Have you ever experienced car problems while driving? Has your engine failed? Or have you experienced another issue? Are you confused if your car insurance covers this or if your car warranty covers it? Owning a car comes with lots of responsibilities and you have to be willing to get whichever coverage that suits your needs.
It might be hard to differentiate between an extended car warranty and car insurance but it’s important to know that the latter protects you from accidents while the former protects you when it comes to mechanical failures in your car
Extended Car Warranty
An extended warranty is the warranty that covers major breakdowns and it protects your car from costly auto repairs. It generally covers mechanical problems that don’t occur due to events covered by insurance. Like if one of the valves of your engine seizes due to the oil level being too low, a warranty covers the repairs and insurance doesn’t.
When you buy a new car, there is a factory warranty with it and it usually expires within 2 to 5 years and when it does, the extended warranty comes into place. It’s important because it keeps you protected and helps you maintain your vehicle in the condition you want it to be
Depending on the policy you choose, it may cover the drive train or more but it doesn’t cover regular day to day maintenance like oil change and worn tires
Extended warranties can also be gotten after buying a used car and they cover certain damages to your car but it doesn’t cover damages to another party
Car Insurance
Car insurance is typically a contract or agreement between you and your insurance provider. In here, the carrier guarantees that it will cover all the losses incurred after theft or collision after you pay a certain amount in premium
The insurance covers possible financial losses that may occur unpredictably while on the road. This insurance coverage consists of the car being covered, the driver and any financial costs that may arise due to collision, theft and any other damages natural or otherwise. And in road accidents, the insurance covers the medical costs and may compensate for one’s death after an accident
Hence it may compensate for damages to the car, damages caused to other people’s property and damages caused by any external party
Car insurance is a legal rule in almost all jurisdictions and those who fail to buy it or let it lapse can have their license suspended. Or their car seized and other penalties that may include jail time according to the severity
Differences between Extended Car Warranty and Car Insurance
As much as an extended car warranty and car insurance may seem similar, they’re extremely different in so many ways and these are explained below;
Extended warranties
protect you when your vehicle goes through a failure on its own through no fault from the outside beyond a reasonable level.
Used car extended warranty can be purchased at any given time whether while the factory warranty is in place or after it expires and it has no specified time.
Extended warranties are not a legal requirement however car insurance is a legal requirement for those with tagged vehicles and the people that don’t abide by it face charges and penalties
Used car warranty covers certain categories of car breakdowns as stated in the warranty while car insurance doesn’t cover the costs associated with a car breakdown
Used car extended warranty ensures the parts of your car perform what they’re supposed to in the length of time they should and if one fails due to no fault of your own, then you can get it replaced for no charge
An extended warranty covers brakes but doesn’t cover the damage you may have caused to other vehicles while car insurance does
When it comes to who offers the policy, extended warranties are offered by the automaker or an independent third party whereas car insurance is provided by the car insurance company
Extended warranties are paid upfront and for a fee that is set out and is negotiated. The price can be rolled into car loan if the owner chooses and hence the payments are spread to the third party as time goes by with interests.
Car Insurance
protects you against any financial losses incurred due to theft, vandalism, collision and acts of nature
Whereas car insurance is the coverage you must possess at all times
Since some things are inevitable and can’t be prevented from happening therefore it’s relevant to have insurance to cover those expenses
Car insurance is considered to be more restrictive than extended warranty because it has restrictions in terms of age of the vehicle or the mileage driven and may vary depending on the provider
When it comes to transferring, car insurance is transferable from one party to another during sale whereas extended warranty depends on the dealerships since most of them don’t allow you to bring a vehicle and transfer your warranty from one car to another
Most of the time, used car warranty transfers are not possible since they are written in a way that after a sale, the warranty becomes void. However, extended warranties can be transferable at the point of ownership change as it applies to the years and mileage