It’s likely that you will hear a lot about warranties when you buy an automobile. We’ll tell you up front that they’re clearly different before you draw any assumptions about it being the same as auto insurance.
A car warranty: what is it? According to the Federal Trade Commission (FTC), it is a legal commitment to repair specific flaws or problems in your car for a predetermined amount of time after you buy it.
Now, we’ll assist explain how it varies in this post from an auto insurance coverage. To help you understand which applies in the event that something happens to your car, our experts will explain the distinctions between warranties and insurance.
Let’s go ahead and begin.
What distinguishes warranties from insurance?
Although there are notable distinctions between auto insurance and warranties, both provide financial security for your vehicles. The following highlights the distinctions between auto insurance and auto warranties to aid in your understanding of the many types of vehicle protection:
An agreement to pay a premium in exchange for financial protection in the case of an accident, theft, or other covered incident is what car insurance is. It is a legal contract that you sign with an insurance provider.
The following coverages should be added to your auto insurance policy in order to assist guarantee sufficient protection against a range of accidents:
Responsibility. When you or your vehicle causes injuries or property damage to another person in an accident, this coverage usually covers those costs. In practically all states, liability must be carried as a minimum coverage.
Impact. The name should usually be a dead giveaway, as collision coverage pays for any damages your car may get in an accident.
all-encompassing. The repairs to your car that are not covered by an accident are partially covered by this coverage. This could include losses due to theft, vandalism, hail, or fire.
Accidental repairs and losses covered by physical damage coverage are not covered by warranties. What exactly do they cover, then, and how can they help you as a driver?
kinds of guarantees
A warranty, as previously said, provides your car with financial security in the event that a part or component fails within a predetermined amount of time or miles, whichever comes first.
Usually, warranties are provided directly by the manufacturer or the dealer where you purchased the vehicle. Generally speaking, an automobile warranty covers just electrical and mechanical problems—accidents excluded. Additionally, you will usually see two different kinds of warranties when buying a car: extended warranties and new car warranties from the manufacturers.
The first three years or 36K miles, whichever comes first, are covered by a new car warranty, often known as a manufacturer’s warranty, which is normally provided by the manufacturer (Ford, Subaru, Toyota, Kia, etc.).
Typically provided by independent businesses, an extended warranty can be added to a used car’s warranty or used car’s warranty to increase its duration. Once more, they are usually only good for a certain amount of time or mileage.
With this knowledge in mind, you might be wondering if getting a warranty is worthwhile if you have insurance already.
Are a warranty and insurance necessary?
In many states, having auto insurance is legally required, therefore it can be answered with a firm “yes” when it comes to needs. Most new automobile purchases come with a basic warranty that is already covered by the purchase price. An extended warranty, however, can be a wise choice if you buy a car and would want a little extra financial security.
When your car breaks down or needs emergency repairs, a warranty can come through for you. It’s crucial to carefully consider what you’re getting with an extended warranty versus a regular warranty because occasionally the cost of an extended warranty is greater than the value it provides.
In the case of an accident that results in damage to your vehicle or the property of others, auto insurance can help shield your finances. We don’t always want to pay for auto insurance, but if the time ever comes when you do need it, you’ll be happy you got it in the first place.
You can reduce your monthly insurance costs by choosing an insurance plan like that uses a telematics-based strategy. In what way? You can reduce monthly costs without compromising coverage by adhering to safe driving practices and avoiding distractions while commuting.
It is imperative to differentiate between an extended warranty and auto insurance, regardless of your decision to purchase one. Both provide you and your car with financial security for those “what-ifs,” albeit they are not the same.