Warranties come in many sizes and flavors. Knowing
the right warranty for your particular vehicle,
situation, and driving habits can save you time,
aggravation, and most importantly money.
Vehicle warranties are known as manufacturer’s
warranties, extended warranties, vehicle service
contracts, mechanical breakdown insurance, and
product warranties. Each of these has their own
benefits and limitations and each are governed
by specific laws and regulations.
Manufacturer’s Warranty
Manufacturer’s warranties are issued by
the original vehicle manufacturer and cover specific
components for a set number of months and a set
number of miles. Manufacturers are required by
law to cover factory installed parts for defects
or workmanship.
In the United States new vehicles come with at
least two warranties. The Basic Warranty covers
most components except items that are subject
to wear out in the normal course of driving, such
as brake pads, filters, belts, hoses, and wiper
blades. A Drive Train Warranty usually starts
where the Basic Warranty ends and only covers
the engine, transmission, axles and driveshaft.
Your vehicle might also come with a Rust or Corrosion
Warranty. Additionally, Federal Law requires Emissions
Equipment to be covered for 8 years or 80,000
miles, and Passive-Restraint systems for 5 years
or 50,000 miles.
Manufacturer’s warranties typically cover
36 months or 36,000 miles up to 60 months or 60,000
miles. See your owner’s manual, dealer,
or check the manufacturer’s Web site for
specific details about your particular vehicle.
Extended Warranties, Vehicle Service Contracts,
and Mechanical Breakdown Insurance
Extended warranties, vehicle service contracts,
and mechanical breakdown insurance are basically
the same thing and we will refer to all of them
as extended warranties.
An Extended Warranty is basically a contract between
you and the warranty provider that says if a part
or component described on the policy breaks, or
wears out in some cases, the warranty company
pays to have it fixed.
Extended warranties can also include benefits
such as free 24/7 roadside assistance for emergencies
like lock-outs, fuel and fluid delivery, battery
jump, flat tire repair, and towing. Many also
come with car rental reimbursement and travel
interruption protection in case of a breakdown.
The better coverage extended warranties also include,
or offer as options, Wear and Tear coverage, Seals
and Gaskets coverage, and Hi-Tech electronic equipment
coverage which are much broader protections than
a standard warranty.
Warranty companies are governed by Federal and
State laws and regulations and these vary from
State to State. Warranty companies must be backed
by an insurance company that guarantees the obligations
of the warranty company. The insider’s secret
here is the very best warranty companies are “A”
rated by A.M. Best & Company. They are an
independent insurance analysis and rating company
that has been around for more than 100 years and
are the gold standard in insurance ratings.
The one note here is mechanical breakdown insurance.
For all intents and purposes this is a vehicle
service contract however it also has a legal aspect.
Mechanical Breakdown Insurance is available in
California and is regulated and overseen by the
California Department of Insurance. In some other
states mechanical breakdown insurance is not backed
or regulated by the State. Reputable warranty
companies and warranty brokers know the difference
and will quote you policies that best meet your
particular State requirements. See your State
Department of Insurance for more information on
types of warranties regulated by the State.
Product Warranties
Product Warranties generally cover far fewer parts
than an extended warranty or vehicle service contract.
A product warranty is only allowed by law to cover
parts that are in direct contact with the product
or parts that are mechanically connected to those
parts. For example, a manufacturer of engine oil
may warrant that by using their product, the engine
will not break. However, the manufacturer is not
allowed to warrant that the car’s horn will
not break, since the horn is not in direct contact
with the engine oil.
Product warranties may not be sold for a separate
price and must be offered free of charge. These
warranties, or guarantees, usually limit how much
you can recover for repairs. Extended warranties
must be guaranteed by an insurance company, product
warranties do not.
The One Insiders Tip You Should Remember
The one important thing to remember about any
warranty is you must perform the routine maintenance
as listed in your manufacturer’s recommended
guidelines. If your manufacturer recommends changing
the oil every 5,000 miles and you don’t
change it for 25,000 miles, not only are you asking
for trouble, but more than likely you will void
your warranty.
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