Infographic of an auto warranty checklist

What is an Auto Warranty and 8 Different Coverage Options

If you own a car, you’ve probably heard the term auto warranty thrown around, but what does it really mean? An auto warranty is a contract that states that the vehicle’s manufacturer will fix some parts and pay for repairs caused by the manufacturer’s defects. The warranties cover costs of components that do not live up to expected but reasonable performance. So, the auto warranty will not cover any damages due to accidents or when a car is used in a way that the manufacturer did not intend.

Also, the coverage will not pay for wear and tear problems. 

How Does an Extended Warranty Work?

Car owners experience many problems, especially the least expected ones, which are not in the manufacturer’s warranty. It helps a lot to have an extended auto warranty even after the one given by a dealership or manufacturer expires. This means car owners do not have to dig into their pockets for replacements and repairs. The service contract covers some services beyond the manufacturer’s warranty scope. It also ensures a vehicle is protected even when the dealer or manufacturer’s warranty expires.

For example, a car with complex music or electric systems requires an extended auto warranty to cover the costs of such costly systems. Most dealership and manufacturer warranties will not cover such repairs. It helps save thousands of dollars that may be incurred in such repairs or replacements.

Keep reading to learn more about what goes into an auto warranty and 8 different coverage options. 

Basic Warranty

Basic warranties are also known as bumper-to-bumper warranties. It is only for new cars and might be transferable if the vehicle is sold to another person. It covers unforeseen issues for the first between three and five years or from 30,000 up to 50,000 miles covered by the vehicle. 

This is one of the most comprehensive warranties and includes many parts except the wear and tear ones, such as brake pads, wiper blades and tires. A basic warranty won’t cover any damage caused by misuse of the vehicle. But it does come in handy for parts such as expensive electronics.

Dealership Warranty

A dealership warranty is for vehicles bought from dealerships. Each warranty is different and has specific stipulations in the contract stating exactly what is covered and what the buyer has to do to benefit from the warranty. 

The stipulations may say where the car can be serviced, which is mostly at the dealership’s workshop.

Extended Warranty

Infographic of a group of people looking at an auto warranty checklist

Extended warranties, or aftermarket warranties, cover a vehicle for an additional time after the original manufacturer’s warranty ends. Every company has its specific type of extended warranty. However, some vehicles are not covered at all. 

Buyers should check their manufacturer’s website and see if their vehicle qualifies for the extended warranty. In general, an extended warranty covers less than the original warranty and it is very common for scammers to try and get you to purchase an extended auto warranty. 

Powertrain Warranty

This warranty covers different major parts of a vehicle, including the engine, transmission and transaxle components. If a manufacturer error causes these parts to malfunction, the manufacturer will repair or replace them for free. Some companies’ powertrain warranties do not have any deductible, and others have varying deductibles.

Rust and Corrosion Warranty

Not all dealerships offer this warranty. However, it may be included in a basic warranty by some companies. Rust and corrosion cover the costs of repairing a vehicle when the upper body corrodes and rusts. Some manufacturers have specific terms and conditions that determine if one can benefit from the warranty. 

For example, a contract may only cover damages that occur below the window line.

Emissions Warranty

Vehicle owners experience emission problems after years and miles of driving. This cover may include a basic warranty, but it is also offered separately by some dealerships. Only a few manufacturers offer it separately. Ford is one of the rare ones where the emissions warranty is not in the basic warranty.

Roadside Assistance

Auto insurance companies make this available, but some vehicle manufacturers offer road assistance warranties. If a driver is stranded on the roadside for any car issue-related reasons, help is sent to them. They offer services such as towing or tire changing for free, and the assistance is available 24/7.

Extended Auto Warranty

This type of auto warranty is a service contract offered by dealerships, manufacturers or independent providers. It’s optional and comes at an extra cost in addition to the buying price. This warranty covers costs of repair for some specified repairs with a certain period or a particular number of miles. It is common with new car buyers and is renewable anytime after the expiration date.

Difference Between an Auto Warranty and Auto Insurance

infographic of a car with an umbrella covering it

The main difference between an auto warranty and auto insurance is the protection. The auto warranty pays for specific mechanical issues, including labor and parts. They may be caused by manufacturing defects or just problems with some car parts.

On the other hand, auto insurance caters to repair costs due to a collision or other causes, including fire, theft and natural disasters. A warranty takes care of problems not covered by insurance. But the two contract services are different, and their only similarity is to protect the covered vehicle.

Auto insurance is compulsory, while an auto warranty is optional.

Here is a review of the pros and cons of auto warranties.


  • Gives a car owner peace of mind since there is no worry about unexpected repair or replacement expenses.
  • The warranties are customizable. Vehicle owners can choose the best coverage for their situation and negotiate with the provider for the best deal.


  • Car warranties are limited and do cover everything. They can only pay for specified repairs to a certain extent. Some may not pay for replacement depending on the contract.
  • Warranty companies charge more than a vehicle can spend when paying for repairs. According to research, on average, warranty providers spend $1200 for most repairs.

Auto Warranty FAQs

Here are the most common frequently asked questions when it comes to auto warranties. 

What will most auto warranties cover?

There is a long list of auto warranties available. Each warranty is different from the others, depending on what the provider has to offer. For example, the bumper-to-bumper warranties cover systems and parts of a vehicle but with some exclusions. A powertrain warranty takes care of engine components and still has its limitations.

What is the best warranty for a new vehicle?

The best warranty for any new vehicle should cover certain parts for at least the first three years of ownership. The ideal warranties include the emissions, rust and corrosion, powertrain and bumper-to-bumper.

Who is the best-extended auto warranty provider?

The best auto warranty provider should have the type of warranty of a particular vehicle. They should also have a variety for customers to choose from.

What is covered by a warranty cover?

A seller gives a warranty to guarantee the buyer that any manufacturer’s defects will be repaired for free if they occur within a certain period. It is also a promise that the vehicle meets specific performance and quality standards, and if it fails, the seller will provide free repairs or replacements.

What will not be covered by an auto warranty?

Auto warranties will not cover racing cars, whether on track or off-road. Also, if a vehicle is hauled or towed in the wrong way, it voids the warranty. Besides that, driving even an SUV off-road can void the warranty.

An auto warranty is important and something most car owners should consider. They help save money and keep the vehicle running great.

Related: Adding a Family Member To Your Auto Insurance Plan [Explained]

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