What’s the difference? Car warranty vs. car insurance

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It’s often not initially clear to most people what the difference is between car warranty cover and car insurance cover, and often they are thought to be one and the same.

But they are significantly different forms of consumer protection and they can cover different things, although there may be some overlap at times. However, usually they are distinct and discrete products, and each is aimed at protecting you and/or your car in different ways.

Parts guarantees: car warranty

Basically, anytime your car has a part that malfunctions due to no fault of your own, and no other outside force acting on it beyond a reasonable level, then it will be the warranty that covers it.

Essentially, a warranty will ensure that your car parts do what they’re supposed to do for the length of time they’re supposed to do them. If one of them fails due to no fault of your own, you can and should get it replaced for no charge as determined by your warranty.

Accident protection: car insurance

Unfortunately, some events occur to cause damage to your car beyond the proper functioning of parts. Car insurance is important for making sure you are covered if your car causes damage to someone else’s property.

Sometimes you can’t prevent such things from happening, so it’s obviously pretty important to make sure you have insurance to take care of these expenses if it does happen, so you don’t have to pay huge sums out of your own pocket.

Failures causing accidents: the importance of each type of protection

Of course, it gets more complicated when you start talking about a situation such as the brakes failing in your car which leads you to rear-ending another car.

This is a good illustration of the potential overlap between your car warranty and your car insurance, since the warranty should cover the brakes but it wouldn’t cover the damage you have done to the other vehicle.

Types of car warranties

Basic

All new cars come with a manufacturer’s new car warranty, which in the UK will usually run from 2 – 7 years. Some used cars may come with a manufacturer used car warranty as well.

A manufacturer’s car warranty will cover most components in your car in case they break down early on in your car’s life. However, there are usually certain exclusions, and a manufacturer’s car warranty doesn’t cover ‘wear and tear’ items like tyres, batteries and so on.

Extended warranty

It’s always an important decision whether or not to purchase an aftermarket extended warranty for your car. There are many different providers you can choose from, and it’s a good idea to look into each of them before you commit to anything.

The contracts for each warranty can be complex, and the cover is usually less comprehensive than the manufacturer’s new car warranty.

This type will cover vehicles for a certain period after the manufacturer’s warranty ends. You can’t always get this type of warranty, but it can certainly help when you can. The cost is usually lower for newer vehicles, and the level of cover is usually better as well.

As cars get older, the cost of aftermarket warranty policies usually go up and the level of cover tends to go down, as older cars tend to have more problems and therefore represent a higher level of risk for the warranty provider.

All of this is exactly why it’s important to get good car warranty reviews online to make sure you know what each policy offers, what it covers, and what it doesn’t.

Further reading

Car warranty or car insurance? Find out at TheCarExpert.co.uk

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Lisa Peteres
Lisa Peteres
Lisa is a freelance writer and blogger. Follow her on Twitter or G+!

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6 COMMENTS

  1. I own a 2013 ford focus I purchased from a main ford dealer 9 month ago, it has a 12month warranty. It developed a starting fault which I took to the dealer for investigation under warranty. they have replied that the washer bottle has failed and damaged the fuse box causing my issue. They say the warranty will cover the washer bottle but not the fuse box and have quoted £1300!!! which seems ridiculous for a car with a warranty. Does this sound right as surely they have admitted a faulty part has cause the damage through no fault of my own, by saying the faulty bottle caused the damage?

  2. I own from new a Fiat Based Motor home which although is older than the standard two year warrantee from FIAT has done less than one years mileage, back in may of this year a major component failed namely the ABS pump, and was therefore replaced by a main dealership at a cost of £2600. When I had written to FIAT regarding my claim they have dismissed it due to the age of the vehicle. They appear to ignore the fact that the vehicle has traveled less than the one year average of 12,000 miles in fact it had done 11,380 miles and thus I have felt under the consumer rights act of 2015 whereby the vehicle is not fit for purpose due to its low quality. What would your thoughts be for a successful claim taking the manufacturer to small claims court?

    • Hi Vic. You’d need to get some professional legal advice if you plan to take a car manufacturer to court, even if it’s only the small claims court, because they’ll have very good legal representation.

    • Hi Jane. A dealer-managed warranty basically means that the dealership undertakes to fix any problems at its own cost. The problem is that you end up arguing with the dealer over whether a problem is covered and how it should be fixed.

      Most commercial warranty products are underwritten by insurance companies. They have formal T&Cs, and clearer guidance over what they will and won’t cover. The cover is better but it is more expensive.

  3. Extended warranty is paid for upfront and for a set fee, which can be negotiated. The price of the extended warranty can be rolled into your car loan if you choose, which essentially allows you to spread out the payments over time, though typically with interest.

What are your thoughts? Let us know below.