As cars age over time the chances of parts breaking down significantly increases and can result in expensive repair or replacement costs. A car warranty allows your vehicle to be protected in the case of mechanical failures, but is it a good investment?

With our guide, we’ll explain what a car warranty is, what they can cover, and what they may cost you. From this, we’ll determine whether you need coverage and what to look for in an extended car warranty. Some of our recommended best extended car warranty companies will also be provided so you can begin comparing quotes.

A “car warranty” is an agreement where a plan provider covers repair or replacement costs for vehicle parts that fail due to poor workmanship or mechanical breakdown. Car warranties also don’t cover damaged parts that are considered normal wear and tear items.

These contracts last for a specific amount of time or until a vehicle reaches a certain mileage amount, whichever comes first. However, lifetime plans are available to cover your vehicle as long as you have it, albeit with limited coverage.

Car Warranty Vs. Car Insurance

Car warranties are different from car insurance since they do not provide coverage for any collision, accident, or weather-related damages. They also tend to come with lower costs than car insurance typically does and are not required to be purchased for your vehicle.

When your vehicle breaks down you need to take it to an authorized repair facility for your car warranty to cover repairs. Once you’ve given the repair shop the go-ahead to diagnose the problem with your car, you’ll need to give them the phone number of your plan carrier’s claims department. Then soon after you’ll be notified if the repair is covered under your warranty.

Typically the majority of repair costs are covered by the plan provider and all you will have to pay is the deductible stated in your agreement. However, if you have a disappearing deductible or no deductible as part of your plan any covered repairs or replacements will be completely paid for.

Can You Cancel a Warranty on a Car?

For most extended warranties, there are no constraints on when you can cancel your policy so it can be done at any time. After you cancel your coverage plan, you’ll be given a prorated refund for the unused portion of your contract. However, a factory warranty cannot be canceled during its lifetime.

Is a Car Warranty Transferable?

Regardless of who owns the car, factory warranties are transferable from owner to owner. This is because a new car protection plan is directly tied to the VIN of your vehicle. However, for extended warranties, it depends on the terms of your contract.

There are two main types of car protection products you’ll come across including limited-term and lifetime car warranties. Both will be broken down below along with common warranties that fall under each category.

Limited-Term Car Warranties

Limited-term car warranties are the most common type of vehicle protection plan and last for a given time period and mileage limit. The more comprehensive coverage gets, the lower the term and mileage limit tends to be and provider coverage varies widely. In the sections below, we detail the three types of term coverage plans available for both new and used vehicles.

Factory Warranty

Also known as a manufacturer’s warranty, a factory warranty comes packaged with most new vehicles. Because they typically cover the majority of car components, you’ll sometimes see factory warranties called bumper-to-bumper warranties.

Certified Pre-Owned (CPO) Warranty

Much like a factory warranty, a CPO warranty comes packaged with a used car that’s been certified by the manufacturer. CPO warranties tend to offer coverage that’s similar to new car warranties, but plans differ based on the manufacturer.

Extended Warranties

True extended warranties are offered by car manufacturers to lengthen the terms of factory warranties. There’s an entire industry of aftermarket warranties sold by third-party providers. While these are often called extended warranties, they’re technically vehicle service contracts (VSCs).

Lifetime Car Warranty

A lifetime car warranty protects your vehicle in the case of mechanical failure for an unlimited time and mileage. These types of coverage plans are similar to powertrain warranties and typically only include important parts like the engine and drivetrain which allow your vehicle to move. However, since it protects your car for its entire life it comes at a higher price than its limited-term counterpart and is not offered by all providers.

In general, car warranties cover vehicle parts that are not considered wear and tear such as the engine, transmission, and axles. When you buy a new vehicle, the car manufacturer sets the terms of the factory warranty and they typically cover nearly all of your vehicle’s components. If you purchase an extended warranty from your car’s manufacturer or an aftermarket provider, you’ll be able to choose from a few levels of coverage.

What Does a Factory Car Warranty Cover?

There are six main components that typically make up a factory warranty coverage:

• New vehicle limited warranty: Most automakers offer a period of bumper-to-bumper coverage for nearly all vehicle components. Coverage varies by manufacturer, but 3 years/36,000 miles is a common warranty period.
• Powertrain limited warranty: Factory warranties often include a period of protection for your vehicle’s engine, transmission, and drivetrain. Coverage generally lasts longer than the bumper-to-bumper warranty, often coming in at 5 years/60,000 miles.
• Corrosion/perforation warranty: Some automakers include a long period of protection against rust and holes on the vehicle’s body.
• Emissions warranty: Cars manufactured since 1995 are covered by the federal emissions warranty, which requires 2 years/24,000 miles of coverage for certain emissions-related parts and 8 years/80,000 miles for others. California has an additional warranty that covers emissions components for 7 years/70,000 miles.
• Lifetime limited parts warranty: Manufacturers may offer lifetime coverage for specific components.
• Maintenance warranty: Some factory warranties include coverage for routine maintenance such as oil changes.

Because of federal regulations, hybrid and electric vehicles come with a minimum of 8 years/100,000 miles of warranty protection for their batteries. Diesel cars may also have a specific warranty that covers parts of the diesel engine.

Certified Pre-Owned (CPO) Warranty Plans

Dealerships will often offer these CPO warranty plans when you buy a used car::

• Limited or standard bumper-to-bumper: Many automakers include bumper-to-bumper or comprehensive inclusionary coverage with CPO vehicle warranties.
• Powertrain: Like new cars, many CPO vehicles come with powertrain and drivetrain protection that lasts longer than the bumper-to-bumper coverage.

Depending on the dealership and manufacturer of your vehicle, there may be other tiers of CPO warranty coverage available.

What Does an Extended Car Warranty Cover?

The amount of coverage you will receive depends entirely on the plan type you select. There are two main types of extended car warranty coverage plans: exclusionary and inclusionary. We’ll take a closer look at each in the sections below.

Exclusionary Car Warranty Plans

An exclusionary warranty covers almost all of your vehicle’s components, which is why it’s sometimes referred to as a bumper-to-bumper plan. These warranties are called exclusionary because their contracts only list the components that aren’t covered. A provider’s exclusionary warranty is usually its highest tier of warranty coverage.

Inclusionary Car Warranty Plans

Inclusionary warranties include a list of all of the components that are covered. If a component isn’t listed in the contract, it doesn’t fall under warranty protection. This is why inclusionary warranties are sometimes referred to as stated-component warranties.

Most providers offer a few levels of stated-component protection. The levels usually break down into these subcategories:

• Comprehensive stated-component: This is usually the highest level of stated-component coverage. It comes close to matching the protection offered by a provider’s exclusionary contract.
• Medium stated-component: Vehicle protection plans with this mid-tier level of coverage typically include the most important car components, as well as systems like navigation and air conditioning.
• Powertrain plus: This warranty adds a few components to basic powertrain coverage. Along with basic drivetrain parts, these plans usually cover components related to the fuel system, electrical system, and cooling system.
• Powertrain: A powertrain warranty is the most basic level of warranty protection a provider offers. It covers the assembly of parts that keep the car moving including the engine, transmission, driveshaft, axles, and differential.

What Voids Car Warranty Coverage?

There are several things that can cause your warranty contract to be voided including:

• Weather-Related Damages: If your car is damaged by natural disasters from wind, fire, or hail warranty coverage may be pulled.
• Misuse of a vehicle: Using a vehicle in other ways that aren’t considered normal use such as driving off-road or racing will immediately end your warranty.
• Lack of proper maintenance: Not following your contract’s maintenance schedule or doing other unauthorized maintenance on your car will cause a warranty plan to be terminated.
• Receiving a salvage title: Once you receive a salvaged title for your car in an extreme accident, your car is considered a total loss and cannot be covered under warranty.
• Unauthorized Alterations: All modifications done to your vehicle with factory parts or otherwise cause your plan to be voided.

A standard car warranty lasts around 3 years or 36,000 miles for comprehensive coverage and 5 years or 60,000 miles for powertrain protection. Typically the fewer parts covered, the longer the contract terms will be. However, some warranties can last much longer than average and may even come with unlimited mileage.

While typically the industry measure is around 12,000 miles for every year of coverage, this doesn’t stack up with how much most people actually drive. According to the U.S. Department of Transportation, in 2022 Americans drove an average of around 13,476 miles per year. So most plans will end before the warranty time limit comes.

If you have a new car, the cost of your factory warranty is included in the cost of the vehicle, so you shouldn’t be charged anything extra. However, if you want extended protection once your plan expires, the price you pay varies widely and depends on a variety of factors which include:

• Vehicle type: Your car’s make and model play huge roles in determining the cost of your warranty. More expensive cars often have more expensive repairs or specialty parts, so they typically cost more to cover. If you have a classic or luxury car, a warranty company may require specific coverage.
• Vehicle age: Older cars usually cost more to cover than newer models because they’re more likely to break down and need repairs.
• Vehicle mileage: Cars with lower mileage typically cost less to cover than higher-mileage vehicles.
• Level of coverage: Most providers have several coverage options, ranging from bumper-to-bumper warranties to basic powertrain coverage. The plan you choose will affect how much your warranty will cost.
• Location: Because states have their own regulations for car warranties and cities have different risk factors, where you live will affect how much you pay for coverage.

How Much is an Extended Car Warranty?

You can expect to pay between $1,000 and $4,000 for an extended warranty. In 2022, we surveyed 1,000 drivers about their car warranties. We found that these were the median costs of extended warranties from different types of providers:

• Manufacturer: $2,500
• Used car dealer: $2,250
• Third-party provider: $2,396

The image below shows how many survey respondents paid within a certain price range:

How Can I Pay For My Car Warranty?

If you buy an extended warranty from your car’s manufacturer, you can often roll that cost into your loan. However, you’ll pay interest on it. In some cases, you’ll have the option to pay up front and possibly get a discount. If you buy a third-party warranty, you may be able to pay up front, but most providers will set up a monthly payment plan.

Whether you need to extend your warranty depends first and foremost on if your manufacturer has expired. If so, pursuing a vehicle service contract also known as an extended warranty may be right for you. However, there are many factors to consider when deciding to buy.

How Do I Find Out If My Car Is Already Under Warranty?

If you’ve recently bought a used vehicle or are interested in buying a VSC, you should find out if you already have warranty coverage. To do this, you’ll need to find your VIN and record your vehicle’s mileage. If you bought your car from a dealership, you can contact that business or the manufacturer. Once you provide the VIN and mileage information, a representative can tell you if your vehicle is still covered.

When buying a car from a private seller, make sure they include any warranty information when conducting the sale. If they didn’t, you can contact them to find out or reach out to the automaker to see if the factory warranty is still in effect. For a fee, Carfax can run a report that details the vehicle’s repair history and whether it has warranty coverage.

Are Car Warranty Extensions Worth It?

The value of purchasing an extension on your car warranty really hinges on the reliability of your vehicle and if you are unable to pay for unexpected repairs. While it can be a good idea to purchase coverage for some cars, typically a warranty will be more expensive than any breakdowns you experience on the road. However, if you are particularly worried about an expensive part like your transmission breaking down, an extended car warranty can give you peace of mind.

There are many options and factors to consider when buying an extended car warranty. While coverage and cost are usually the primary concern, there is more to consider in a plan. Also, depending on the provider you choose you may get different coverage options and claims experiences. To help you make the best decision, we’ll highlight the types of warranty companies and what to look for in vehicle service contracts.

Where To Buy a Car Warranty

When searching for a car warranty you’ll be able to choose from many different options including dealerships, brokers, and direct third-party providers. Below we will highlight these types of car warranty companies and the pros and cons of each.

Automaker Dealers

Vehicle Dealerships will often try to offer you an extended protection plan soon before your coverage expires. While factory warranties come with comprehensive protection and certified repair technicians, they are much more expensive than those from other providers. Also, they must be purchased before the factory warranty expires and they have less flexibility compared to third parties.

Coverage Brokers

These types of warranty companies don’t handle the coverage plans directly. Instead, they match you with coverage plans and serve as the purchasing hub for a variety of different providers. If you chose to buy a plan from these intermediaries, it can be confusing to make a claim and you will have to find the handler of your contract rather than the broker.

Direct Providers

This third-party provider handles all vehicle service contracts directly and offers plans purchase and claims services as part of their business. They also tend to offer a large number of coverage plans to choose from that can be personalized to your particular needs. If you need to make a claim, all you have to do is contact the company’s claims department directly.

What Should I Consider When Shopping For A Car Warranty?

If you’re in the market for a car warranty, make sure you’re aware of any stipulations or exceptions in the service contract. Here are some important factors to consider when shopping for warranty coverage:

• Exclusions and restrictions: Most warranties don’t cover common wear-and-tear items like spark plugs or brake pads. They also don’t cover pre-existing damage or car repairs that result from misuse and negligence.
• Coverage eligibility: Some warranty providers put age and mileage limits on their coverage plans. If you have an older or higher-mileage vehicle, consider used car warranties or extended warranties for cars over 100,000 miles.
• Waiting period: Most extended warranties have a waiting period–you’ll typically need to wait 30 days and put 1,000 miles on your car before you can use your coverage. This helps prevent customers from filing warranty claims for pre-existing damage.
• Cancellation policy: Most providers will offer a full or prorated refund if you decide you don’t want your car warranty after all.
• Coverage terms: VSCs come with terms (expressed in mileage and length of time) that dictate how long coverage will last. You’ll see warranty coverage terms written like “5 years/50,000 miles.” Your coverage ends with whichever milestone comes first.
• Transferability: Warranties are tied to the vehicle identification number (VIN), so if you sell your car, the new owner can usually get coverage for the rest of the warranty period. Check your contract, as some providers charge a small fee.