A car insurance policy and an extended car warranty are two very different things. One is mandatory while the other is optional. And it can be tough to decide if both are right for you.

In this quick guide, we’ll explain the difference between a car warranty and car insurance and share what they can protect you from as a driver.

What is car insurance?

Car insurance is mandatory coverage that protects drivers in the event of a collision or incident. Each month, you pay an insurance company a set amount for an agreed upon level of coverage.

Car insurance may protect you from:

  • Having to pay to repair your car or other vehicle if it's damaged or in an accident
  • Liability claims if you are held responsible for an accident that causes damage to another person’s vehicle or injury to other people

If you get into a car crash, your insurance may cover ​the driver, all passengers, and other people who are involved. Also known as “auto insurance,” car insurance may also cover you for certain costs that occur between totaling a car and buying a new vehicle.

It’s important to note that car insurance is mandatory in Canada. All provinces and territories require drivers to have auto insurance coverage. Some provinces may require more coverage than others.

What is an extended car warranty?

An extended car warranty is optional protection that can help you cover the cost of certain car repairs that you may need while you own it. Also sometimes known as a used car warranty, extended car warranties typically kick in after a car’s manufacturer’s warranty expires.

Whereas car insurance provides coverage for collisions and incidents, an extended car warranty covers the costs associated with sudden breakdowns and repairs.

Extended warranties typically provide coverage for vehicle repair costs and other expenses associated with a breakdown. While certain extended warranties may include coverage for (e.g. roadside assistance), they do not cover things like routine maintenance, vehicle appearance, or pre-existing conditions. 

For example, a GuardTree extended car warranty subscription provides protection from most major electrical and mechanical repairs and includes additional benefits like roadside assistance, car rental, and trip interruption costs.

Learn more: Extended Car Warranties 101: Everything You Need to Know

What is the difference between car insurance and extended car warranties?

A car insurance policy provides coverage in the event of a collision or incident. An extended car warranty provides coverage for breakdown and repair costs which auto insurance does not cover.

Do you need car insurance and an extended car warranty?

No, you don’t need a car insurance and a car warranty. While car insurance is mandatory in Canada, an extended car warranty is optional.

Read more: How to Choose an Extended Car Warranty That’s Right For You

Are extended car warranties worth it?

Because extended car warranties are optional protection, you’re probably wondering if an extended warranty is worth it for your particular situation.

Typically, if your vehicle’s manufacturer’s warranty has expired or you drive an older vehicle, the protection that an extended warranty provides can make a lot of sense. But whether an extended warranty is right for you (or not) is a tricky question to answer, as factors like your vehicle’s age, mileage, your budget, and how long you intend to own the vehicle all come into play.

To help with your decision, here are the benefits of an extended car warranty:

  • Avoid paying out-of-pocket for surprise repair and breakdown costs
  • Reduce the risk of buying a used vehicle
  • Maintain coverage once the manufacturer warranty expires
  • Get “hidden extras” coverage (e.g. some extended warranties, like GuardTree, also provide car rental, roadside assistance, and travel expense reimbursement benefits)
  • Peace of mind that you’re covered in the event of an unexpected incident

Read more: Is an extended car warranty worth it? 

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. 

Pricing starts at $49.95 per month. You’re never locked into a long-term contract. And our contract provides protection from most major electrical and mechanical repairs and includes additional benefits like roadside assistance, car rental, and trip interruption costs.

See what’s covered and use our price calculator to decide if an extended car warranty is right for you.