You care about your family’s well-being, which is why you look at safety features when shopping for a new car. Taking care of your family also means preparing for the unexpected, like car accidents or highway breakdowns. Do you need a car warranty or insurance for this type of situation? This guide explains the difference.
What Is the Difference Between a Car Warranty Vs. Insurance?
Car warranties and car insurance have a few things in common, like not paying out of pocket for repairs. That said, warranty and insurance coverage for your car work differently and have different requirements.
Car Warranty Vs. Insurance Comparison Chart
| New Car Warranty | Vehicle Protection Plan | Car Insurance | |
| Definition | Manufacturer guarantee | Service agreement | Contract |
| Cost | Free | $1,300 to $4,600 annually | $1,500 to $3,300 annually |
| Coverage | Repairs and replacements for defective parts | Repairs and labor for covered parts | Vehicle damage and medical costs after car accidents |
| Factors that affect cost | N/A | Make and model, age of vehicle, condition | Driving habits, driver age, gender, traffic tickets |
Manufacturer’s Warranty
Any time you buy a new car, it comes with a manufacturer’s warranty. This is essentially a guarantee that the vehicle doesn’t have any problems or defects. You never have to pay for the original warranty.
Extended Warranty or Vehicle Protection Plan
Unless you get them directly from the dealer, extended warranties aren’t manufacturer guarantees. They’re service agreements. A more accurate term is vehicle protection plan.
Save thousands on auto repairs with autopom! Get a FREE quote!
Service agreements are designed to cover your vehicle after the original warranty ends. You can get VPPs for used vehicles from third-party companies. It’s important to note that VPPs are not insurance. They don’t replace required liability or collision coverage — instead, they offer protection from costly mechanical breakdowns not caused by an accident once your factory coverage ends.
Car Insurance
Automotive insurance is a contract between an insurance company and a vehicle owner. Basic car insurance coverage is mandatory for all drivers in the United States. Instead of helping you when vehicle parts fail, car insurance offers coverage after crashes, car fires, theft, and similar situations.
What Is Covered By a Car Warranty?
Warranty coverage depends on the manufacturer, service provider, and the plan you choose.
New Vehicle Warranty Coverage
The original manufacturer’s warranty covers most vehicle parts and systems for a specified period of time:
- Engine
- Transmission
- Electrical parts
- Electronic components
- Suspension system
- Body
Brakes, tires, oil filters, batteries, and upholstery are not usually included. Oil changes and other maintenance tasks aren’t included unless the brand specifies them.
Powertrain Warranty
Powertrain warranties usually cover the engine, transmission, driveshaft, axles, and bearings. Coverage can vary, so you need to read the agreement terms carefully.
VPP Coverage
Labor and parts are provided for covered repairs. Many vehicle service plans include perks like 24/7 roadside assistance, free towing, rental vehicle help, and more.
What Is Covered By Car Insurance?
Car insurance coverage varies by the type of insurance you purchase:
- Liability coverage: Pays for damage to other vehicles, drivers, and passengers after a crash
- Personal injury: Covers your medical expenses after a crash
- Collision: Covers vehicle repairs after multi- or single-car accidents
- Comprehensive: Can cover hail damage, vandalism, and vehicle fires
The type, amount of coverage, and deductible rates for car insurance vary significantly by provider.
Where Do You Buy a Car Warranty Vs. Car Insurance?
The companies that offer vehicle protection plans for after your manufacturer warranty runs out are different from insurance companies like Allstate or GEICO. At autopom!, we can help you find trustworthy VPPs that meet your needs. Contact us for more information on car warranty and insurance options today.
Attention Auto Dealer Finance Managers: Autopom! Ranked Among Top Five Extended Service Contract Companies in USA Today 2024 Guide! Partner with us for all your VSC, GAP and Ancillary product needs. Contact: Mike Jones (949) 309-2526.
