What are the differences between a car warranty vs. car insurance?

The biggest difference between a warranty and insurance is the situations in which they can be used. Standard car insurance can pay to repair or replace your car if it gets damaged, stolen, or destroyed through a covered event. Car warranty coverage only applies to car parts that break due to wear and tear, manufacturer defects, and some other non-accident causes, usually within one to three years of purchasing a car. There are also vehicle protection plans, often offered by car insurers, that can step in with similar coverage once your warranty expires.

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What is a car warranty?

A car warranty is a contract that protects against defects to your vehicle's parts and mechanical components. If a covered part breaks, the warranty provider pays to fix it. Typically, you can buy warranties through a dealership or third party, but any new car typically comes with a manufacturer's warranty that you don't have to buy separately.

One way to think about when to use a warranty vs. insurance is to identify whether the problem results from a clearly identifiable event like a car accident. When the cause isn't a specific event, a warranty claim may be what you need.

Car warranty vs. car insurance

Understanding the differences between a car warranty and car insurance is important so you can adequately protect your vehicle. The following chart breaks down the key differences between the two:

Car warrantyCar insurance
LengthCar warrantyNew car warranty: Typically, 3 years
Extended warranty: Varies
Car insuranceRenewable every 6–12 months, in most cases
What it can coverCar warrantyParts that break due to normal wear and tear, extreme heat or cold, mechanical defect, vehicle recalls, or poor maintenanceCar insuranceProperty damage or injuries you cause in an accident, as well as damage to your vehicle and your own injuries
What it doesn't coverCar warrantyRoutine maintenance, oil changes, tire rotation, brake padsCar insuranceRoutine wear and tear, mechanical breakdowns, or manufacturer defects
When you can purchase itCar warrantyYour vehicle will come with a warranty that lasts for ~3 years; after that, you can buy an extended warranty at any timeCar insuranceYou can purchase a policy at any time
Where to buy itCar warrantyManufacturer, dealership, third-party vendorCar insuranceEither online or over the phone through an insurance company or agent

Car warranties vs. vehicle protection plans

Both cover parts and systems on newer cars, but vehicle protection plans generally step in when your car warranty runs out. Vehicle protection plans are often offered by car insurance companies as an optional coverage, while manufacturer car warranties come with the car when you buy it.

Progressive Vehicle Protection is available in some states for newer cars. It covers major system repairs not covered by your warranty, minor dents and dings, and even key/fob replacement. This goes above and beyond a vehicle warranty to cover the common issues that tend to pop up when your warranty expires. Plus, it's pay-as-you-go, compared to having to pay up-front for an expensive extended car warranty.

What do car warranties cover?

Car warranties can cover some or most of the components inside your vehicle, including the engine, electronics and air conditioning systems, and the transmission. They fill in coverage for types of damage not usually covered by insurance, such as:

  • Normal wear and tear
  • Extreme heat or cold
  • Mechanical defects (including vehicle recalls)
  • Poor maintenance

Don't have a car warranty? Find out if your car insurance will cover engine repairs or other mechanical issues.

Does a car warranty cover accidental damage?

A car warranty won't cover damage to your vehicle caused by an accident. That's where car insurance can help. If you carry comprehensive and auto collision coverage, your vehicle is covered for accidental damage, as well as other unexpected events, such as a tree branch falling on your car.

What are the different types of car warranties?

Typically, you can choose between a new car warranty and an extended warranty. Both options provide you with coverage but vary in how long the protection lasts.

New car warranty

A new car warranty, also known as a manufacturer's warranty, helps pay for replacement parts or specific repairs during the stated warranty period. A new car warranty's length may vary by manufacturer, but most last at least three years or the first 36,000 miles, whichever comes first.

Extended warranty

Extended warranties can provide protection for used cars that are outside the manufacturer's warranty or provide extended coverage for new vehicles. The coverage length for extended warranties varies widely between providers but is also measured in years or mileage.

Roadside assistance vs. car warranty

Both car warranty providers and insurance companies may offer roadside assistance for tows, lockouts, and more. Not all car warranties include coverage for this service, though most insurers offer roadside assistance as an optional car insurance coverage you can add to your policy. If you're looking for roadside assistance coverage, compare the cost of a warranty with it against the cost of adding it to your auto policy, as well as what specific services are covered.

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