump and injectors.
- Electrical systems such as the alternator, ignition system, and starter motor.
- Cooling system parts, including the water pump and radiator.
- Parts of the suspension system, like the shock absorbers.
- Air conditioning and heating system, including the compressor.
- Parts in the steering system like the steering gearbox.
- The braking system, including the master cylinder.
- Software components like the GPS and assisted driving.
It should be noted that additional benefits could be included within the warranty, such as roadside assistance and rental car coverage. However, it depends on your provider and the warranty you choose. Furthermore, it should also be noted that certain maintenance items will not be covered under these types of warranties. Here is a closer look at some exclusions below:
- Routine upkeep includes rotating tires, oil changes, and air filters.
- Any damage related to the installation of extra parts, common car accidents, the natural environment, or unsuitable car care.
- Damage to the outside and inside of the vehicle itself. This could include stained or ripped upholstery and scratches to the exterior paint.
- Normal deterioration of parts, including brakes, tires, clutches, and wiper blades.
Things to consider when you buy an extended warranty
To make a well-informed decision when buying an extended warranty for your vehicle, take into account the following factors:
Coverage details
Make sure you completely understand what is and is not covered. Plans differ in the amount of coverage they give, so make sure the one you choose fits the demands of your car.
Cost
Examine rates offered by multiple vendors. Take into account each warranty’s possible out-of-pocket costs, deductibles (if applicable), and initial costs.
Reputation of the provider
Select a reliable supplier of warranties. Examine consumer feedback, rankings, and the track record of the business and how they honour any claims.
Terms and conditions
Read the small print. Recognize any restrictions, limits, or special circumstances that might affect coverage.
Deductible amount
Know the amount of the deductible that you have to cover before the warranty pays for repairs. This is similar to the deductible you pay with your Toronto car insurance or any other plan across Canada, where you need to pay out of pocket first before coverage kicks in.
Transferability
Check whether the warranty can be transferred from one car to another, as this may have an impact on your vehicle's market value.
Claim Process
Be mindful of the steps involved in making a claim, as it may involve different steps than when calling insurance after a minor accident or reporting a car accident to the police. Opt for a warranty that is straightforward and easy to understand. Also, ensure that your warranty provider offers assistance along the way.
Maintenance needs
To ensure that the warranty is still valid, be informed of any servicing that is required on your vehicle from the time the contract begins. You may be required to perform routine maintenance on your car in order to keep your warranty intact.
Duration and mileage
Think about how long you want to keep the car and how many miles you expect to drive it. Select a warranty that fits your goals for ownership.
Coverage overlaps
Check for overlaps in coverage between the current dealer or manufacturer warranties. Don't spend money on insurance you already have.
Repair centre requirements
Determine whether you can only get repairs done at authorized facilities or whether you have other options.
Cancellation policy
Know the cancellation terms in the event that you choose to discontinue the extended warranty before its expiration date.
How much does an extended car warranty cost?
In Canada, the typical cost of an extended auto warranty ranges from $1,000 to $2,000. In fact, there are a number of factors that will determine what you end up paying in the end. Here is a closer look at some of these variables:
- What kind of car you drive
- The age of your vehicle
- How much mileage your car has
- How much coverage you wish to purchase
- The duration of coverage you choose
- Whether the manufacturer or a third party issued your coverage
When can you get an extended car warranty?
As a car buyer, you can get an extended auto warranty at several points while you own the car. Here is a closer look below:
When you buy your car
When purchasing a new or used vehicle from a dealership, a lot of motorists choose to invest in an extended warranty. This is practical, and the price may be included in the total financing.
Before your manufacturer's warranty ends
You can buy an extended warranty for a new car before the manufacturer's warranty's initial coverage expires. This guarantees ongoing protection against unforeseen maintenance expenses.
After your manufacturer's warranty expires
You can still purchase a replacement warranty even if your manufacturer's warranty has come to an end.
Anytime throughout owning your vehicle
Regardless of the age or mileage of the car, certain third-party warranty providers let you buy extended warranties at any time while you're the owner.
Should you buy an extended car warranty from a vehicle manufacturer?
Just like any purchase, whether or not you personally decide to purchase an extended car warranty from your vehicle's manufacturer depends on your personal circumstances and budget. In truth, there are advantages for and against this type of protection. Let’s dive a bit deeper into the pros and cons in more detail below:
Benefits
Comprehensive expertise
Because manufacturers have an in-depth knowledge of their cars, maintenance and diagnostics may be more reflected in the warranty itself.
High-quality repairs using original parts
Guarantees backed by the manufacturer frequently ensure the proper application of original components, preserving the quality and efficiency of the car.
Drawbacks
Cost comparison
Extended warranties provided by the manufacturer may be more costly than alternatives. It's essential to weigh the prices and determine whether the extra benefits outweigh the increased cost.
Limitations on coverage
Some parts or circumstances may be subject to particular limitations under manufacturer warranties. Recognizing these restrictions is essential to knowing how much coverage you have.
Authorized mechanics
Repairs covered by a manufacturer's warranty might only be performed by a licensed dealership or mechanic. This may restrict your options for convenience and flexibility when selecting a repair shop.
Tips
Compare your options carefully
Consider extended warranty options from the manufacturer and other vendors. Take into account the terms, coverage specifics, and any extra benefits provided.
Discuss terms
The price of the extended warranty can frequently be negotiated when buying a new car. Dealerships can be open to changing the terms of the contract or adding extra perks.
Research credibility
Examine consumer feedback and satisfaction scores on the extended service warranty offered by the manufacturer. Good experiences from other car owners can help you feel more confident about your choice moving forward.
Ultimately, even though manufacturer-backed extended warranties offer significant benefits like a thorough knowledge of their cars, access to original parts, and a broad network of service providers, it's essential to weigh these advantages against potential disadvantages like cost and repair limitations by conducting your own research.
When is it wise to buy an extended warranty?
The timing of your extended warranty purchase is determined by a number of variables related to your car, your driving style, and your budget. Here are some circumstances where buying extended warranties would make sense:
Purchasing a new car
An extended warranty might offer comfort following the expiration of the manufacturer's warranty on your new car.
High repair costs
A warranty might help reduce the financial risks if your car is known to require costly maintenance.
Used automobiles
A supplementary warranty can protect against unforeseen maintenance costs and provide coverage as the car ages.
Long-term ownership
If you plan on owning your car for a long time, it can provide coverage as your vehicle and its parts deteriorate because of age.
Regular travel
An extended warranty with roadside assistance and rental car coverage can provide extra convenience and peace of mind for people who drive long distances every day.
Transferability
A supplementary guarantee that is transferable can increase the value of your car.
Should you buy an extended car warranty on a new or used car?
Whether to get an extended auto warranty for a new or used vehicle depends on a variety of factors, and there really is no one-size-fits-all answer. For the sake of helping, you make an informed choice, consider the following:
New cars
Current manufacturer's warranty
A manufacturer's warranty is usually included with new cars. Check the details of the coverage before thinking about purchasing an extended warranty. An extended warranty might not be as important in the initial years of ownership if the factory warranty is thorough and long-lasting.
Foreseeable repairs
During the first few years of ownership, new cars often have fewer mechanical problems. An extended warranty may not be as crucial if you're buying a new car with the plan to trade it in or upgrade within a few years, as there may be less chance of incurring large repair costs.
Used Vehicles
Manufacturer's Warranty Expiration
An extended warranty might offer additional security against unexpected repair costs if you're purchasing a used automobile and the manufacturer's warranty has expired.
Unknown maintenance history
The preventative car maintenance history of a used vehicle may not be fully disclosed to you. A longer warranty can provide comfort, particularly if you're not sure how the automobile has been maintained in the past.
Budget considerations
Pre-owned vehicles are more likely to experience wear and tear, particularly those with higher mileage. An extended warranty can offer financial security if you're on a limited budget and wish to prevent unforeseen routine maintenance costs.
Long-term ownership
Investing in a prolonged guarantee could be wise if you want to retain the used car for a long time in order to protect yourself against future repairs as the vehicle gets older.
Does getting in an accident affect my extended warranty?
Getting into an accident typically does not directly affect your extended warranty or how an accident affects car insurance rates. Extended warranties are specifically intended to cover mechanical and electrical problems, not damages resulting from accidents.
Specific limitations pertaining to crashes, accidents, and any damage brought on by outside factors are frequently found in extended warranties. Usually, motor insurance covers these instead of an extended warranty
That said, some repairs may be covered if the accident causes mechanical or electrical problems that fall under the scope of your extended warranty. But it's unlikely that the warranty will pay for the actual accident-related damages.
Contact BrokerLink today
Working with insurance companies in Canada can be daunting, which is why the team at BrokerLink is here to help guide you through the process of purchasing car insurance that meets your unique needs as a driver and budget.
To speak with an experienced broker, don't hesitate to reach out to us over the phone. Alternatively, if you prefer to meet with someone in person, you can visit us at one of our many locations across the country! On a time crunch? Get customized insurance quotes from the comfort of your own home using our free online quote tool!
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Extended car warranty FAQs
Is extended warranty worth it for a car?
Purchasing an extended auto warranty is a decision that is influenced by the vehicle in question, your risk tolerance, and your unique situation. Examine the vehicle's current warranty, reliability, your financial resources, and the anticipated length of ownership. An extended warranty might provide important security if you're worried about future maintenance expenses, and your peace of mind is essential. This is especially true for used cars or cars that are no longer protected by the manufacturer's guarantee.
What are two reasons not to buy an extended warranty?
First off, since the cost of the warranty may surpass the cost of future repairs, extended warranties might not be worth it for dependable cars with low maintenance requirements. Second, certain extended warranties have conditions that restrict flexibility and may be inconvenient, such as deductibles and selected repair centres. Therefore, before opting to buy an extended warranty, it is essential to thoroughly examine the conditions of the guarantee as well as the reliability of your vehicle.
Do we really need an extended warranty?
Depending on the situation, an extended warranty may or may not be required. There may be no need for an extended warranty for people with dependable cars, cheap repair expenses, and a good budget. An extended warranty, however, can offer comfort to people with less reliable cars, more potential repair bills, or who like to know when and where they'll have to spend money.
Does my car insurance cover repairs?
Whether or not your car insurance covers repairs depends on your insurance provider and the specific policies you have in your portfolio. However, most insurance companies refrain from covering the cost of repairs for everyday wear and tear or mechanical problems. The primary coverage provided by auto insurance is for losses caused by things like theft, accidents, or natural disasters. Therefore, you, the owner of the car, is usually accountable for any mechanical problems or maintenance-related problems.
Does my insurance pay for rental cars?
This is a common question that really doesn't have a one-size-fits-all answer because it depends on the type of car insurance you have. In most cases, this is an optional coverage that can have an overall cap and a daily limit. To fully understand the precise rental car coverage specifics and limitations within your insurance plan, it's essential that you examine your policy or speak with your insurance provider directly.
Does insurance cover towing after an accident?
Towing charges resulting from an accident are often covered if you have comprehensive or collision coverage. Additionally, some insurance provides roadside assistance, which can involve towing. To be sure you are covered, it is essential to check your policy or speak with your insurance company. Remember that there may be coverage limitations and conditions, so being familiar with the specifics of your policy will guarantee that you know of the types of towing costs that are included.
How long does extended warranty last?
Often, extended warranties have a time limit or a mileage restriction. Depending on the details of the contract, coverage can usually range from 80,000 to 160,000 kilometres or more. Certain plans may have a three- to five-year time frame for this type of coverage. We recommend looking at the terms and conditions of your specific warranty for a more accurate timeframe.
If you have any questions, contact one of our local branches.
