Understanding the particulars of your car warranty can be a difficult and frustrating experience for any car owner. Learning the differences between the different types of car warranties, such as factory versus extended, is another layer of difficulty altogether. However, despite the challenge, knowing these crucial differences is a must if you want to get the best coverage for your vehicle, old or new. If you are going car shopping, don’t overlook the warranty. In this article, we will cover different types of car warranties and how they differ from car insurance.
What are car warranties?
In simple terms, a car warranty is a promise by the manufacturer that they will fix any defects in your vehicle. The agreement between you and car manufacturer is a guarantee by the manufacturer to rectify specific issues that occur within a specific time period. You will not have to pay for most vehicle repairs or labour during that timeframe.
Factory car warranties for new vehicles
Car warranty terms and conditions vary, depending on the vehicle manufacturer and the type of warranty. All new cars come with this manufacturer or factory warranty. It is the one that comes from the factory or dealership with a new car. These warranties are standard from virtually all major automotive manufacturers. Manufacturer’s warranties tend to be the most limited in terms of scope. They only kick in when defects arise from manufacturing and material issues, affecting the safety and operation of the vehicle. If you have an issue with your vehicle that your warranty includes and is within the warranty timeframe, you can receive repairs at no cost to you. Your auto dealer is required to fix the vehicle. However, if a repaird does not have coverage under a manufacturer’s warranty, the claim will be denied, and you will have to pay out of pocket.
Types of car warranties
If you are buying a new or used car, the types of warranties available to you are different. Authorized dealers have an expectation to honour them, even if you did not buy the vehicle from that location. Here are the most common types of car warranties for vehicles:
1. Basic warranty: New vehicle limited warranty
This car warranty is offered by the manufacturer to cover manufacturing defects. It will cover the basic parts of the car, including door locks, electronics, paint and the like. Basic warranty is usually the only warranty that is included with your car for free.
2. Comprehensive Warranty: Bumper to bumper
Offers comprehensive coverage for all aspects of the car. If your car suffers a fault or failure of a component that was under warranty – and that failure was due to a manufacturing defect – it may be changed by the manufacturer, free of charge. However, labour and shipping costs may not have coverage. This type of warranty covers almost anything that fails during a specific timeframe (generally three to five years).
3. Powertrain Warranty: Engine, transmission, and AWD
These repairs will have no charge if they need fixing, but you may have to pay for parts associated with the repairs, such as hoses or belts. This warranty lasts around eight years or 160,000 km, depending on the manufacturer. Powertrain warranty must typically be purchased separately for your car.
If you have a hybrid vehicle, it’s possible that electric motors, cables and batteries may be covered under separate warranty.
4. Emissions Warranty: Catalytic converter or engine control module
This warranty covers specific car parts that are responsible for reducing emissions, and are generally under a warranty that outlasts the powertrain warranty.
5. Corrosion Warranty: Rust and corrosion
If the rust starts from within and eats a hole through the body panel, you may be eligible to have it fixed at no cost. With the snow, slush and salt we see on Canada’s roads, this is a good option to tick.
6. Hybrid and electric warranty
Coverage for defects in electric motors, cables and batteries. Since battery capacity reduces with use, normal battery decline will not have coverage.
7. Tire warranty
This provides protection against unexpected deformities in tires or other manufacturing defects. A blowout, or the tire popping due to a pothole, will fall outside of warranty coverage.
What are extended car warranties?
After a factory warranty has run its course, there are two options:
- Either the vehicle is no longer covered or
- You can purchase an extended warranty
This is actually a bit misleading since you can purchase an extended warranty, either from the factory or third-party provider, even when the factory warranty is still in effect. True extended warranties from an automaker are nothing more than an extension of the original factory warranty. The only thing that’s different is the coverage period itself. These warranties also have certain eligibility requirements, but most options tend to favour newer vehicles.
Extended third-party warranties
Extended auto warranties from third-party providers are slightly different, and are often more advantageous. Also known as vehicle service contracts, these warranties can have different inclusions, exclusions, extra perks, and terms, since they don’t come from the factory. Most third-party providers offer more coverage for vehicles, sometimes rivalling the bumper-to-bumper warranty from the factory with better perks. These include roadside and emergency assistance, as well as other benefits. A third-party warranty may be your best bet for getting coverage on a vehicle that has more than 100,000 km on the engine.
Some extended warranties will also give you an option to:
- Choose your own repair facility
- Reimburse you for rental car or towing costs
- Allow monthly payments
- Cover some repair costs factory warranties don’t
What is the cost of a car warranty?
The cost of a factory warranty is already worked into the vehicle price; therefore, they can vary. Extended warranties, however, can cost anywhere from $500 to $2,500. The price depends on the type and length of the warranty, and the level of coverage from the manufacturer.
Can a car warranty be voided?
Here are the most common ways that a car warranty may be voided:
- Failure of scheduled vehicle maintenance and/or not using Original Equipment Manufacturer (OEM)-certified parts.
- Incorrect product use: Not using the oil type specified by the manufacturer.
- Total Loss declaration: Voids the entire warranty.
- Mistreatment of vehicle: Road racing or off-roading.
- Performance-enhancing alterations: If it affects the performance or a factory car part.
- Gauge tampering: Turning back the odometer.
- Environmental damage: Vehicle suffers damage due to a fire, flood, or hailstorm.
To learn more about how your warranty can become void, please click here. (next article)
The Competition Bureau of Canada, a government agency that ensures fair competition and market practices in Canada, states that warranties cannot be voided simply because a consumer chooses to have their car serviced by an independent repair shop.
Is a car warranty transferrable?
Depending on the type of warranty that covers your vehicle, it can sometimes be transferrable. Vehicle warranty follows the vehicle. Therefore, if you buy a vehicle that has 15,000 kilometres and the factory warranty is valid until 50,000 kilometres, your vehicle will still have coverage.
Warranties for used cars
If you are looking to buy a used vehicle, depending on the year and mileage, some may still be under factory warranty. You can negotiate a warranty when buying a previously-owned vehicle. Check with the dealership to see if they offer standard, limited, or service warranties. An extended warranty is another option, but is often more expensive. Here are the types of warranties to consider for used cars:
- Standard used car: This type of warranty usually covers mechanical defects and concerns regarding vehicle safety. These warranties are based on time or distance (i.e., three years or 60,000 kilometres).
- Limited used car: Covers partial car maintenance costs or mechanical parts, and generally lasts a few months.
- Service: This can cover everything from brake pads to oil changes.
- Extended car: These packages can last three to five years longer than the basic warranty, and are sometimes transferrable.
Are car warranties and car insurance the same thing?
No. Insurance and car warranties are two different types of protection. A car warranty is designed to cover mechanical issues and labour on your vehicle caused by defects or issues with parts. A car warranty can be negotiated by the manufacturer. They are optional coverage you may choose to add to your vehicle purchase. Car insurance, however, is mandatory. It is illegal to operate a vehicle in Ontario without auto insurance. Insurance coverage will cover the costs of repairing your vehicle if it is damaged in a collision, natural disaster, fire, or theft. It is handled by your insurer.
It is important that you do your research about the vehicle you want from top to bottom. Before committing to a vehicle or model of car, be sure to inquire after the factory warranty, as well as any extended warranties available. Take the time to look around, weigh your options, get some free quotes, and read the fine print. Owning a vehicle nowadays is an expensive commitment, so you want to be sure that you have the right coverage. When your ready to buy a vehicle, contact one of our isure representatives to help you choose the best insurance coverage that suits your needs.
