Warranties and auto insurance policies offer some form of protection to your car, only different types of protection.
Normally, a warranty will cover the costs of replacement of parts that have certain issues or labor costs for repair of specified types of mechanical breakdown due to malfunctions from manufacturing defects. Auto insurance on the other hand is typically designed to cover losses or costs of repair or replacements due to damages resulting from collision or other causes such as theft and fire.
Despite this difference, having a car warranty may impact your insurance coverage options in a number of ways depending on the nature of that warranty.
A warranty may lessen your need for insurance coverage
When you buy a new car, your dealer will often recommend that you buy an extended warranty that covers any mechanical breakdown of the car or parts of it depending on what the deal stipulates. Meanwhile, your car insurance company will also try to persuade you to buy an additional coverage called Mechanical Breakdown Insurance (MBI) policy which covers practically the same thing. It pays for your car’s repairs due to mechanical problems that are unrelated to an accident or the other risks often covered by regular car insurance policies.
Depending on comparative advantages, if you settle for the extended warranty option such as the selection of Hyundai extended warranties available for your car, you would not necessarily need a Mechanical Breakdown Insurance coverage. Your extended warranty plan would pay for all repairs to your car in excess of the manufacturer’s warranty just like an MBI insurance policy would.
What makes an extended warranty unique from other warranties?
Your extended warranty is what saves the day after your bumper-to-bumper warranty has expired. New cars usually come with various warranties, notably the bumper-to-bumper (or factory) warranty and powertrain warranties.
The bumper-to-bumper warranty, which is backed by the automaker even though it is the car dealer who sells it, covers all repairs to the vehicle except the cost of repairs to parts that wear out such as brake pads, windshield wipers and tires. This warranty typically remains in effect for a minimum of three years of purchase of the new car or 36,000 miles depending on the carmaker’s policy.
If your car breaks down after the expiry of this period, you are on your own. You will have to pay out-of-pocket to have the problems fixed.
With an extended warranty in effect, you’ll be free from having to pay through the nose for such repairs. An extended warranty is therefore your safeguard against all costly unforeseen car repairs, which it covers through the agreed-upon period of time and number of miles.
Warranties help you pay less for insurance coverage
Since warranties take care of part of the protection you would need from your insurance company, it naturally means that your overall insurance bill goes down as you are taking less coverage from the car insurer.
Before you sign any insurance contract, be sure to look at what your car warranties have covered so you don’t repeat the same coverage on your insurance policy. This should help you save money off your insurance budget.