Is Car Warranty Insurance Worth It? Exploring Your Options

Buying a car is a huge step.

It is not just a one-time investment; maintaining a car comes with a lot of additional costs. In most cases, these costs can increase as the car gets older and faces more wear and tear. Without a car warranty, such situations could easily become an unwanted financial burden.

But what exactly is a car warranty? Is it worth it? What should you look for when you get a car warranty? We have compiled a complete guide in this article so you can make a more informed decision.

What is a car warranty?

A car warranty offers protection against some of the labour charges and part replacement for your vehicle. This protection is generally provided when your vehicle suffers from mechanical or electric failures. Such faults can be extremely costly to fix.

All new cars usually come with a warranty, which generally lasts for between three and seven years. If you have a used car, however, you can sometimes buy a warranty, if required. These policies can range from a month to seven years. Usually, most last for about 12 months with the option to renew.

However, you might need to meet other conditions like maximum mileage and servicing of the car at regular intervals to keep your warranty valid.

What does a car warranty usually cover?

• The exact inclusions vary from one provider to another. But most cover you for the engine, transmission, fuel and ignition system, air conditioning, electrics, gearbox, steering, suspension, clutch, and brakes.
• Some policies might also give you additional services as a part of their cover. This can include breakdown recovery, emergency travel expenses, overnight stays, or a courtesy/hire car when yours is being repaired.
• Some new car warranty packages can also provide an extended period that covers the corrosion of the vehicle. For instance, BMW covers the parts of the car for about 3 years. However, it covers rust for 15 years.

What does a car warranty not cover?

• A car warranty usually does not cover what is defined as “wear and tear”. Parts like tyres, windscreen wipers, brake pads, and clutches are not included as they get worn out over time.

However, there is an exception – when a component of a new car experiences an early failure due to a defect. If any of these parts gets damaged within the first 90-day period, it might not be considered “wear and tear”. Warranties may not cover issues with batteries unless they malfunction within the first few months of owning a new car.

Please note that some service providers also allow you to include general wear and tear for an additional cost.

• In most cases, items like batteries, exhausts, converters, etc are not covered. Fluids like brake oils, antifreeze, oils, etc. and any damage caused by oil leaks are also not included.
• If your car gets damaged by faulty parts or poor workmanship, then it might not be covered by your warranty.
• Items that are covered in comprehensive car insurance, like windscreens and accident damage, are usually not covered by the car warranty.

However, the situations might overlap. For example, there could be a situation where brake failure causes an accident. In such a case, your warranty would only cover the costs and repairs of brake failure. The other accident-related damage is covered by car insurance.

• Other than that, damages that are termed as “cosmetic” might not be covered by the warranty. For example, scratches on the paintwork, scuffed wheels, etc.
• Sometimes, if you modify new or used cars, it can risk the validity of the warranty.
• Cars used for motor sports or taxis might also be not covered by the warranty.

What are some of the conditions in car warranty insurance?

Each car warranty insurance policy comes with its own set of terms and conditions. If you fail to comply with these, your contract might be invalidated. These terms usually include:

• Age Limit: Typically, warranties don't cover cars that are older than 10 years.
• Mileage Limit: For example, some warranties limit coverage to cars with less than 60,000 miles (aprox 96,000 kms).
• Claim Limit: The maximum payout is usually equal to your car's value.
• Pre-existing Issues: In most cases, problems existing before you enter the policy aren't covered.
• Warning Lights: Ignoring warning signs may void your claim.
• Maximum Labour Rate: Your warranty provider may set a limit on labour costs.
• Servicing and MOT: It might be mandatory to record and get your maintenance approved from the garage. Some warranty providers even make it mandatory to get servicing done at regular intervals
• Insurer Authorization:Repairs may require approval before claims are paid.
• Approved Garages: It might be mandatory to use garages approved by your warranty provider.
• Car Modifications: Alterations to the original vehicle might void your warranty.
• Time Limit for Claims: There might be a specified period within which you must inform your provider. For example, in seven days.

Common types of car warranties

1. New car warranty

Generally, new cars come with a manufacturer’s warranty that lasts for about 3-7 years. In most cases, they cover for failures or faults. However, any wearing down of parts like tyres and brake pads is not included.

When your manufacturer warranty expires, you can do the following:

• Save for the unexpected costs that might occur after the warranty period is over!
• Sell your car to buy a new car with a warranty.
• Purchase a new warranty policy.

However, for the manufacturer’s warranty to stand valid, conditions like maintenance and servicing of the vehicle at regular intervals should be maintained.

2. Used car warranty

This is an option if you buy a used car. If bought from a dealership, it might come with a 12-month warranty; although it is necessary to look if the second-hand car is still under manufacturer’s warranty.

If you choose to get a used car warranty, the general rule is that the cheaper your warranty, the lesser your coverage. So, you have two main levels of coverage to choose from – a simple “mechanical breakdown” or “comprehensive”.

It is important to note that warranties sold by dealers might cost more than the ones available online. But they don’t always provide better cover.

3. Aftermarket warranty:

The aftermarket warranty is the cover you purchase for a car that you already own. While they cover both new and used cars, however there might be limitations of the age or mileage that can be covered.

Do you need car warranty insurance?

Car warranties are not legally compulsory in the UK. It comes down to whether you can afford the repairs without it or not.

Please note, that having a car warranty or extended car warranty has no bearing on car insurance. You still need car insurance to drive legally in the UK.

Is car warranty insurance worth it?

There is no one answer to this. But, to make things easier, Money.co.uk lists some of the pros and cons of car warranty insurance:

It is also important for you to understand the costs involved so that you can decide whether the cover is right for you or not. The cost of your warranty generally depends on the following factors:

• Use of car (daily or weekly/business or social)
• Age of the vehicle
• Car model and type
• Value of car
• Annual mileage

Many times, you may find the cost of the price of warranty exceeding the cost of repairs claimed. In such cases, it can seem unnecessary to pay for the warranty.

However, a warranty could save you a lot of money in case of heavy and costly repairs. You should factor in what the policy includes (like breakdown cover or courtesy car) and make a decision.

Where can you get car warranty cover?

There are plenty of options available for getting a car warranty in the UK. You can either get it directly from the dealer or other service providers. The former is generally the more expensive option.

Take the time to do your research and read the policy documents carefully. Go through the different available options and select one that makes sense for you.

Ultimately, the decision to purchase a car warranty is a personal one. There is no right answer. Only you can decide whether it is worth it.

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