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Car Warranty vs. Car Insurance

Jason Metz

A car warranty generally covers problems such as mechanical breakdowns. Car insurance, on the other hand, covers problems like accidents, car fires and theft. Here’s what to know.

What does a car warranty cover?

Car warranties typically cover items for mechanical defects, like the engine, electronics and transmission. Car warranties do not cover damage caused in a car accident, routine maintenance or normal wear and tear, such as worn brake pads, windshield wipers or tires.

Car warranties are often broken down into two parts:

  • “Bumper-to-bumper” coverage typically includes items like the car’s air conditioning and electronics.
  • “Power train” coverage is for a car’s engine and transmission.

What’s covered under a car warranty depends on the company. It’s a good idea to know exactly what’s included before purchasing a car warranty.

How do I buy a car warranty?

  • A new car warranty is usually included when you buy a new car. This covers a range of years or miles, like a three-year or 36,000 mile warranty (whichever comes first).
  • An extended car warranty can extend the length of a new car warranty or cover a used car. These car warranties may be sold by the car’s manufacturer or an outside company. You may have to pay a deductible before the warranty pays for repairs. For example, if the extended warranty has a $100 deductible, you’ll be responsible for paying that amount if you have a problem covered by the warranty.

What is car insurance?

Car insurance is a contract that basically says you’ll pay money to a car insurance company and if you have an accident that’s covered by the policy, they will pay you money.

  • Liability car insurance, which pays for injuries and damages you cause to others. It’s required in all states except New Hampshire. But even New Hampshire requires liability insurance if you have caused a car accident.
  • Collision insurance pays for repairs if you cause damage to your own car if you crash into something, like a guardrail.
  • Comprehensive insurance covers damage to a car due to problems like fire, theft, flood, hail, vandalism, falling objects (like tree branches) and crashes with animals (like deer).

Read about other types of car insurance.

Other types of car protection

While a car warranty and car insurance can cover a lot of problems, there are other types of products that can fill gaps:

  • Roadside assistance helps cover the cost of a professional to help replace a flat tire, jumpstart a dead battery, unlock your car or tow your car.
  • Mechanical breakdown insurance (MBI) is similar to an extended car warranty but purchased through your car insurance company. MBI covers the cost of repair for a host of mechanical defects, like engine, electronics and air conditioning problems. MBI does not cover normal wear and tear (like brakes and tires). You’ll have to pay a deductible before MBI kicks in for the cost of repair.

How do I know if my car is under warranty?

New-car factory warranties typically cover the first three years or 36,000 miles (whichever comes first). Some car manufacturers offer longer warranties. For example, Hyundai offers a five-year/60,000 mile warranty for second and subsequent owners. If you’re not sure whether your car is under warranty, call the dealership where you bought the car. You will need your VIN number, which you can find on the driver’s side window or on documents relating to the car sale. If you bought the car in a private sale, you may be able to find warranty information from a vehicle-history service like CarFax.

Does a car warranty cover accidents?

A car warranty does not cover accident damage. Car insurance covers accidents.