What You Need Know about Warranties

Auto warranties come in many sizes and flavors. Knowing the right warranty for your particular vehicle, situation, and driving habits can save you time, aggravation, and most importantly money.

Vehicle warranties are known as manufacturer’s warranties, extended warranties, vehicle service contracts, mechanical breakdown insurance, and product warranties. Each of these has their own benefits and limitations and each are governed by specific laws and regulations.

Manufacturer’s Warranty

Manufacturer’s warranties are issued by the original vehicle manufacturer and cover specific components for a set number of months and a set number of miles. Manufacturers are required by law to cover factory installed parts for defects or workmanship.

In the United States new vehicles come with at least two warranties. The Basic Warranty covers most components except items that are subject to wear out in the normal course of driving, such as brake pads, filters, belts, hoses, and wiper blades. A Powertrain Warranty usually starts where the Basic Warranty ends and only covers the engine, transmission, axles and driveshaft. Your vehicle might also come with a Rust or Corrosion Warranty. Additionally, Federal Law requires Emissions Equipment to be covered for 8 years or 80,000 miles, and Passive-Restraint systems for 5 years or 50,000 miles.

Manufacturer’s warranties typically cover 36 months or 36,000 miles up to 60 months or 60,000 miles. See your owner’s manual, dealer, or check the manufacturer’s Web site for specific details about your particular vehicle.

Extended Warranties, Vehicle Service Contracts, and Mechanical Breakdown Insurance

Extended warranties, vehicle service contracts, and mechanical breakdown insurance are basically the same thing and we will refer to all of them as extended warranties.

An Extended Warranty is basically a contract between you and the warranty provider that says if a part or component described on the policy breaks, or wears out in some cases, the warranty company pays to have it fixed.

Extended warranties can also include benefits such as free 24/7 roadside assistance for emergencies like lock-outs, fuel and fluid delivery, battery jump, flat tire repair, and towing. Many also come with car rental reimbursement and travel interruption protection in case of a breakdown. The better coverage extended warranties also include or offer as options such as Wear and Tear coverage, Seals and Gaskets coverage, and Hi-Tech electronic equipment coverage which are much broader protections than a standard warranty.

Warranty companies are governed by Federal and State laws and regulations and these vary from State to State. Warranty companies must be backed by an insurance company that guarantees the obligations of the warranty company. The insider’s secret here is the very best warranty companies are “A” rated by A.M. Best & Company. They are an independent insurance analysis and rating company that has been around for more than 100 years and are the gold standard in insurance ratings.

The one note here is mechanical breakdown insurance. For all intents and purposes this is a vehicle service contract however it also has a legal aspect. Mechanical Breakdown Insurance is available in California and is regulated and overseen by the California Department of Insurance. In some other states mechanical breakdown insurance is not backed or regulated by the State. Reputable warranty companies and warranty brokers know the difference and will quote you policies that best meet your particular State requirements. See your State Department of Insurance for more information on types of warranties regulated by the State.

Product Warranties

Product Warranties generally cover far fewer parts than an extended warranty or vehicle service contract. A product warranty is only allowed by law to cover parts that are in direct contact with the product or parts that are mechanically connected to those parts. For example, a manufacturer of engine oil may warrant that by using their product, the engine will not break. However, the manufacturer is not allowed to warrant that the car’s horn will not break, since the horn is not in direct contact with the engine oil.

Product warranties may not be sold for a separate price and must be offered free of charge. These warranties, or guarantees, usually limit how much you can recover for repairs. Extended warranties must be guaranteed by an insurance company, product warranties do not.

The One Insiders Tip You Should Remember

The one important thing to remember about any warranty is you must perform the routine maintenance as listed in your manufacturer’s recommended guidelines. If your manufacturer recommends changing the oil every 5,000 miles and you don’t change it for 25,000 miles, not only are you asking for trouble, but more than likely you will void your warranty.