Extended warranties or vehicle service contracts can range from full bumper to bumper protection to just covering the engine. The auto warranty industry separates coverage 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 Tip 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 up to five years old and under 50,000 miles or is still covered by a portion of the manufacturer’s basic warranty. You may have bought your car from the third owner with 40,000 miles on it and warranty companies will still consider it a new car. So don’t think that just because you have 40,000 miles on your car 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 is also known as a new car coverage, a wrap plan, luxury or full coverage. This is the highest level of coverage you can purchase. Technically, a bumper to bumper plan is called exclusionary coverage. These plans cover so many parts and components that the policy will only list the items that are not covered or excluded. Hence the term “exclusionary” since only the items excluded from coverage are listed.
Bumper to Bumper coverage is typically only available on lower mileage vehicles. In most cases these are vehicles that have less than 50,000 or 60,000 miles.
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. However, this is the most extensive coverage you can buy.
Stated Component Coverage
Stated Component coverage, also known as an inclusionary policy, is an extended warranty that covers most of the major parts and components on your vehicle. These policies will list all of the parts or components covered or included in the warranty, hence the term “inclusionary”.
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. This type of coverage typically applies to mid-mileage vehicles with 50,000 to 100,000 miles.
There are many levels of stated component coverages available. Some will cover all of your major components while others may only cover just a few. Carefully read the coverage contract to determine exactly what components are covered.
Powertrain coverage is a basic warranty that will cover, as the name refers, the vehicle’s powertrain. This would include the engine, transmission and drive axles. Some powertrain warranties, also known as plus or enhanced policies, will extend the coverage to a few additional parts and components such as the starter and air conditioner.
A powertrain warranty will cover you for the big ticket items and the really big repair bills. 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.
Additional Reading: Eligibility and Length of Coverage