If you’re unfamiliar with how extended car warranties work, shopping around for a contract can be a daunting process.
Read on to learn everything you need to know about extended auto warranties—what they cover, what to look for in a policy, and how to decide if an extended warranty is right for you.
What is an extended car warranty?
An extended car warranty is an optional insurance policy that can help you cover the cost of certain car repairs that you may need while you own it. An extended car warranty usually kicks in after the manufacturer’s warranty has expired.
When does an extended warranty kick in?
Extended warranties typically kick in after a manufacturer’s warranty expires. This can vary depending on the make of a vehicle, but generally a manufacturer’s warranty expires occurs after 5 years when breakdowns and repairs start to happen more frequently with an aging car.
Manufacturer’s warranty vs extended car warranty: what’s the difference?
A manufacturer's warranty (also known as a “factory warranty”) is included in the vehicle’s purchase price, starts at the time of sale, and typically provides coverage for the components of your car, most importantly the powertrain. Extended car warranties cost an additional fee and they are not included with the purchase of a vehicle.
Should I buy an extended warranty on a used car?
Extended car warranties aren’t essential. But they can save you money if your car needs repairs that are covered under the plan.
Purchasing an extended car warranty might make sense if you:
- want protection for your car once the manufacturer’s warranty expires
- plan on owning your car for a long time
- bought a used car and you want to reduce your financial risk and stress
If you happen to use your car for commercial purposes, be aware that most extended warranties have exclusions for commercial use which would make your warranty void.
To figure out if an extended warranty is worth the investment, you’ll need to consider the specifics of your situation. Your ability to cover all of the costs associated with a major breakdown, your vehicle’s age, mileage, and how you plan to use the car all come into play.
To help you do the math, check out our guide: Is an extended warranty worth it?
What does an extended car warranty cover?
Extended car warranties will typically cover vehicle repair costs and other expenses associated with a breakdown. They do not provide coverage for things like routine maintenance or vehicle appearance.
Although coverage will vary depending on the company that’s offering the contract and the type of plan available, here’s an overview of what an extended car warranty will generally cover.
Extended car warranties typically cover repairs for everything in a vehicle’s powertrain, which includes:
- Transfer case
- Front and rear drive axle
- Electric/hybrid components
Other Vehicle Parts
Other critical vehicle parts might be covered in an extended car warranty, such as:
- Air conditioner
- Fuel delivery components
- Front and rear suspension systems
- Cooling systems
- Enhanced electrical systems
- Supplemental restraint systems
- Emission systems
Extended car warranties can also cover some of the other costs associated with a breakdown. Things like roadside assistance, trip-interruption costs, car rental costs, and multimedia software updates can be included in a policy.
What isn’t covered in an extended car warranty?
Extended car warranties typically exclude for the following items:
- Routine maintenance: oil changes, tire rotations, etc.
- Wear and tear: brakes, brake pads, clutches, windshield wipers, headlight bulbs, etc.
- Appearance and exterior damage: scratches and dings
- Interior damage: tears in the upholstery, holes in the seats, broken plastic, etc.
- Damage from an accident: dents in the exterior, broken glass, etc.
- Damage from environmental factors: salt, sand, wind, hail, tree sap, etc.
- Damage caused by improper car care: skipping regular maintenance, reckless driving, etc.
- Alterations or modifications: installing incorrect parts, tampering with the odometer, etc.
Beyond these general exclusions, you should also keep an eye out for exclusions that are specific to your situation. For example, make sure your policy won’t expire if you move from one province to the next.
For an example of how exclusions look in fine print, here’s a list of automotive parts that are not covered as part of GuardTree’s used car warranty.
What to consider when selecting an extended warranty
It’s important to choose an extended warranty that works well for your specific needs. Make sure you can clearly answer the following questions before you choose an extended warranty for your vehicle.
- What is covered and what is not: Does the policy include coverage for everything you think you might need? Keep in mind, some exclusions like wear and tear are standard across most if not all extended car warranties.
- Any specific exclusions in the contract: Read the fine print and familiarize yourself with every exclusion before signing on the dotted line. For example, if the policy excludes coverage for any commercial use of your vehicle, and your vehicle is used for commercial purposes, it’s not the right policy for you.
- Cost: The price of an extended warranty will vary depending on your vehicle’s make, model, mileage, and age. Make sure you shop around for the best price and do the math to calculate the total price of the warranty before you sign up. Similar protections on the same vehicle will not necessarily come at the same price, depending who sells it.
- Transferability: Can you transfer the warranty to a new owner if you sell the car?
- Kilometer limits/age of vehicle limits: Will the policy expire when your car reaches a certain age or mileage limit?
- Which repair shops are approved: Where can you take your car in for repairs? Everywhere? Or just to specific repair shops?
- Waiting periods: Will the policy kick in as soon as you sign up, or is there a waiting period (e.g. 30 days from signing the contract)?
- Deductibles: What is your deductible in the event of a breakdown?
- Cancellation policy: Can you cancel the policy at any time? Is the cancellation policy fair? Are there any cancellation fees?
- Who is backing the warranty: whether the auto manufacturer or an independent company is providing the extended warranty, read online reviews and make sure consumers are happy with the company providing the coverage.
Comparing extended warranties and confused by all of the options? Know what to look for with our step-by-step guide: Not all warranties are created equal.
What is the deductible on an extended car warranty?
The deductible on an extended car warranty can range from $0 to hundreds of dollars. The exact deductible you’ll pay will vary based on the options you enter when you purchase a policy.
Generally, extended warranties with low or no deductibles will cost more than plans with high deductibles.
Where can I buy an extended car warranty in Canada?
In Canada, you can buy an extended car warranty from car dealerships, major insurance companies, credit unions, banks, and auto clubs. Some companies also offer extended car warranties online. These are typically limited to certain provinces as licensing restrictions apply.
When should I buy an extended warranty for my car?
You can buy an extended warranty at any time during a vehicle’s life, provided your car doesn’t have unusually high mileage or age.
Be aware that car dealerships may try to pressure you into buying an extended warranty at the time of sale. But you aren’t required to buy an extended warranty the same day you buy the car.
Whether you decide to purchase an extended warranty at a dealership or elsewhere, you should always explore and compare other policy options to make sure you’re getting the best deal.
Get more for your money. Get GuardTree.
Extended auto warranties aren’t right for everyone. But many car owners are glad they purchased one—especially those who’ve been through unexpected, expensive breakdowns.
If you’re looking for an extended car warranty in Canada, GuardTree is a comprehensive, monthly extended warranty subscription that you can cancel at any time.
Our policy provides protection from most major electrical and mechanical repairs and offers additional benefits like roadside assistance, car rental, and trip interruption costs.