What Does Extended Warranty Cover on a Car?

If you ever offered an extended warranty as an add-on, then you've probably been asked by your customer, "what does extended warranty cover on a car?"

Extended warranty coverages may differ from warranty provider to warranty provider. But it all boils down to these basic coverages, but first, let's look at…

What is an extended warranty?

An extended vehicle warranty is a service contract that provides comprehensive coverage for repairs and replacements beyond what is provided by the original manufacturer's warranty.

It is an optional service contract for a vehicle that buyers can purchase from the manufacturer, a dealership (that's you), or a third-party warranty provider. It costs more than the purchase price and covers the cost of fixing or replacing specific parts for a certain period or miles beyond what the manufacturer's warranty covers.

Even though most people buy a service contract when they buy a new car, they can usually get one at any time before their warranty runs out.

An extended car warranty is also called a "vehicle service contract".

red toy car in between a person's hand

What does extended warranty cover on a car?

Extended warranty coverage has different levels. But these 3 are the most common levels of extended warranty coverage for cars:

Powertrain coverage: Covers parts of your vehicle's engine, transmission, and drive axle.

Bumper-to-bumper coverage: Covers most parts of the car, like the steering, suspension, air conditioning and heating, and electronics. On the contract, you may see the word "exclusionary." This means that the warranty only lists things that aren't covered.

Stated-component coverage: Covers only the parts and systems of the vehicle that are listed.

Here's a 3,000 ft view on the difference in extended warranty coverage for cars

Bumper-to-Bumper Warranties	Powertrain Warranties	Stated-component coverage
Covers most parts of a car except those that are listed.	Covers only the essential parts of your car, like the engine, transmission, and drive axle, are covered.	Covers only the items listed. Nothing else.
More expensive than powertrain warranties	Cheaper option, among other extended warranty coverages	Depends on the chosen coverage
Usually comes with extra benefits like roadside assistance, trip interruption benefits, or reimbursement for a rental car.	Plans may or may not include benefits	Plans may or may not include benefits

Benefits of an extended warranty coverage

When purchasing extended warranty coverage for cars, customers get extra advantages and protections that are not often included with conventional warranties. Several of these advantages include:

Comprehensive, customizable coverage: Vehicle owners who purchase an extended warranty coverage may choose which components to cover. Owners may pick a more comprehensive coverage plan or a simple powertrain warranty if they wish.

Protection for your wallet: Even the most routine repairs may need costly components or labor. Extended warranty coverage can potentially save money on unexpected repairs. The only part where the owner needs to pay is for the deductible.

Improved vehicle maintenance: Most customers avoid repair shops as much as possible to reduce hefty expenses. However, ignoring the problem may cause it to worsen. Therefore it is preferable to handle it immediately. An extended warranty coverage relieves your client of the anxiety associated with contacting a repair, even after the manufacturer's warranty has expired.

Extra advantages: Most extended warranty coverage for cars provides additional benefits to automobile owners, such as roadside assistance, rental cars, and trip interruption coverage.

Peace of mind: Many car owners don't mark the end period of their manufacturer's warranty on their calendars. This makes them worried whenever something happens to their car, but they are unsure if the OEMs warranty has ended. Having extended warranty coverage for their vehicle will also give them an extended peace of mind.

According to research from Edmunds in 2021, the most common repairs and their costs are as follows:

Car Make and Model	Repair Type	Average Cost Without Extended Warranty
Honda CR-V	Head Gasket Replacement	$1,316–$1,575
Toyota RAV4	Brake Line Replacement	$191–$216
Toyota Camry	Transmission Replacement	$5,200
Ford F-150	Transmission Case Shift Motor Replacement	$302–$311
Honda Civic	AC Compressor Replacement	$1,007–$1,061
Mazda CX-5	Daytime Running LED light failure	$1,130
Subaru Outback	Windshield Replacement	$880
Jeep Wrangler	Oil Housing Replacement	$710
Honda Accord	Starter Replacement	$710–$738
Subaru Forester	Suspension Coil Replacement	$1,060

Who needs extended warranty coverage?

Anyone who wants to extend the benefits of the coverage and period of their OEM warranty should buy an extended warranty. Suppose your customer plans to own a car for more than the OEM period, and he wants a piece of mind. In that case, he must have extended warranty coverage for his car.

But some customers might think it's an unnecessary expense. You can offer an extended warranty coverage later if this is the situation. You could also advise them to have an emergency fund ready when their car breaks after the OEM warranty expires.

a hand on the steering wheel

Conclusion or Takeaway

A car service contract may shield your clients from unexpected repair expenses. Not only that, but an extended warranty can also minimize angry customers yapping on your phone. The coverage provided by an extended warranty might save your clients hundreds or even thousands of dollars on car repairs.

All things considered, you're doing your customers and yourself a favor when offering them an extended warranty coverage.

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