[Blog] 4 Things You Need to Know about Extended Car Warranties

An extended car warranty is optional vehicle protection that can help you cover certain costs in case of a car breakdown or unexpected car repairs (such as transmission, air conditioner, brakes, steering). An extended car warranty essentially extends the type of coverage one would get with the car’s original factory or manufacturer warrant, so you remain protected from expensive repair costs. Now that you know what an extended warranty is, here are the top 4 questions to ask when deciding if an extended car warranty is the right choice for you.

1. What components will be covered by the extended car warranty?

It is important to know exactly what will be covered by an extended car warranty in order to decide whether it is worth it for you. Although coverage will vary depending on the provider, and the plan that you choose, this is an overview of the most common components that extended car warranties cover based on GuardTree’s article.

Powertrain Parts

Extended car warranties typically cover repairs for everything in a vehicle’s powertrain, which includes:

• Engine
• Turbocharger/Supercharger
• Transmission
• Transfer case
• Front and rear drive axle
• Electric/hybrid components

Additional Critical Parts

These parts are commonly affected by vehicle breakdowns, so it is good to make sure the warranty provider that you choose will cover them:

• Steering
• Brakes
• Electrical
• Air conditioner
• Fuel delivery components
• Front and rear suspension systems
• Cooling systems
• Enhanced electrical systems
• Supplemental restraint systems
• Emission systems
• Multimedia software

Benefits Extended car warranties can also include extra benefits or cover some of the other costs associated with a vehicle breakdown. For example, GuardTree, a monthly subscription-based extended car warranty available in Ontario, covers expenses for roadside assistance, trip-interruption (i.e.: lodging and meals), and car rentals.

2. What components will not be covered by the extended car warranty?

It is important to proactively look at what components are not covered by extended car warranties. These are some of the most commonly excluded components:

• Pre-existing conditions: these include issues that existed before starting an extended warranty contract and issues that occur before your vehicle exits the extended warranty waiting period. 
• Routine maintenance: oil changes, tire rotations, etc.
• Wear and tear: brakes, brake pads, clutches, windshield wipers, headlight bulbs, etc.
• Appearance and exterior damage: scratches and dings
• Interior damage: tears in the upholstery, holes in the seats, broken plastic, etc.
• Damage from an accident: dents in the exterior, broken glass, etc.
• Damage from environmental factors: salt, sand, wind, hail, tree sap, etc.
• Damage caused by improper car care: skipping regular maintenance, reckless driving, etc.
• Alterations or modifications: installing incorrect parts, tampering with the odometer, etc.

Beyond these general exclusions, we always recommend reading the provider’s terms and conditions before signing up. Be sure to keep an eye out for exclusions that are specific to your situation.

3. Does an extended car warranty make sense considering my situation and budget?

If you own an older car or a secondhand vehicle, you may want to consider an extended car warranty or “aftermarket warranty” to help protect you from unexpected, costly repairs that may occur after your manufacturer’s warranty expires. But is an extended car warranty really worth the upfront cost when your car seems to be doing just fine for now?

To answer that question, you should consider the specifics of your situation. Factors like your vehicle’s age, mileage, and your personal budget all come into play.To help you decide if an extended car warranty is worth it for you, consider this math scenario: here.

4. What should you ask before choosing the right extended car warranty provider?

It’s important to choose an extended warranty that works well for your specific needs. Make sure you can clearly answer the following questions before you choose an extended warranty for your vehicle:

• What is covered and what is not: Does the policy include coverage for everything you think you might need? Keep in mind, some exclusions like wear and tear are standard across most if not all extended car warranties. 
• Any specific exclusions in the contract: Read the fine print and familiarize yourself with every exclusion before signing on the dotted line. For example, if the policy excludes coverage for any commercial use of your vehicle, and your vehicle is used for commercial purposes, it’s not the right policy for you.
• Cost: The price of an extended warranty will vary depending on your vehicle’s make, model, mileage, and age. Make sure you shop around for the best price and do the math to calculate the total price of the warranty before you sign up. Typically, extended warranty providers require you to sign up for a committed contract and pay in full (for example, you will pay upfront for a one-year contract). However, providers like GuardTree never lock you into a long-term contract with their monthly subscription plans starting at $49.95/mo.
• Transferability: Can you transfer the warranty to a new owner if you sell the car?
• Kilometre limits/age of vehicle limits: Will the policy expire when your car reaches a certain age or mileage limit? And does that limit make sense to you?
• Which repair shops are approved: Where can you take your car in for repairs? Everywhere? Or just to specific repair shops?
• Waiting periods: Will the policy kick in as soon as you sign up, or is there a waiting period (e.g., 30 days from signing the contract)?
• Deductibles: What is your deductible in the event of a breakdown?
• Cancellation policy: Can you cancel the policy at any time? Is the cancellation policy fair? Are there any cancellation fees?
• Who is backing the warranty: whether the auto manufacturer or an independent company is providing the extended warranty, read online reviews and make sure consumers are happy with the company providing the coverage.

Comparing extended car warranty providers and feeling overwhelmed by all the options? Check out our comparison chart of the top extended car warranty providers in Canada: Canada’s top extended car warranties.