Car Parts Plus

How To Select An Extended Warranty

When you purchase a new car, it comes with a warranty that covers service, parts, and repairs in the event a problem occurs. For example, if the transmission fails 12 months after driving it off the dealership lot, you’ll be able to take it back to the dealer in order to have the problem corrected. And it won’t cost you a dime.

Eventually, warranties expire and your recourse options become limited. This is the gap into which extended warranties fit. In effect, they’re service contracts – or, insurance policies – that cover the cost of parts and repairs when your original warranty expires. In today’s article, I’ll explain how to select the right service coverage for your vehicle, given your needs.

Identifying Your Coverage Needs

First, you need to determine what your current warranty already covers. For example, if you purchased a new car during the past 12 months, it’s probably already covered under a comprehensive 3-year, 36,000-mile policy from the factory. If you only drive 12,000 miles a year, you don’t need an extension for awhile; the original factory policy will cover any problems. However, if you drive 20,000 miles each year, or you plan to keep your vehicle for several years, an extended policy may come in handy.

Also, if you’re buying a used car that’s only a couple of years old, ask the owner about the current warranty and any extended policies that he’s invested in. And keep in mind the miles on the odometer; a 2-year old vehicle with 40,000 miles on it may have already outlived the original factory policy.

Choosing The Underwriter

Extended warranties are similar to life insurance policies: your recourse depends on the financial stability of the issuer. Most warranties that are underwritten by automakers are financially solid. Toyota isn’t going out of business anytime soon. Policies that are underwritten by independents are comparatively less-expensive, but may not be as reliable several years down the road. Bottom line: choose a stable underwriter, even if that means spending a little extra money.

What Coverage Is Included?

Reading coverage contracts is as exciting as watching a weed grow, but you need to find out what is covered and what isn’t. All extended warranties are different. Some only cover car parts that fail while others cover components that wear down under normal driving conditions. Some won’t cover anti-locking braking systems (odd, but it happens). Don’t assume something is covered in the policy. Check the contract and ask if you have questions.

Sometimes, They’re Valuable

Extended warranties can add value, depending upon how you use your car. People who seldom drive probably won’t need one (at least, during the first few years of ownership). However, others who drive more miles than covered on the factory warranty should consider investing in one. It’s basically an insurance policy that provides recourse if something goes wrong with your vehicle. Examine your needs, choose a stable underwriter, and carefully review the items that are covered. Long-term peace of mind may be worth the extra expense.

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