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Warranty insurance: is it worth it?
A car warranty covers you against electrical and mechanic failures over an agreed period – typically three years or 60,000 miles. It brings peace of mind by covering the costs of labour and parts when the worst happens. However, policies vary, and you need to pick the right one – here’s what you need to know.
The pros and cons of car warranty insurance
Here are the main pros and cons when it comes to taking out car warranty insurance:
| Pros | Cons |
|---|---|
| Peace of mind | Claim limits |
| Tailored cover | High monthly cost |
| Breakdown recovery included | Conditions of cover |
| Discounts on MOT and servicing | Often lots of exclusions |
Here is more information about how car warranty insurance works
How much does it cost?
The price of your warranty depends on your insurer, so compare quotes to find the best deal.
Most insurers offer three levels of cover, with basic policies being cheaper and premium cover costing more. The cost of warranty insurance is also based on:
The age of the car
The make and model
The value of the car
Your annual mileage
How your car is used, eg for social or business
Cheaper warranties usually provide less cover, so you may need to spend more to get the protection you want. But check that the cost of a warranty is not more expensive than paying the cost of repairs yourself.
Check the Reliability Index website for average car repair costs
What if your mileage is high?
You may struggle to find a warranty if you have a second-hand car, or a classic car with high mileage.
There are specialist policies, but they tend to be expensive so it’s even more important to shop around for the best deal.
What does warranty insurance cover?
Policies vary by insurer, but a typical vehicle warranty policy covers repairs to the:
Engine
Transmission system
Fuel and ignition system
Air conditioning or cooling system
Electrics
Gearbox
Steering
Suspension
Non-frictional clutch and brakes
It is important to check your documents because exclusions may restrict what you can claim for. For example, some insurers cover electrics but not in-car stereo systems. Read the terms and conditions carefully, and make sure when you’re selecting a policy it covers all the components you need.
As well as cover for repairs, your cover may also include:
Vehicle breakdown recovery
Car hire, while yours is being fixed
Hotel expenses for overnight stays while repairs are carried out
Emergency travel expenses, e.g. taxis, trains or buses
Driving your car abroad
Cover levels vary widely depending on the policy you choose, so check the insurer's summary of cover before you buy.
Beware of conditions
Warranties come with conditions that mean your cover is invalidated if they are not met, like:
Age limit: Cars older than 10 years are usually not covered
Mileage limit: For example, no more than 60,000 miles
Claim limit: This is the most your insurer will pay for repairs, usually the value of the car
Pre-existing faults: Problems that were there before your policy started are not covered
Warning lights: You cannot claim if you have ignored warnings of a problem
Maximum hourly rate: This is the most your insurer will pay for labour costs
Regular servicing and MOT: This must be recorded by an approved garage
Insurer authorisation: Repairs must be approved before claims are paid
Authorised garages: All repairs must be carried out at a garage approved by your insurer
Car modifications: Any changes to the original vehicle may void your insurance
Maintenance: You must look after your car in line with the manufacturer's handbook
Time limit for claims: You must tell your insurer of any problems within seven days
Read the insurer's policy documents for a full list of conditions before you pay for cover. If you fail to meet them, your insurer can refuse to pay your claims.
Here is more information about how to make a claim on your warranty insurance.
What is excluded?
Exclusions vary between insurers but some of the things that are often excluded by a car warranty policy are:
General wear and tear (you may be able to include this for an added price)
Batteries, wheels, tyres, exhausts, catalytic converters, worn-out clutches and brakes
Damage caused by oil leaks
Cars used for competitions, commercial deliveries or as taxis
Improvements to parts that are not broken
Damage caused by frost, worn friction materials, blockages, contamination or sludge
Poor workmanship or faulty components
Check policy documents when you compare warranty insurance. Think about the car you drive and what is likely to go wrong. Make sure you select a policy that meets all your needs, even if it’s slightly more expensive. The alternative is costly insurance that won’t pay out.
Are you already covered?
You may not need separate cover if you already have a manufacturer's warranty in place.
New cars: All new cars come with a manufacturer's warranty, usually lasting between 3 and 7 years.
Used cars: If you buy your car from a second-hand car dealership, it may come with a 12 month warranty. You could also look for a used car that is still within its manufacturer's warranty, which could last up to 7 years.
Check your purchase documents to see if your car is still under its manufacturer's warranty before you buy insurance.
Do you need a warranty?
This depends on whether you can afford the costs of repairing your car yourself.
You may find the price of a warranty is more than the cost of paying for repairs, in which case you should avoid paying the unnecessary price of insurance.
However, warranty insurance could save you money if your car needs expensive repairs.
Many warranties also include breakdown cover, which means you don’t need to buy it separately, so you should factor that into your calculation too.
Where can you get cover?
You may be offered a warranty by the dealership where you buy your car, but this is usually the most expensive way to get cover.
Instead, compare as many different quotes as possible and always read the small print in the policy documents. This will help you find the right policy for your car.