When you buy a new car, it comes with a standard warranty of about 12 to 36 months. If something goes wrong with your vehicle during that time, the manufacturer will repair it at no charge to fix the issue. However, that only covers the car’s original manufacturer-provided parts.If you need additional repairs, such as an air conditioning system repair or new brake pads, the manufacturer will charge you for the parts and labor to install them. If you live in a state with mandatory extended warranty coverage, you may also have the option to purchase an extended warranty that covers all repairs for a set number of years. An extended warranty can be a great way to protect yourself from unexpected vehicle repair costs, especially if you live in a high-cost area or depend on your car to get to work every day. However, it’s important to understand what coverage is available and how an extended warranty works so you can make informed decisions about purchasing one for your next car purchase.

Who is Covered Under an Extended Warranty?

Most extended warranty providers cover the owner of the vehicle and any passengers who are listed on the policy. This includes anyone who drives the vehicle on a regular basis, including parents transporting their children to and from daycare. If the owner of a vehicle has a commercial driver’s license, many extended warranty providers will also extend their policy to cover that driver.

Which Coverage Types Are Available?

Most extended warranty providers offer one or more coverage types. A basic extended warranty will cover most parts and labor to repair your vehicle. If you already paid for a repair on your vehicle that is covered under your manufacturer’s warranty, an extended warranty can help you get it fixed quickly and at no cost.An additional coverage option is a “bundled” extended warranty that combines the purchase of your new car with an extended warranty. This allows the company to offer an even lower price on your vehicle because they are offering you more coverage than would be possible if you purchased the warranty separately.

How does an Extended Warranty Work?

Most extended warranty providers use an “all-risk” policy that covers everything in your vehicle, whether it’s normal wear and tear, sudden and unusual circumstances, or faulty workmanship. These policies are different from traditional car insurance policies in that they cover all repairs, including those that are due to a manufacturer defect or design flaw.As long as the vehicle is in normal use, the warranty company will cover all repairs, even if the issue was not your fault. If a repair is needed that is not covered under your extended warranty, the company will cover the repair at the normal service rate. However, if the repair is related to a covered issue, you will still be charged for the parts and labor.

What Happens If Something Goes Wrong?

If your extended warranty has a deductible, you will be responsible for covering this amount before the warranty company will pay the rest of the cost of your repair. If a repair is needed and the dealer is unable to repair the vehicle at no charge, the warranty company will cover the cost of the repair at the normal rate.The extended warranty company will make every effort to help you find the best repair option for your vehicle, but if you cannot find a part that is necessary to complete the repair, the warranty company will let you know. If you are unable to repair your vehicle at the time, the warranty company will offer to find you a rental vehicle.

Bottom line

A basic extended warranty might not be enough to protect you if your vehicle experiences an expensive repair. If you want to have the peace of mind that comes with knowing you will never have to pay for a repair that is covered under your vehicle warranty, an extended warranty is a smart buy.