Q

How does a car warranty work?

A

When you purchase a vehicle, it will likely come covered by a car warranty — an agreement that covers necessary repairs to your car due to manufacturer defects or mechanical breakdown. You also have the option of purchasing an extended warranty.

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By 

Stephanie Nieves

Stephanie Nieves

Editor & Home and Auto Insurance Expert

Stephanie Nieves is a former editor and insurance expert at Policygenius, where she covered home and auto insurance. Her work has also appeared in Business Insider, Money, HerMoney, PayScale, and The Muse.

Updated  | 6 min read

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When you buy a new car, it will typically come with a warranty, an agreement that the car’s manufacturer will cover the cost of certain repairs or issues that come up with the vehicle — specifically issues that result from defects or poor workmanship.

Depending on the specifics of the car warranty, it might cover issues with the engine, transmission or drive shafts, as well as problems with the car’s air conditioner, backup camera, steering, and other systems.

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Warranties will last up to a certain length of time or number of miles, whichever comes first. For example, your warranty on your new car might last until three years after you purchase it or until you reach 36,000 miles, whichever happens first.

A car warranty is different from car insurance because it covers broken or defective parts, not damage from a collision, extreme weather, or other outside forces. But warranties don’t cover routine maintenance, like oil changes or brake pad replacements.

Key Takeaways

  • New cars come with a factory warranty that covers certain mechanical repairs and repairs or replacement due to defects.

  • Car warranties are often transferable owner to owner, so even if you buy a used car it may still come with a manufacturer's warranty.

  • Once the original warranty expires, some drivers purchase an extended warranty to continue the coverage.

  • However, extended warranties can cost more than they save in repairs, so they aren’t always the right choice for every driver.

What does a car warranty cover?

When you buy a new car, it will come with an original manufacturer warranty that covers the cost to repair or replace broken or defective car parts. In many cases, these warranties stick with the car and are transferable from owner to owner.

That means you may be covered by the original warranty if you purchase a used or certified pre-owned car that’s only a few years old. But the clock doesn’t start over on the warranty. If you bought it with just six months or 6,000 miles left on the original warranty, that’s how long you’ll have it.

As we mentioned above, a warranty covers broken or defective parts and systems, not damage from an accident or from regular wear and tear. In order for the fixes to be covered by your manufacturer’s warranty, you may have to take your car in for service at one of your automaker’s licensed dealerships or an approved repair shop.

The types of problems covered by your car’s warranty can include:

  • Repairing or fixing engine parts

  • Repairing or fixing transmission parts

  • Issues or defects with seatbelts or airbags

  • Issues or defects in the audio system or entertainment system

  • Issue or defects with other electronic systems in the car, like the AC

Your car’s warranty may also include roadside assistance for the length of the warranty. If your car’s warranty doesn’t include roadside assistance, it’s an easy add-on to your car insurance policy, or you can purchase it through a third-party provider like AAA.

Types of warranties

The warranty that comes with a new car is usually called the original manufacturer warranty or the factory warranty. It typically lasts for a set period of time or number of miles, whichever comes first. Different automakers offer different warranties, so the length of the warranty is something you might want to consider when shopping around for a new car.

However, within the original manufacturer warranty there may be several components that cover different elements of your car and last for different amounts of time, including:

  • Powertrain warranty: This term will sound familiar to car shoppers. A powertrain warranty covers the parts of your car that make it move, including the engine, transmission, driveshaft, axles, gaskets, seals, and wheels.

  • Drivetrain warranty: A drivetrain warranty is a slightly more limited version of a powertrain warranty, and covers most of the same parts except the engine. It may also last longer than a powertrain warranty.

  • Bumper-to-bumper warranty: This component of a factory warranty covers all the other parts of your car that aren’t included under a powertrain or drivetrain warranty. That can include airbags, seat belts, air conditioning, infotainment systems, rearview cameras, doors and locks, and other electrical systems in the car.

  • Emissions warranty: New cars are required by law to meet certain emissions standards, and automakers are also required to provide warranties to cover the parts of your car that help it meet those standards. That includes exhaust pipes and valves, oxygen sensors, the catalytic converter, and other emissions-related parts.

  • Corrosion warranty: This is a warranty component that covers perforation or corrosion on your car. This type of warranty generally lasts longer than your powertrain warranty or bumper-to-bumper warranty, but you’re also not very likely to need it, since most new cars are well-protected against perforation or rust.

Be sure to read your factory warranty carefully to understand which of these components it includes and for how long. Your car warranty may also include roadside assistance, which is a service that covers the types of emergencies that can leave you stranded on the side of the road, like flat tires or running out of gas.

Then there are extended warranties. Once your factory warranty runs out, repairs to parts of your vehicle that were once covered under warranty will no longer be covered.

That’s why some drivers choose to purchase a separate product called an extended warranty, either from your dealership or from a third-party company that offers extended warranties. An extended warranty can cover the same kinds of issues and repairs that your factory warranty did — but they come at a cost.

Should I get an extended warranty?

An extended warranty, also called a vehicle service contract, is a separate product that drivers can purchase, to cover some of the costs associated with repairs or replacement parts. Like your original factory warranty, an extended warranty can cover parts of your vehicle’s engine, transmission, or other systems, but it won’t cover routine maintenance. 

An extended warranty is similar to mechanical breakdown insurance, a car insurance endorsement that extends coverage for mechanical issues not typically covered by car insurance. 

Some drivers may appreciate the peace of mind that comes with having an extended warranty, and knowing they may be able to have certain repair costs covered and won’t have to pay out of pocket.

An extended warranty may make sense for people who purchase a used or older vehicle that is no longer covered by its original warranty, and plan on driving it for a long time. They might be especially useful for people driving particularly unreliable models of car that are prone to mechanical issues.

However, it's smart to be cautious about extended warranties, whether you’re being offered one at your car dealership or considering purchasing one from a third-party warranty company.

They can sometimes wind up costing you more than they’re worth: A 2013 Consumer Reports survey [1] found that more than half of drivers who had purchased an extended warranty hadn’t used it for repairs. And for those that did, the median amount of money saved was $837, compared to the $1,214 average initial cost of an extended warranty.

That means many people spent hundreds more to get the warranty than they saved in repair costs. Instead of buying an extended warranty, it may be more cost-effective to simply buy a car that’s well-rated for reliability.

Extended warranty companies

You can purchase an extended warranty from a car dealership or from one of the many third-party car warranty companies. As with car insurance, it makes sense to shop around before you settle on an extended warranty.

You should also be sure to read the fine print: A cheaper extended warranty may cover less than a slightly more expensive one. Some of the companies that sell extended warranties are:

  • America Auto Care

  • Carchex

  • CarShield

  • Concord Auto Protect

  • Complete Car Warranty

  • Delta Auto Protect

  • Endurance

  • GWC Warranty

  • Infinite Auto Protection

  • Omega Auto Care

  • Protect My Car

Car warranty vs. car insurance

As we mentioned above, a car warranty covers mechanical issues or replacements to vehicle parts due to defect or poor workmanship. Car insurance can cover damage to your vehicle from collisions or other accidents, as well as damage from extreme weather, fire, flood, vandalism, or theft.

Car insurance is also important because it covers damage you do to others: Your liability coverage, which is the backbone of every car insurance policy, pays for other drivers’ repairs or medical expenses if you cause an accident.

Car insurance is broken into different coverage components, which protect you and your vehicle under different circumstances. Here’s a quick rundown of different types of car insurance coverage:

Coverage TypeWhat It Does
Bodily injury liabilityThe part of your liability coverage that pays for medical bills if you've injured someone in an accident
Property damage liabilityThe other part of liability coverage, covers the cost of property damage you've caused in an accident
Personal injury protectionCovers medical expenses for you or your passengers after an accident
Uninsured/underinsured motoristCovers the costs if you're in an accident caused by a driver with little or no car insurance
ComprehensiveCovers damage to your car that happens when you're not driving
CollisionCovers damage to your car after a car accident, no matter who was at fault

Together, those coverage types make up what’s usually referred to as full coverage car insurance. As you can see, car insurance coverage doesn’t overlap with a car warranty: They exist to offer you very different types of protection.

Neither a car warranty nor car insurance covers routine maintenance and wear and tear though, so oil changes, new brake pads and other regular services your vehicle requires are on you.

Frequently Asked Questions

What does a 5-year/60,000 mile warranty mean?

Manufacturer warranties last up to a certain number of years or until your car reaches a certain mileage. So a 5-year/60,000 mile warranty will cover your car for five years or 60,000 miles, whichever comes first. Powertrain warranties, which cover your engine, transmission, and drive system, typically last longer than bumper-to-bumper warranties, which cover everything from the front bumper to the back bumper (minus the bumpers themselves).

Who pays for warranty work on a car?

If your car has an issue that’s covered under its manufacturer warranty, then the car manufacturer will pay for the necessary work. You don’t have to take your car back to the dealership where you bought it in order to get the necessary repairs, you should be able to take it to any of the same automarker’s dealerships.

Are warranties transferable?

Full warranties, where the manufacturer or dealer repairs your vehicle for free for a certain period of time, are usually transferable from owner to owner. If you sell your car to someone else after you buy it, the full warranty will carry over to them as long as it hasn’t ended already. However, limited warranties, which repair specific parts of your car and certain types of defects, are typically not transferable.