What is a car warranty?
It is a type of insurance policy that covers the cost of repairing your car if parts break down. Warranties are often automatically included when you first buy your car, but may only run for a few months.
You can choose policies that last from a month to five years, but most run for 12 months with the option to renew when the policy ends.
A car warranty does not cover the cost of repairs needed due to accidental damage, loss or theft, so check this is covered by your car insurance.
What do they cover?
It varies between insurers but most warranties cover repairs to your:
Engine and transmission
Fuel and ignition systems
Steering and suspension
Clutch and brakes
Some warranties also include added cover for things like breakdown recovery and car hire while yours is being fixed. However, things like damage to paintwork, glass or wheels will not be covered.
What types are there?
The type of warranty you can get depends on whether you are:
Buying a new car
Buying a used car
Looking for cover for your current vehicle
Manufacturer's warranty: This is usually included when you buy any new car. Your manufacturer's warranty can last anything between 3 and 7 years.
Used car warranty: This is an option if you buy a second hand car from a dealership. The dealership may offer you cover, but it is usually cheaper to shop around and compare quotes from other providers.
After market warranty: This lets you take out cover for a vehicle you already own. It covers new and used cars, but there may be restrictions on the age of car or mileage that can be covered.
Look for warranties offered by insurance companies, rather than your car dealership. Insurers have to be registered with the Financial Conduct Authority (FCA) and come with a 14 day cooling off period, so you can cancel if you change your mind.
This also varies widely between insurers, but the most common things not covered by warranties include:
General wear and tear, although you may be able to cover this for an added price
Specified car parts, like batteries and wheels
Cars used for racing, or as taxis
Repairs to parts that are not broken
Damage caused by frost or carbon build up
You may also have to wait a set amount of time before you can claim, for example 90 days after the start of your policy. Any problems that happen before will not be covered.
There will also be conditions you will need to meet for your insurer to pay claims. For example, you will need to service your car regularly and be up to date with its MOT.
What is consequential loss?
It is a term used by warranty providers to mean any damage to an insured part, that is caused by an uninsured part breaking.
For example, your exhaust (insured) gets damaged because your catalytic converter breaks (not insured).
Some warranties do not cover consequential loss, so check the policy documents carefully to be sure.
What is betterment?
It relates to claims where a new part has been fitted to your vehicle which:
Puts it in a better condition than it was originally in
Increases its value
If there is a betterment clause in your warranty, it means that you may have to contribute to the cost of repairs. Try to look for a policy that does not restrict your cover in this way.
Do you need it?
Unlike car insurance, a car warranty is not a legal requirement. But it could help you cover the costs of repairing or replacing broken parts.
However, due to the number of conditions and exclusions on car warranties, you may end up paying for cover that does not pay out when you need it to.