Auto extended warranties have become extremely popular over the past decade or so, due to the sagging economy. Many consumers are concerned about the reliability of their car’s warranty and want a policy that will give them peace of mind in the event of a breakdown or mechanical failure. Extended warranties can help protect your investment. But, what exactly does an auto warranty cover?
Your warranty will usually cover the components of your vehicle (also known as the “wear and tear” clause of your warranty policy). That means that it will pay for parts such as tires, rims, and brakes that wear out or are otherwise damaged during normal use. The typical coverage will also pay for basic wear and tear on the transmission or engine if the vehicle has a problem after purchase. For most warranties, you must use the vehicle for a certain amount of time before the warranty kicks in.
Another common warranty feature is the so-called “tire guarantee”. You may have heard of this kind of insurance coverage. It pays for damage to your car caused by a blowout or flat tire. This can be covered with a separate warranty from the manufacturer or you may be covered by your vehicle’s warranty through the dealer. If so, then this type of coverage is usually separate from
the manufacturer’s warranty. Tire coverage is subject to availability and there are other kinds of coverage available.
A few warranties will cover you in the event that your vehicle becomes stolen or vandalized. You may also be covered for damage caused by weather, fire, and even terrorist attacks. For this very reason, a handful of dealerships prefer to include a terrorism insurance rider to their warranty contracts. This is good to know ahead of time, because some dealerships won’t add this rider if you tell them upfront that you want it.
The number one reason for most car owners to buy warranties is to save money. A few years ago the premium associated with extended car warranties was very high. Today, the cost has gone down, but the benefits remain the same. Before purchasing an extended warranty you need to figure out exactly what your vehicle is worth. If you overpay for a warranty, you may end up with a low car value, or worse yet, no car value at all.
One of the biggest additions to the typical extended warranty is the “protection period”. This is the time frame in which you are covered during your warranty. For most types of vehicles, your warranty will kick in after your vehicle leaves the dealership; usually around 6 months, but it could be as short as a few weeks.
You should also consider how many months you will be covered during this “protection period”. Will your warranty provide coverage for repair costs after your warranty expires? Are you covered for any additional damage that occurs during the warranty period? These are all things that you should consider and ask about before purchasing an extended warranty. If you don’t think you have the budget to obtain a full coverage warranty, consider getting partial coverage for your vehicle.
How long does the “car’s value” last? As long as your vehicle is maintained well and you pay
your premiums on time, you will get full value of your car. This means that your warranty is for the full cost of your car, even if you have to repair it or replace parts due to wear and tear. If you ever need to sell your used car, you will still get top dollar for it because the value has not decreased. Just make sure that you are getting full value, not just a reduction in price.
Do your best to research the different types of coverages out there. There are many companies that sell auto extended warranties but there are good ones that stand apart from the bad ones. You can always go online and look at the reviews previous customers have left which are good depictions of their experience. For example, Olive extended car warranty coverage reviews showcase that it is a very established company with many happy customers. Doing your research can help you save money from a reputable company rather than wasting money with a bad one.