What You Need to Know About Car Warranties

Down the road, when that new-car smell fades away and your vehicle doesn't quite drive like it used to, you'll want to know the extent of your auto warranty coverage. Knowing what parts, tune-ups. and repairs will be covered -- and for how long -- will give you a complete picture of how to minimize your costs and what kind of insurance you'll need in the long run. Here's what you need to know to save you money and get the best service for your car when you need it.

Auto warranty 101
An auto warranty is a promise a manufacturer or dealer makes to cover repairs and defects over a certain amount of time and mileage. Most basic warranties are guaranteed for at least three years or 36,000 miles, but the length may vary according to the manufacturer.

Warranties are essential a legally binding pledge to fix or replace any parts that have broken down or are inherently faulty, including defective parts. Warranties do not cover regular maintenance and will not cover breakdowns caused by accidents, acts of nature, lack of proper maintenance, contamination of fluids or fuels, collision, fire, theft, negligence, or abuse.

There's a basic checklist of questions all consumers should have answered before purchasing a car warranty, according to the Federal Trade Commission, including asking about length of the warranty, the point of contact for service, what parts and repair problems are covered, and any conditions or limitations on the warranty.

What's covered? 
Different levels of warranty coverage exist, so it's important to understand the limits and umbrella of coverage before purchasing. These are the most typical types of warranty your car dealer will offer: 

  • Basic "bumper-to-bumper" warranty: This is the most general coverage that pays to repair defects in factory-installed parts. 
  • Drivetrain/powertrain warranty: Covers the engine, transmission, and transaxle parts. This warranty tends to last longer than bumper-to-bumper.
  • Roadside assistance: Covers towing costs and tire changing if the car breaks down during travel.
  • Rust or corrosion warranty: Covers rust in sheet-metal parts of the car. 
  • Federal emission warranty: Covers repairs needed to correct defects in parts that would cause the car not to meet Environmental Protection Agency standards.

How drivers can maintain their warranty
Regular car maintenance and inspections are necessary to guarantee that a warranty won't be voided. Typically, routine maintenance includes oil changes, tire rotations, fluid checks and flushes, brake pads, and belt replacement. A warranty will remain valid no matter who performs the repairs, meaning you can use your own mechanic or shop -- not just the dealer's service department.

What does auto insurance do that car warranties don't?
Under car warranties, the manufacturer makes a guarantee to the car buyer regarding the condition of its product. In case car parts do not function as intended, a warranty will cover the costs to repair or replace the part, as well as car rentals resulting from repairs. It might also potentially cover corrosion and rust.

Insurance, on the other hand, is an obligation on the part of the insurer to take on financial protection or reimbursement for the risks that are inherent to driving. Every state in the U.S. except for New Hampshire requires drivers to purchase some level of auto insurance to cover accidents, collisions, car rentals, and possibly roadside assistance.

Service contracts or "extended warranties"
When a warranty runs out, car owners may choose to purchase a service contract to provide repairs or maintenance. Vehicle manufacturers, auto dealers, and independent providers sell the contract separately from a warranty.

Service contracts will not provide benefits until after the initial warranty expires. Rates for these contracts depend on the life of the car -- those with fewer miles and past repairs will get a better deal.

These contracts, while often referred to as "extended warranties," are not actually warranties. Drivers who are interested in purchasing a service contract should practice due diligence to find the most trustworthy source, particularly from third-party companies.

However, since service contracts are optional and car warranties end, it's most critical for car owners to purchase insurance that will be the most affordable, provide adequate coverage and be the best fit for their specific car.

Best and worst warranties on the market
There are three vehicle brands that stand out for providing the best in basic and power train warranties: Hyundai, Mitsubishi, and Kia. Each brand offers limited warranties for five years or 60,000 miles on new vehicles, plus 10 years or 100,000 miles on powertrains.

Brands such as BMW and Cadillac offer warranties of four years or 50,000 miles, plus five years or 100,000 miles on powertrains. Other big brands such as Chrysler, Chevrolet, and GMC all offer three years or 36,000 miles new vehicle limited warranty, and five years or 100,000 miles powertrain limited warranty

The most standard warranties on the market come from Honda, Nissan, Toyota, Ford, Mazda, and Subaru, with three years or 36,000 miles on the new vehicle, plus five years or 60,000 miles on the powertrain.

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