Is an extended car warranty worth it?

Extended car warranties may not be worth it due to other more affordable and comprehensive coverage options available. For instance, a pay-as-you-go vehicle protection plan or mechanical breakdown insurance can cover mechanical failure of a vehicle, plus other perks, depending on the provider. One pro of extended car warranties is their convenient availability from car dealers, but cons include high upfront price tags and restrictive coverage.

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What is an extended car warranty?

An extended warranty is much like a vehicle's standard warranty in that it covers malfunctions of major systems like the powertrain, but for a longer period than the standard warranty. You can typically purchase an extended car warranty from your car manufacturer or a third party before your car reaches a certain age or mileage. Extended car warranties may also be referred to as vehicle service contracts.

What does an extended car warranty cover?

Extended car warranties typically cover malfunctions in a car's powertrain for a set period beyond the standard warranty. Powertrain extended warranties typically cover the car's:

  • Engine
  • Drivetrain components like the transmission, axles, and differential

Some extended car warranties are just for the drivetrain — those would cover the drivetrain components but not the engine. Extended warranty coverage lasts until your car reaches a certain age or mileage.

If you have an active extended warranty and one of the covered parts or systems breaks, the warranty provider bears most of the cost. But be sure to read your warranty's fine print. Some might have deductibles or require you to submit costs for reimbursement. And many warranties cover only named components while excluding others.

What doesn't an extended car warranty cover?

Extended car warranties typically don't cover damage from accidents (you'll need car insurance for that) or wear and tear. They only cover what's specified in the warranty. You may even need to purchase separate extended warranties for different parts, depending on what you want coverage for.

Learn about the differences between car warranties and car insurance.

When are extended car warranties worth it?

You might consider an extended car warranty if you're purchasing a high-mileage vehicle. However, extended car warranties are often not worth it due to their high upfront price and coverage restrictions. The terms and conditions of coverage often make it more cost-effective for car buyers to cover the costs of repairs themselves rather than cover the warranty cost. It may make more sense to purchase a vehicle protection plan or mechanical breakdown insurance, or save up for unexpected car repairs.

What's the difference between an extended warranty and a vehicle protection plan?

Extended warranties are offered by manufacturers and third parties to cover specific vehicle parts. Vehicle protection plans through a car insurer or third party may provide more comprehensive, pay-as-you-go coverage for newer cars than a warranty. Vehicle protection plans are sometimes also called mechanical breakdown insurance. At Progressive, there are two options that can cover a vehicle's major systems and breakdowns:  

  • For newer cars: Progressive Vehicle Protection is an optional car insurance coverage in some states that covers your newer car's breakdowns and major systems and parts, plus minor dents and dings and key/fob replacement. This vehicle protection plan starts at $12 per month per vehicle. 
  • For other cars and RVs: With Good Sam's mechanical breakdown insurance available as a standalone policy through Progressive, a mechanical repair plan pays to repair your car's sudden and unexpected breakdown. 

Should you buy an extended car warranty?

While there are a few cases when an extended warranty can make sense, it may be more cost-efficient to set aside money each month so you can cover the cost of repairs yourself if something breaks. Alternatively, you may want to consider purchasing vehicle protection through your insurer for more convenient, affordable, and comprehensive coverage.

How to buy an extended car warranty

You can buy an extended car warranty from your dealer or car manufacturer when you purchase a new car or any time before the car's standard warranty expires. Make sure you understand which parts are covered and for how long before you buy an extended warranty. Third parties may also try to sell you an extended warranty, but these often heavily restrict your coverage and service options. And remember, you may be better off purchasing similar coverage through your insurer.

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