Car Insurance Vs. Extended Car Warranty: Which Is Best?

If you’re looking at buying a preloved vehicle for your next car, you might wonder what the difference is between car insurance and an extended car warranty. 

Even though these two types of financial protection plans have several differences, they often seem similar. Both contracts protect your pocket if your vehicle endures mechanical breakdowns and costly repairs, but for different reasons. Without either policy, you might find yourself forking out a nauseating amount of money for repairs. 

Let’s delve into the details so you can make an informed decision. 

Extended Car Warranties

An extended car warranty works similarly to a manufacturer’s warranty and becomes active the moment the manufacturer’s warranty wears off. However, extended car warranties are not all-inclusive; these policies only cover specific components for a particular time and mileage. 

A basic extended warranty will cover the engine, gearbox, transmission, suspension, and steering system of your vehicle. On the other hand, a comprehensive warranty will cover virtually everything else like the heating and air conditioning system, electrical components, and even the audio system. Granted that repairs are not based on negligence.  

Purchasing a used car warranty is wise as a driver because this service contract helps you afford the costs of repairs and part replacements. 

Car Insurance

Now that you know what an extended vehicle warranty is, you might feel you can avoid paying monthly insurance premiums. However, this is not the case.

While a warranty covers the costs of repairs due to routine wear and tear on specific components, insurance does not cover these costs. But instead, insurance covers costs associated with unpredictable damages and repair needs. 

There are also different types of car insurance policies that provide different levels of coverage for policyholders. Liability cover will protect you from the costs of damage to other people or their property. Collision insurance will pay out damages to your vehicle caused by road accidents. At the same time, the comprehensive cover goes above and beyond by protecting you from the costs of damages that aren’t caused by collision. More often than not, it’s wise to choose comprehensive cover because it’s the most extensive policy available. 

Depending on your level of insurance cover, your policy will pay out for collisions, damage due to natural disasters, fire, and even theft. 

Moreover, while car insurance is vital for all drivers, extended warranties are optional. 

The Bottom Line

It’s wise to purchase both policies as the driver of a used vehicle because each policy provides different types of cover. Without either policy, you’ll inevitably find yourself paying a large fortune towards vehicle repairs, whether due to an accident, routine wear and tear, or even a natural disaster. 

But whether you choose to opt for both policies or only car insurance cover, it’s crucial to compare policy options from different providers to get the best deal; not shopping around is a fairly common mistake to avoid when buying insurance. Not all service providers will offer the same level of cover or the same benefits, so it’s wise to evaluate policy details when comparing all your options. 

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