Many drivers are eager to purchase an extended car warranty, but that’s not always the best financial decision. Before you sign up for any coverage, it’s important to review your financial situation and risk tolerance, as well as your vehicle’s reliability.
An extended warranty is a contract between you and a service provider that covers the cost of certain repairs once your manufacturer’s warranty has expired. Depending on the plan you choose, it may also cover other items such as prepaid maintenance or tire protection. In addition, some service providers offer additional benefits such as 24/7 roadside assistance or reimbursement for rental cars, as well as trip interruption insurance that pays for a hotel or food if your car breaks down far from home.
While the costs of an extended warranty can add up, it is possible to save money by purchasing a newer model used car with lower repair bills and maintenance costs, or by choosing a car with a high reliability rating. You should also consider how long you’ll be driving your vehicle and whether it makes more sense to save up for the eventual cost of an expensive repair or simply pay for an extended warranty upfront.
When shopping for an extended warranty, it’s important to find one with a reputation for customer service and a solid track record of paying out claims. It’s also important to look at the terms of the policy, including deductibles. How the deductible is charged — by per-repair or per-warranty-service-visit, for example — can make a big difference in your budget.
A good extended warranty company should be transparent and easy to contact. It should also provide a list of covered parts and repairs, so you can easily compare it to other warranties. It should also be clear how long the policy lasts — some run for a specific number of years or miles, while others expire after a specified amount of time or once the car reaches a certain mileage limit.
The top providers of extended warranties include Endurance, Olive and Affinity. Each offers customizable plans to fit your needs, but you should also shop around and get quotes from several different companies. For example, Endurance’s prices are usually lower than those of other leading service providers, while Olive is more transparent about its coverage levels and provides an interactive table to help customers compare plans. It’s also a good idea to read reviews of each company and ask other consumers for their opinions. Be wary of companies that try to pressure you into signing up or are offering a limited-time promotion or special offer.