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Extended Car Warranty | Are Extended Warranties Scams?

Last Modified: September 03, 2018 by Jeff Ostroff | Originally Published August 28, 1999

Do You Need an Extended Warranty?

Now that cars are extremely reliable and routinely go over 100,000 miles you may feel a false sense of security. However, due to all of the advanced technology, when repairs are needed they can be shockingly expensive.

When You Should Consider Coverage

There are some situations where you should have the protection of an extended vehicle warranty. Here's some examples:

When You Don't Need Extended Warranty Coverage

Extended auto warranties are not for everybody and, in some cases, are not even needed. Let's take a look at a few cases:

If you have determined that you need an extended car warranty, we highly recommend the CARCHEX family of extended warranty products.

Continue reading for more detailed information:

What is an Extended Warranty for your Car?

An extended car warranty is a product that extends the term of the original warranty provided by the manufacturer of a vehicle. Legally, only the manufacturer of a product can offer you an extended warranty and refer to it as such. However, many third parties sell "vehicle service contracts" that give you the same type of coverage for a much lower price.

as is no warranty sticker

Each extended warranty contract is slightly different and may not exactly replicate the manufacturer's original warranty. There are different levels of coverage that you can purchase as well as different deductible options. There can be a lot of confusion and opportunities to make mistakes and buy the wrong coverage.

In the related pages we have all of the in depth information that you will need to get a complete understanding about related topics such as:

Extend Auto Warranty Repair

Extended Warranties Can Protect Your Wallet

In a nutshell, any warranty is insurance against future high cost repairs. You pay a known upfront cost so you can avoid getting hit with unexpected expenses when something breaks. They are available for both new and used cars.

Extended vehicle warranties are the most confusing "product" car dealers sell. The language is tricky and difficult to understand. We are here to clear it up for you. There is a large profit for the dealership in this "product" that they almost force on you, so you can expect high pressure sales tactics.

Buying extended coverage from a reputable third party company instead of the dealership will always get you a better deal.

The level of protection available ranges from the least expensive "big ticket item" coverage to the most expensive "bumper to bumper" plans. We have done research in this area. We have found the companies that offer the most complete coverage at the lowest prices. Reviews are below. We will discuss the unique features of the CARCHEX compete model.

Your premiums are deposited in a "claims reserve account." It is insured in case the administrator goes belly up.

Tips

Why we like CARCHEX and the "compete" model

Just like buying a car, I always encourage shopping around for the best price. The CARCHEX "compete" model is like shopping around. They offer coverage from multiple top tier administrators including their own products to ensure the highest level of coverage at the best price.

Car Under Repair

Quality Coverage for California Residents

California PlateGood news for California residents, CARCHEX is licensed to offer Mechanical Breakdown Insurance in California. Plans are available from high quality administrators. Each plan has four available levels of protection, deductible options, and up to seven years of coverage. Click here for a California quote from CARCHEX

Type of Warranty Coverage to Buy

Ignore terms like "Bumper to Bumper" which is misused and abused. Every extended car warranty company has their own definition of the term and it will not match yours.

Get the right coverage for your car and fully consider what they are buying. An "extended warranty" does not mean a golden umbrella of protection that covers all. Read the contract, understand it and get help if needed.

No plan covers standard consumable items such as tires, batteries and windshield wipers. Don't expect coverage for glass, lenses, lights, trim, upholstery or paint. Plans won't cover exhaust systems, brake pads and rotors, shock absorbers and similar items. These items are standard exclusions, do not be alarmed.

Some plans have benefits such as towing, roadside assistance and car rental reimbursement. When they do, you must read the fine print carefully. These benefits typically don't kick in until the manufacturer's warranty has expired.

The Sooner You Buy, the Better the Price

Due to inflation, prices for extended car warranties will go up the longer you wait and the more mileage that you have on your vehicle equals higher cost. Never wait until the manufacturer's coverage expires, buy an extended plan with it to get a better extended plan.

Deal With a Solid Company

Only buy coverage from companies with solid financials so they can actually pay your claims. The news over the last few years is littered with stories of companies that went under and left policy holders with worthless paper.

Car dealers will tell you that I'm making money with scare tactics. In reality, I'm uncovering tricks that will save you money!

Advertising Policy

Our Reviews of Warranty Companies

CARCHEX CARCHEX offers the "compete" model by offering policies from multiple top tier administrators including their own exclusive line of products. Their line of products was developed by combining their 14 years of industry experience with the backing of Assurant, Inc., one of the most respected insurance providers. They are now licensed to sell Mechanical Breakdown Insurance in California

I always say that you should shop around for the best price and coverage and CARCHEX makes that easy to do. They will make sure that you get the highest level of coverage at the best price, even if it is from another administrator. Most important to me is that they will let you see the contract for the coverage in the CARCHEX Direct system as they are talking to you. Everything is up front so you know exactly what you are getting. Read our full review >>

Get A Quote From CARCHEX or call them at 866-538-5986

Limited Time Offer: CARCHEX is offering $100 off all policies for CarBuyingTips.com visitors until October 31.

Click here to learn what to look for in an extended warranty.

Important Warnings About Car Warranties

warranty card

Caution About Manufacturer's 100,000 Mile Warranties

Many manufacturers are advertising very high mileage coverage. Don't get suckered in by the hype. You should focus on the word "limited." These are not full blown bumper to bumper warranties as they would have you believe. They are limited to the power train and do not cover the parts most likely to break. You should consider protecting your investment with a "bumper to bumper" extended warranty to cover these holes left by the manufacturer's limited coverage.

Tips for After You Buy the Warranty

Perform the Manufacturer's Scheduled Maintenance on Your Vehicle

oil cap

Don’t let companies weasel out of paying for repairs by maintaining your vehicle according to the manufacturer's schedule in the owner's manual. You must keep up with all the required maintenance. Make sure to perform oil, fluids and filter changes on time. Be sure to use only approved parts and fluids. Keep all receipts as proof that the proper maintenance has been performed. Some policies have maintenance logs in their contract books where you log each service performed on the car.

Avoid Issues When Making a Claim

Use the active manufacturer's warranty for repairs and go to a dealership. The extended coverage plan does not pay for repairs until the original warranty has expired.

When you need to make a claim, you want the process to be as smooth and hassle free as possible. Be prepared in advance and read our advice on the best practices for getting your claim approved.

CarBuyingTips.com has affiliate relationships with multiple web sites. We are paid referral fees for leads or sales generated from visitors that click on some links or fill out certain forms on this site. Please view our advertising policy page for more information.