Is an Extended Warranty Worth Buying? Understanding the PMC Difference

Are Extended Car Warranties Worth It?

Picking out the right car is just the beginning of your car buying experience. You’ve chosen the make and model, but then comes the price shopping, decisions about package options, financing, and insurance choices. Just when you think you’ve finally nailed down all the details, the salesperson asks whether you’d like to buy an extended warranty, and you’re almost too overwhelmed to ask the important questions — what exactly is an extended warranty, what does it cover, are there used car warranties or do they only cover new cars?

You might be surprised to find out that not only are there two different types of extended warranties — original equipment manufacturer (OEM) warranties and third-party aftermarket warranties — the offerings within those categories vary widely, as well.

Arming yourself with a little knowledge beforehand can make the car buying process much smoother.

Extended Warranties Defined

Extended warranties, also referred to as vehicle service contracts, are agreements purchased by a car owner, either directly from the manufacturer or from a third party, to cover vehicle repair costs beyond the manufacturer’s original warranty. Most new cars will come with both a powertrain and bumper-to-bumper warranty.

The powertrain warranty covers defects with the engine or transmission. A bumper-to-bumper warranty will pay for repairs to other components for a set number of miles or time, like six months or 60,000 miles. While these warranties are included in the price of the new vehicle, OEM and third-party extended warranties are bought separately.

Differences Between OEM and Third-Party Extended Warranties

OEM warranties may be purchased from the manufacturer when the car is new to extend the original warranty, or they may be offered by the manufacturer on a certified pre-owned vehicle if the original warranty has expired. OEM warranties generally mirror the terms of the original manufacturer’s warranty.

Third-party extended warranties can be purchased as new or used car warranties and are generally available throughout the life of the car. The coverage, benefits, and limitations of third-party extended warranties vary between companies more than OEM warranties, so always look carefully at any contract before you sign.

Things to Consider When Buying an Extended Warranty

The terms of an extended warranty contract will depend on the vehicle and the company offering the warranty. There are several key considerations when looking at any warranty agreement:

1. How does payment work? 

Look at the contract to determine how payments for repairs are handled. Some warranties pay the repair shop directly, while others will expect the owner to pay for repairs on their own and then file a claim for reimbursement.

With Protect My Car, when you need a repair, you call the claims department to get authorization and then take the car to a licensed repair facility. If the repairs are covered under your contract, Protect My Car will pay the repair facility directly.

2. What repairs are covered? 

For many OEM extended warranties, the repair coverage will mirror the bumper-to-bumper or powertrain warranty from the manufacturer. Third-party warranty coverage will depend on the contract. Coverage may be inclusive, in that it only covers repairs to parts listed in the contract, or exclusive, in that it covers repairs to any part not listed in the service contract.

An extended warranty with Protect My Car is an inclusive contract, and depending on the policy, covers systems such as the engine, air conditioning and heating, transmission, fuel system, electrical, cooling system, and drive axle. Protect My Car policies also include 24/7 roadside assistance and rental car reimbursement.

3. Are there limitations on where repairs are done? 

With OEM warranties, repairs must generally be done at a dealership or a car manufacturer-authorized repair shop. Third-party warranties, too, might have limitations on where you may take your vehicle to get repairs, although that is not always the case.

Protect My Car only requires that policyholders use a licensed repair facility, but does not otherwise limit where you may get your vehicle fixed.

4. Is there a deductible? 

OEM warranties usually either have no or a very low deductible. Depending on the contract, third-party extended warranties may have a high deductible.

Protect My Car offers three policy options: Driveline, Select, and Supreme. Each plan has a $100 deductible.

Choose Protect My Car for Your Next Warranty

Like all parts of the car-buying process, before you choose an extended warranty, take the time to understand what an extended warranty is. Evaluate your options, looking specifically at how claims are processed, what repairs are covered, where repairs are authorized, and the deductible. 

Whether you’re in the market for a new or used car warranty, Protect My Car is a great choice. Request a quote today!