Difference between Auto Warranty & Auto Insurance

May 19, 2020

Most companies have multiple types of warranties, which may include: new car warranty; usually from the car's manufacturer or seller, or used-car, extended warranty; that you can purchase from either the manufacturer or any third-party company that supports auto warranties.

New Car Warranty (Factory Warranty):

A new car warranty, also called factory warranty, is the manufacturer's way to help pay for replacement or covered repairs during the warranty period. This warranty is usually included in the initial cost of your car.

New car warranties consist of:

  • "Bumper-to-bumper" coverage
    Includes items such as your car's electronics or air conditioning system.
    This type of warranty won't cover wear and tear due to regular use, such as tires and brake pads.
  • "Power train" coverage
    Covers the engine and its transmission.

Car Insurance vs. Car Warranty?

Car insurance is there to help pay for damage to your car and other items as the result of a collision, fire, or theft. Unlike warranties, car insurance policies won't cover any vehicle problems due to mechanical or equipment breakdowns.

Coverages that are available on an insurance policy include:

  • Liability coverage: Pays for someone else's medical bills or damage to their property caused by an accident you caused.
  • Collision coverage: this coverage helps pay for repairs, If your car is damaged in a collision.
  • Comprehensive coverage: Pays to repair or replace your car if it's damaged by a covered event stated in your contract.
  • Uninsured motorist coverage: Covers your costs if you are hit by a driver with little to no insurance.
  • Medical payments coverage: If passengers are injured in an accident, coverage pays for your medical expenses.

Additional Protection: Roadside Assistance

Tow your car if it breaks down, or get services like battery recharging, flat-tire repair and more in case of it breaking down.