The important points
- A warranty covers service and repair costs for a vehicle, for a defined period of time.
- New vehicles come with a warranty from the manufacturer, but it’s possible to expand this coverage with an extended warranty.
- Warranties and insurance are two separate things. Car insurance is mandatory coverage for sudden and unexpected events (like collisions). Warranties cover repairs for mechanical issues (like a part that fails during typical use).
What is a vehicle warranty?
A warranty covers many repairs that a new vehicle might require over a defined period of time. While your car is covered by a warranty, you won’t have to pay any repair costs for repairs defined in the warranty.
All new vehicles come with a manufacturer warranty, which covers defective parts or assembly (but not damage or abuse). Many manufacturer warranties last between three and five years or 60,000 and 100,000 km (whichever comes first). Wear-and-tear items, such as brake pads or wiper blades, have a shorter warranty coverage period. When your car is under warranty, you don’t pay for repairs that are defined in that warranty.
Vehicle owners can also buy an extended warranty, also known as an aftermarket warranty. These take effect at the end of the manufacturer’s warranty. They offer various types of coverage. As you’d expect, the more the extended warranty covers, the more it costs. Car dealerships sell extended warranties, but it’s possible to buy them from independent sellers too.
Both the manufacturer’s warranty and extended warranty cover repairs and component failure, but they don’t cover actual damage. Any repairs due to collisions, fire, hail, or similar perils aren’t covered by warranty — that’s what car insurance is for.
Let’s look at what car warranties do cover.
Manufacturer warranty coverage
Let’s start with manufacturer warranties. Every new vehicle comes with a manufacturer warranty. They last for a number of years or kilometres driven, whichever limit comes first. The manufacturer warranty is often subdivided into different coverages. The most important manufacturer warranties are the new vehicle warranty and the powertrain warranty.
- The new vehicle warranty (or comprehensive warranty) is the complete package. It includes broad coverage for all sorts of mechanical issues that the vehicle might face. Most manufacturers have a three-year/60,000-km limit on this coverage. It doesn’t include wear and tear to components like brake pads, tires, or hoses.
- The powertrain warranty applies to parts of the vehicle that deliver power to the wheels: the engine, transmission, driveshaft, and axles. The manufacturer powertrain warranty usually lasts longer than the comprehensive warranty, commonly five years or 100,000 km.
There are two warranties that generally provide longer coverage. The corrosion warranty covers rust, as long as it’s not the result of damage to the vehicle panels. Most automakers only cover panels that have rusted through, not just surface rust. The emissions warranty covers components related to the emissions system, such as the catalytic converter or engine control module (although it doesn’t cover the muffler).
Manufacturer warranties, unsurprisingly, depend on the manufacturer. If you’re shopping for a new car, pay attention to the warranty as part of your research.
Manufacturer warranties do come with some conditions. For a repair to be covered, it must be done at a dealership, or, in rare circumstances, by a technician approved by the automaker. If you have work done at an outside shop and then discover it’s covered by warranty, the automaker may only reimburse you at the rate it would have paid its dealership for the repair. Major modifications to the car can also void the warranty.
Extended warranty coverage
Extended warranties differ depending on what you buy and where you buy it. Whether it’s from the automaker or a third party, there are different levels of coverage available, from basic powertrain to full comprehensive warranties. Of course, they get more expensive as more items are covered. Some plans also include roadside assistance, a rental car if your vehicle is in the shop, or trip interruption coverage if the vehicle breaks down when you’re away from home.
When you’re shopping for an extended warranty, the most important thing is what it doesn’t cover, rather than what it does. In some warranties, a component may be covered, but not the peripherals. You may have to pay for belts, hoses, fluids, or other parts that are necessary to complete a repair, for example.
Most extended warranties have deductibles, which is an amount you pay for the repair even when it’s covered. The higher the deductible, the less you’ll pay for the plan. But, be sure you can budget for the deductible amount if a repair is necessary — and if the deductible is more than the repair cost, you’ll have to pay for the repair. And, find out whether the deductible is for each visit or each repair: if you come in for three repairs at once, will you pay one deductible or three?
If you buy a manufacturer’s extended warranty, all dealerships representing that brand have to accept it and repair your vehicle under the warranty terms, usually with you paying only the deductible. With a third-party warranty, you can go to independent shops. But, they may make you pay up front, later being reimbursed by the warranty company. Both types of warranties have their pros and cons, so be sure you do your research and know you’re getting the best one for you.
