The Breakdown Blog

What is the difference between an extended warranty and car insurance?

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There are a few key differences between car insurance and an extended car warranty. Your car insurance may be mandatory, depending on where you live. Car insurance includes liability coverage, which pays for damages you cause if there's an accident while you are driving your car, and depending on your car insurance policy's limits, it may also cover damage to your car, regardless of who is at fault in an accident. Some car insurance policies also cover the costs of physical recovery for you and your passengers if you are in an injury-causing accident. There are some car insurance policies out there that even cover damage to your vehicle from vandalism, theft, and natural disasters. However, car insurance does not cover the costs of mechanical breakdowns. An extended warranty helps pay for expensive repairs that could keep you from driving your car and is an option no matter where you live.

What is an extended warranty?

An extended auto warranty takes over when the manufacturer's warranty coverage on your car ends. New cars typically come with a manufacturer's warranty for a certain number of miles or a number of years; whichever comes first. When that warranty ends, you can choose to purchase an extended warranty to help pay for unexpected breakdowns that could otherwise cost you a lot of money. For example, Ford Motor Company’s used vehicle warranty starts at the expiration of your Ford New-Vehicle Warranty expires, or the date your “Ford Blue Advantage” used vehicle is purchased, whichever comes later.
It includes coverage for:

  • Bumper to bumper: 12 month/12,000-mile Limited Warranty Coverage
  • Powertrain: 7-year/100,000-mile Limited Warranty Coverage
  • 24-hour Roadside Assistance
  • 172 points of inspection by certified technicians

All used cars come with similar coverage. If your vehicle is no longer covered by the manufacturer warranty, you can purchase an extended warranty that would extend the time and/or number of miles your car's systems and parts are covered.

Does an extended warranty cover breakdowns?

Yes, your car's extended warranty should cover breakdowns that occur when a covered part or system fails. Depending on the limits of the extended warranty, it may cover the total cost of the repair, or a portion of the repair bill, minus your deductible. You can learn exactly which parts and systems your extended warranty covers by reading the contract issued by your extended warranty company.

Advantages and disadvantages of an extended warranty

Auto clubs, dealerships, car insurance companies, and independent car warranty companies sell extended auto warranties. You may be able to use your mechanic of choice when your car breaks down, depending on the rules of your extended warranty. In some cases, your extended warranty may dictate where you get your car fixed. One of the main advantages of an extended car warranty is that it helps pay for expensive repairs so you don't have to wipe out your savings or use your credit card to get your car back on the road.

Extended warranties are optional. Many car owners choose not to purchase additional coverage for mechanical breakdowns after their manufacturer's warranty expires and find themselves in a real pickle when they have an unexpected breakdown. However, those on a limited budget who worry about how they'll pay for the cost of fixing their car if it breaks down may find that an extended warranty brings peace of mind.


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About the AuthorRidesure Team

The Ridesure Team is here to help you understand the ins-and-outs of extended warranties, breakdown coverage, and many more topics you may hear when your vehicle has surpassed it's original warranty.