What you need to know about car warranties

Nothing is perfect, not even a new car. Sure enough, at some point, it’ll break down, and when it does, you’ll find yourself rummaging through the paperwork to see if it’s still under ‘guarantee’. At times like these, thoughts turn to warranties and the question of whether they’re worth it comes into play.

What is a car warranty?

A warranty is a type of insurance policy that covers the cost of repairing your car if its parts break down. Warranties are often automatically included when you first buy your car, but may only run for a few months, so it makes sense to check what you have.

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 doesn’t cover the cost of repairs needed due to accidental damage, loss or theft, so check your car insurance covers this.

What do they cover?

It varies between insurers, but most warranties cover repairs to your:

• Engine and transmission

• Fuel and ignition systems

• Air conditioning

• Electrics

• Gearbox

• Steering and suspension

• Clutch and brakes

Some warranties also include added cover for breakdown recovery and car hire while yours is being fixed. However, don’t expect damage to paintwork, glass or wheels to be covered.

What types are there?

The type of warranty you can get depends on whether you’re:

• 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 three and seven 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’s usually cheaper to shop around and compare quotes from other providers.

• Aftermarket 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 the vehicle or the 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 and come with a 14-day cooling-off period, so you can cancel if you change your mind.

Common exclusions

There’s no such thing as an insurance-wide attitude to warranty exclusions, as they vary widely between insurers, but the most common items 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

• Poor workmanship

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 then won’t be covered.

There will also be conditions you’ll need to meet for your insurer to pay claims. For example, you’ll need to service your car regularly and be up to date with its MOT.

What is consequential loss?

Consequential loss is a term used by warranty providers to mean any damage to an insured part caused by an uninsured part breaking.

For example, your exhaust (insured) gets damaged because your catalytic converter breaks (not insured).

Some warranties don’t cover consequential loss, so check the policy documents carefully to be sure.

What is betterment?

Betterment relates to claims where a new part has been fitted to your vehicle that:

• 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 you may have to contribute to the cost of repairs. Look for a policy that doesn’t restrict your cover in this way.

Do you need a car warranty?

Unlike car insurance, a car warranty isn’t 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 doesn’t pay out when you need it to.