What’s the Big Deal About Auto Warranty Insurance?

When it comes to auto warranty insurance, it is much the same thing as you may have heard of when someone has talked about extended warranties. Do you need it? That depends on how much you want to have to pay for future car repairs and problems.  Find out which extended auto warranty company we recommend.

Generally, when you purchase a car, you will be given a warranty, of some sort, from the dealership. Different car dealers offer various things in their warranties. Some cover any problem you may have with your vehicle. Others are only going to cover very specific problems. Before you sign on to purchase any auto warranty insurance plan, you need to keep a few things in mind.

Be alert for the details in your warranty to be sure your claims are not seriously limited in number or amount spread over the life of the vehicle.

Check what they are saying in consumer reviews both online and in print about the plan you are considering.

The very best warranties are called "exclusionary". That means they list what is NOT covered rather than what is covered.

How much is your deductible? Will your coverage or cost improve if it is lower?

Who pays for the repairs? Does the warranty company pay up front or do you have to pay and then file for a reimbursement?

There are warranty insurance companies that will pay for the difference between what your car insurance and warranty cover, excluding your deductibles. For example, let’s say you have a good operating car about 4 years old. According to the Kelly Blue Book its trade in value is around $8000.00. After you get over your disappointing reality check about depreciation in vehicles, you learn that if you have damage to your car resulting in $8000 or more, it will mean your car is "totaled."

So how much of this will your warranty cover? Zilch. The warranty is only valid on a functioning vehicle. You will have to look at your car insurance policy to see what collision coverage you have. But the warranty is useless in this scenario. The confusing terminology of warranty insurance may be what set you up to expect coverage . If you have a $1500 deductible amount on your car insurance, you know you will need to pay that up front. Your car insurance settlement may be less than what you owe the lender for your now damaged or destroyed vehicle. You are then the responsible party for the balance. Not the warranty.

There are warranty insurance policies that cover the balance that remains after all of your warranty items are paid for. But they are uncommon and expensive. Perhaps you ought to take the full "totaled" value of your vehicle from your car insurance company and use it as a down payment for you next car.

There is really no simple answer to the questions of warranties and insurance. You will get what you paid for. But more money does not guarantee a better warranty or stronger insurance policy. Read it carefully. If it is too confusing for you, ask for help so you know just what is covered in your auto warranty insurance policy.

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