How Do Car Warranties Work?

4 min read

car Warranties Are Not Car Repair Insurace

Why do people buy cars these days? 

Well, you buy a car because, for you, it’s a luxury. Or, maybe because you’re a car lover like Jay Leno (ok, not quite like Jay because he has a mere 286)… Or, more like the average Joe, it’s a necessity. 

Whatever your reason, the process of buying a car should be an enjoyable experience – not something that causes your jaw to clench or a cold sweat to make an appearance on your forehead. 

And even though it’s not glamorous, car maintenance and repairs are an inevitable part of that buying process.  

When you buy a new car, the manufacturer provides you with some reassurance in the form of a free limited factory warranty. It covers your car against manufacturing defects and breakdown of some parts. (The key word being some.) 

When the free limited warranty expires, you are on your own. Yup. You are then bestowed with the honor of negotiating your way through the gauntlet of “We highly recommend you do this… You really can’t afford not to do… For an extra $100,000 and the promise of your first born, you can have the best…”

Ok. So, maybe not your first born. But we can all agree you might leave feeling naked and afraid. 

Before explaining how car warranties work, you should know that a car warranty is different from car insurance (or auto insurance). 

Auto insurance is insurance for your vehicle. It provides financial protection against car theft, natural disasters, fires, physical, and bodily damage. 

A car warranty is simply a promise from the manufacturer to cover the financial cost and (sometimes) labor to fix a short list of the stated vehicle parts that might break due to manufacturing defects or assembly errors. 

(Never miss that stated part of your warranty. It’s what remains unstated that’ll sneak up on you.)

Now to answer the big question: How do car warranties work? 

You might think that car warranties are supposed to protect you from most of the defects that occur. Because they claim to cover you “bumper to bumper”, but here’s where the trick lies: a car has more than 15,000 parts, this is the moment when you realize that manufacturer warranties have quite a few unstated things.

Add that to the fact that they only choose the most reliable parts to cover and things become clearer: manufacturer warranties leave you with more risk than you realize. 

Car manufacturers only list the parts that they’re going to cover. That fact right there leaves the buyer in an unwilling shroud of mystery. It’s as if you’re the only person in the room wearing a blindfold. 

Usually, car salesmen try to lull you into a sense of security with the term bumper to bumper. BUT. That term is not to be taken in its literal sense. Because even bumper to bumper warranties don’t cover everything and often leave a lot of parts uncovered (which just happen to be the most unreliable).

This is why most people these days don’t look twice at the extended manufacturer or dealer warranties and consider 3rd-party coverage because they simply offer more transparency.

As for 3rd-party coverages, each one works differently, but as a car buyer, your goal is to protect your wallet and time from the known failures and breakdown of car parts -it’s not your fault.

So you’d ideally want a vehicle service plan that — unlike traditional manufacturer warranties — actually states which parts are not covered. This way, you’ll know exactly what you expect to gain. A plan that is clear and transparent. 

This is why you should consider Eligible, we offer a comprehensive plan that:

  • Is transparent and discloses what is not covered
  • Is comprehensive and covers you and your car
  • Pays the repair bill directly to the dealer or repair shop
  • Is Affordable
  • Is Insurance backed
  • Is no risk because the plans are paid monthly and can be prorated
  • Can be easily canceled or transferred
  • Travel with you across the US and Canada
  • Is accepted by more that 30,000 ASE Certified mechanics

To sum it all up, traditional manufacturer car warranties help to protect dealerships and car manufacturers control costs, not the customer

We are that customer. You are that customer.

And that’s exactly why you should go for a car repair insurance plan that protects YOU. That is exactly what Eligible does. 
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