Lemon Law Attorneys Blog

The majority of consumer products come with some form of warranty, and cars are no exception. In fact, many manufacturers and third parties offer extended warranties that promise to provide additional protection and benefits. Before you say “yes” to an extended warranty, learn what they are and whether they are worthwhile.

What is an Extended Warranty for Cars?

Rather than a traditional warranty that covers repairs and defective parts, vehicle extended warranties are actually more like service contracts. As the name indicates, an extended warranty covers your car after your original warranty expires. As far as coverage goes, these extended warranties come in all shapes and sizes, with each offering different terms and possibly even deductibles. Extended warranty deductibles vary and can require payment based on visits or parts. In some cases, per-part deductibles apply even when multiple parts were used to repair one issue. Per-part extended warranties can be quite costly, so it is important to read the contract carefully before signing up.

On a very basic level, there are two types of extended warranties: manufacturer’s extended warranties and third party extended warranties. Generally, manufacturer extended warranties are really just an extension of the initial manufacturer warranty. In most cases, the manufacturer requires car owners to take their vehicles to franchised dealers for repairs and parts. If you take your vehicle to an outside service technician or replace parts yourself, you might void the warranty altogether. Third party warranties are backed by independent companies that are not affiliated with the manufacturer. If the company goes out of business, car owners are left without extended warranty coverage.

Before you purchase an extended warranty, know which questions to ask:

What Does the Warranty Cover?

Unlike the original manufacturer’s warranty, extended warranties are far from uniform. Coverage varies widely and might exclude certain repairs and parts. If you are considering buying an extended warranty, make sure it covers the parts that are most likely to experience problems, such as brakes, transmissions, air conditioning systems, and power steering. Read the contract thoroughly to catch important exclusions. Also beware of suspiciously low prices. If an extended warranty seems too good to be true, it probably is.

Who Pays: Me or the Repair Shop?

Pay attention to how the warranty handles repair bills. Although most extended warranties pay repair shops directly, some require owners to foot the bill and then wait to be reimbursed. If your car needs costly, extensive work, this can put you thousands of dollars out of pocket. Even worse, it usually takes the warranty company weeks or even months to process receipts and approve reimbursement.

Do You Need a Warranty?

Most auto experts caution against purchasing an extended warranty. Many are riddled with exclusions that do not cover the most frequent repairs. Furthermore, original manufacturer warranties generally provide comprehensive coverage for lengthy periods. Some original warranties offer bumper to bumper protection for up to 100,000 miles or five years, whichever comes first. Unless you plan to keep your car for quite a long time, you might never need the additional coverage.