Do I Need An Extended Auto Warranty If I Am Still Covered By The Manufacturer?

By Author: Steve Khzakia
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So, your recently purchased automobile is still covered by the manufacturer's warranty-do you really need an extended warranty as well? The long and short answer is yes. Even if you're still covered by the manufacturer, an extended warranty for your vehicle can be advantageous.

What is an Extended Warranty?

An extended auto warranty allows you to protect yourself against the unforeseen-in this case, the unexpected cost of repairing a car due to mechanical failure. Considering the fact that even a single mechanical failure is easily capable of exceeding the entire cost of the warranty, in most cases an extended warranty is something you can't afford to be without.

Thirty-six states do not currently regulate the specific types of coverage offered in extended auto warranties. As a result, the exact degree and level of coverage can vary greatly between companies. In order to both protect yourself and obtain the most from a warranty, it is important to gain a thorough understanding of what exactly your potential warranty covers.

Why are extended warranties necessary? First of all, let's take a look at ...
... what constitutes an extended warranty. An extended warranty is a contract between a car owner and a company that agrees to cover the costs of repairs stipulated by the contract for a predetermined amount of time in exchange for an initial fee. Whether the repairs are necessitated during the duration of the contract or not, the fee is still money well spent, as it provides you with peace of mind.

What is Covered by an Extended Warranty?

"Breakdowns" and "wear and tear" are the two most common areas of coverage related to extended auto warranties. Breakdown warranty coverage provides payment only to replace or repair parts of the automobile that break. On the other hand, wear-and-tear coverage pays out to cover the replacement of parts that are simply worn-down, acting as a protective measure before a breakdown can even occur.

Some warranties only feature breakdown coverage which can be less than adequate. Under a breakdown-related warranty, the warranty company will only pay for situations when a part physically breaks. However, not all mechanical failure can be attributed to abrupt damage. Parts of your vehicle can gradually wear down over time, significantly affecting your vehicle's performance, resale value, and even your own personal safety. But if a warranty only includes breakdown coverage, know that you'll have to shell out the cash to remedy anything else. In order to get the most effective degree of coverage, it's suggested that you opt for a plan with both breakdown and wear-and-tear allowances.

You should also find out if the extended warranty that you're considering includes coverage for Technical Service Bulletins (TSB), sometimes referred to as Factory Service Bulletins (FSB). Automobile manufacturers will occasionally determine that a part of an existing make and model of vehicle is unsatisfactory. This can usually occur when an unsafe aspect of the car's operation is brought to the manufacturer's attention. When this happens, the manufacturer will issue a TSB, alerting vehicle owners of the need to repair, replace, or otherwise remedy a particular part of the car. In some cases, depending on the seriousness of the condition and the safety issues involved, this might require immediate service.

It isn't uncommon for a manufacturer to issue multiple TSBs for a particular make and model of car over the duration of several years. However, many warranty companies fail to offer standard TSB coverage in their plans. This loophole can stick you with the repair bill, even when you've taken perfect care of your vehicle. When choosing an extended warranty for your car, always be sure to ask if the plan recognizes TSBs.

Do I Really Need the Extended Warranty?

Okay, so now that we know what kind of costs can be covered by an extended warranty, we still have to look at the big question: Why pay for extended coverage when you're currently covered by the manufacturer?

The price of an extended auto warranty is largely determined by your vehicle. This means that the longer you own your vehicle and the more miles it accumulates, the higher the price for the warranty. In addition, the older your vehicle grows, the higher the cost of potential repairs.

By purchasing an extended warranty for your new car as early as possible-even if it's still covered by the manufacturer-you can take advantage of the vehicle's low mileage and brand-new status in order to lock in the best price on the warranty. The longer you wait to secure an extended warranty, the more it will cost you down the road. If you wait until your manufacture coverage runs out, you could be looking at a significantly higher price tag for protection and peace of mind.
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