Vehicle Warranty vs. Vehicle Insurance
When it comes to protecting your vehicle, car insurance and vehicle warranties both play a big role. Knowing the difference between the two can help you make informed decisions about the coverage you need.
Vehicle Warranty
New car warranties
When you buy a new car, you get a factory warranty from the vehicle manufacturer at no additional cost to you. It is a guarantee that the car you bought is in good working order. A vehicle warranty covers replacements or repairs in case a component breaks or fails for a specified period. Typically, there is no deductible with a new car warranty. It covers both the new part and the labor.
A new car warranty generally comes in two parts:
- Bumper to bumper coverage: This covers repairs to most parts including electronics and air conditioning (for typically 3 years or 36,000 miles).
- Power train coverage: This covers the engine and transmission (for typically 5 years or 60,000 miles).
Sometimes a manufacturer’s warranty includes a limited corrosion warranty, emissions warranty, tire warranty, hybrid and electric car battery warranty, and roadside assistance. When your warranties expire, you often have the option to purchase an extended warranty.
Used car warranties
You can get warranties for used cars. A limited warranty comes with a certified pre-owned (CPO) vehicle. The cost is rolled into the higher price you will pay for a CPO vehicle. You also may purchase an extended warranty from your car’s manufacturer or a third party for most used cars. The cost of that extended warranty usually depends upon vehicle age, mileage, make and model, coverage level, your deductible, and the warranty provider.
What warranties cover and what they don’t
Warranties protect you against defects in your car’s parts from power windows and the infotainment system to your engine and transmission. They help cover repairs for those parts if they break or fail during the warranty period. Most car warranties are similar in their broad coverages but may differ in the details so check your policy for what is covered.
Warranties do not cover everything. They do not cover routine maintenance like oil changes or tire rotations. They do not cover wear-and-tear parts like brake pads or wiper blades. They do not cover damage from collisions, damage caused by the owner, severe weather, fire, or theft. For the latter, you need vehicle insurance.
Vehicle Insurance
Car insurance is required by law in most states for any car – new or used – that is on the road. This type of insurance pays for damage from a collision, or another covered adverse event such as fire or theft. Auto insurance does more than fix your car. It can help with medical bills for you, your passengers and the people you hit in a collision. It can help pay if the other driver is not insured. It even covers damages when another driver is at the wheel of your car and has an accident because insurance follows the car, not the driver.
What vehicle insurance covers and what it doesn’t
Car insurance policies are made up of different coverages. You choose the types you need from a range of options. Your premium is determined in part by the coverages that you choose.
- Liability: If you are at fault in an accident, and others are involved, it’s good to have liability coverage. Liability coverage is required by law in most states. It covers you for bodily injury and property damage you cause to others. However, it does not cover any damage to your own vehicle; that’s covered by collision. It also does not cover injury to you and your family; it only covers the people in the other car.
- Collision: This coverage is if your car is damaged in a collision with another car or an object, such as a fence. Your collision coverage will pay for repairs minus the deductible. Collision coverage is not required unless you’re leasing a car or paying off a loan on a vehicle. However, it may be good to have, especially in the event of an accident.
- Comprehensive: Comprehensive coverage is for natural disasters, fires, vandalism, theft and animals that damage your vehicle. Think of it as “bad luck coverage.” Comprehensive coverage is not usually required unless you’re leasing a vehicle or paying a car loan. However, it’s valuable to protect your car.
- Medical expenses: If you or others are hurt in an accident, you will want medical expenses covered. You will either be able to get medical payments coverage or personal injury protection (PIP). These coverages apply to everyone in your car whether or not you are at fault in the accident. This type of coverage is good to have, as your health insurance may not cover auto accidents and does not normally protect your passengers. PIP is only available in some states and may be mandatory if your state offers it.
- Uninsured or underinsured motorist: You may encounter drivers who are not insured or who are underinsured. If so, you will need insurance to cover your car and the people in your car if hit by an at-fault driver in that situation. Uninsured/Underinsured Motorist Property Damage (UMPD) helps pay for repairs to your vehicle. Uninsured/Underinsured Bodily Injury coverage pays for medical treatment, lost wages, pain and suffering for you and your passengers. These are optional coverages in most states. In some states, you are not allowed to carry collision and UMPD at the same time. Also, sometimes UMPD has a policy maximum, or cap on the amount it will pay.
Talk to your insurance agent to see what is covered under your policy. That way you’ll be fully prepared should anything happen. Safe travels.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.