WHAT DOES EXTENDED WARRANTY COVER ON A CAR?

If you ever offered an extended warranty as an add-on, then you've probably been asked by your customer, "What does an extended warranty cover on a car?" 

Extended warranty coverages may differ from warranty provider to warranty provider. But it all boils down to these basic coverages, but first, let's look at…

WHAT IS AN EXTENDED WARRANTY?

An extended vehicle warranty is a service contract that provides comprehensive coverage for repairs and replacements beyond what is provided by the original manufacturer's warranty. 

It is an optional service contract for a vehicle that buyers can purchase from the manufacturer, a dealership (that's you), or a third-party warranty provider. It costs more than the purchase price and covers the cost of fixing or replacing specific parts for a certain period or miles beyond what the manufacturer's warranty covers.

Even though most people buy a service contract when they buy a new car, they can usually get one at any time before their warranty runs out.

An extended car warranty is also called a "vehicle service contract".

WHAT DOES EXTENDED WARRANTY COVER ON A CAR?

Extended warranty coverage has different levels. But these 3 are the most common levels of extended warranty coverage for cars:

Powertrain coverage: Covers parts of your vehicle's engine, transmission, and drive axle.

Bumper-to-bumper coverage: Covers most parts of the car, like the steering, suspension, air conditioning and heating, and electronics. On the contract, you may see the word "exclusionary." This means that the warranty only lists things that aren't covered.

Stated-component coverage: Covers only the parts and systems of the vehicle that are listed.

Here's a 3,000-view on the difference in extended warranty coverage for cars.

Bumper-to-Bumper Warranties - Covers most parts of a car except those that are listed. More expensive than powertrain warranties. Usually comes with extra benefits like roadside assistance, trip interruption benefits, or reimbursement for a rental car.

Powertrain Warranties - Cover only the essential parts of your car, like the engine, transmission, and drive axle, are covered. A cheaper option, among other extended warranty coverages. Plans may or may not include benefits.

Stated-component coverage - Covers only the items listed. Nothing else. Depends on the chosen coverage. Plans may or may not include benefits.

BENEFITS OF AN EXTENDED WARRANTY COVERAGE

When purchasing extended warranty coverage for cars, customers get extra advantages and protections that are not often included with conventional warranties. Several of these advantages include:

Comprehensive, customizable coverage: Vehicle owners who purchase an extended warranty coverage may choose which components to cover. Owners may pick a more comprehensive coverage plan or a simple powertrain warranty if they wish.

Protection for your wallet: Even the most routine repairs may need costly components or labor. Extended warranty coverage can potentially save money on unexpected repairs. The only part where the owner needs to pay is for the deductible.

Improved vehicle maintenance: Most customers avoid repair shops as much as possible to reduce hefty expenses. However, ignoring the problem may cause it to worsen. Therefore it is preferable to handle it immediately. An extended warranty coverage relieves your client of the anxiety associated with contacting a repair, even after the manufacturer's warranty has expired.

Extra advantages: Most extended warranty coverage for cars provides additional benefits to automobile owners, such as roadside assistance, rental cars, and trip interruption coverage.

Peace of mind: Many car owners don't mark the end period of their manufacturer's warranty on their calendars. This makes them worried whenever something happens to their car, but they are unsure if the OEM warranty has ended. Having extended warranty coverage for their vehicle will also give them extended peace of mind.

According to research from Edmunds in 2021, the most common repairs and their costs are as follows:

WHO NEEDS EXTENDED WARRANTY COVERAGE?

Anyone who wants to extend the benefits of the coverage and period of their OEM warranty should buy an extended warranty. Suppose your customer plans to own a car for more than the OEM period, and he wants a piece of mind. In that case, he must have extended warranty coverage for his car but some customers might think it's an unnecessary expense. You can offer an extended warranty coverage later if this is the situation. You could also advise them to have an emergency fund ready when their car breaks after the OEM warranty expires.

CONCLUSION OR TAKEAWAY

A car service contract may shield your clients from unexpected repair expenses. Not only that, but an extended warranty can also minimize angry customers yapping on your phone. The coverage provided by an extended warranty might save your clients hundreds or even thousands of dollars on car repairs.

All things considered, you're doing your customers and yourself a favor when offering them extended warranty coverage.

 
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