Types of Warranties

Extended Warranties can range from full Bumper to Bumper protection all the way down to covering only the vehicle’s powertrain, and everywhere in between. The auto warranty industry has broken it down into three major categories and all extended warranties will fall into one of these. They are Bumper to Bumper, Stated Component, and Powertrain.

An Insider’s Secret You Should Know

When is a used car not a used car? When it comes to extended warranties. The industry uses the term “New Car” to mean any vehicle that is still covered by a portion of the manufacturer’s warranty. You could have bought your vehicle from the third owner with 40,000 miles on it and the warranty companies still consider it a new car if it is within the manufacturer’s warranty period. So don’t think that just because you have 40,000 miles on your vehicle and you didn’t buy it off the showroom floor, that you have to settle for a “used car” warranty.

Bumper To Bumper Coverage

A Bumper to Bumper warranty, also known as a new car warranty, a wrap program, or an exclusionary policy, is the most comprehensive coverage you can buy. They cover so many parts and components that the policy will only list the items that are not covered. Hence the term “exclusionary” since only the items excluded from coverage are listed. Most bumper-to-bumper policies will also include, or offer as an option, added benefits and coverage such as 24/7 roadside assistance, towing, car rental reimbursement, travel interruption protection, wear and tear coverage, seals and gaskets coverage, and hi-tech electronic equipment coverage.

Bumper to Bumper coverage is only available to what the industry calls “new cars”. In most cases these are vehicles that have up to 50,000 miles. You will pay a small surcharge for miles above 12,000 but the additional protection is well worth it.

An insider’s tip is “Bumper to Bumper does not cover the bumpers”. Contrary to the term “bumper to bumper” these policies do not cover every single part on your vehicle from bumper to bumper. Make sure you read the policy to see exactly what is not covered. They are however the most extensive coverage you can buy.

Stated Component Coverage

Stated Component coverage, also known as an inclusionary policy, is a standard extended warranty that covers most of the major parts and components on your vehicle. These policies will list all items covered or included in the warranty, hence the term “inclusionary”. Some stated component policies will offer as an option additional benefits and coverage.

These are a very good alternative when your vehicle does not qualify for a bumper-to bumper policy and they are a very good value. Typically these apply to mid-mileage vehicles with 50,000 to 100,000 miles.

Powertrain Coverage

Powertrain coverage is a basic warranty and only covers, as the name refers, the vehicle’s powertrain. This would include the engine, transmission, drive axles and drive shaft. Some powertrain warranties, also known as plus or enhanced policies, will extend the coverage to a few additional parts and components.

A powertrain warranty will cover you for the big ticket items and the really big repair bills. These are the most inexpensive of all the warranties. A powertrain warranty is more appropriate for a high mileage vehicle or a mid-mileage vehicle if you are only concerned with the big ticket repair bills.