What does a car warranty cover?

12 June 2020

All brand-new cars are covered by a manufacturer warranty.

Manufacturer warranties usually last for up to 3 years or 60,000 miles from new, although some manufacturers like Hyundai and Kia offer 5 and 7 years. A manufacturer warranty is there to give you confidence that the vehicle is of a high standard but if you were to have an issue (subject to a very small number of exceptions) they will put it right for you.

New car or extended warranty

When the manufacturer warranty runs out, or if you buy a used car which isn’t covered by the manufacturer warranty anymore, you do have the option of buying an extended warranty. This can be through the manufacturer or through a third party. The latter can often save you money but regardless of which option you choose, as with any insurance, you should thoroughly check the details of the cover to make sure you’re not caught out by any exclusions if you need to claim.

Why buy an extended warranty? Is it worth buying a warranty on a second-hand car?

If something unexpected goes wrong with your car, you might find you’re left covering a high repair bill which you might not have budgeted for (unless you have “self-insured” and have savings put aside to cover the cost of the repairs – which most of us don’t!) Extended warranties can include additional features such as covering the cost of a hire car or onward travel costs, but check the terms to see if this is only in certain situations. Whilst no warranty can cover everything, for some people an extended warranty can take some of the stress out of an otherwise stressful situation.

Which warranty do I buy?

The level of cover available, not to mention the premium, can vary and is based on several factors including the make, model, age, and mileage on the car. Like every type of insurance, not all warranties are created equal and reading the small print is essential in making sure that there are no nasty surprises when you need the cover most. A good extended warranty will cover the cost of the parts and labour required to fix the problem with your car, have fewer exclusions and useful additional features.

What isn’t covered by an extended warranty?

You’ll find certain components or faults which are always excluded by an extended warranty, including:

Paintwork
Glass
Consumables – this includes tyres, brakes (wearable parts such as the discs and pads), clutch, fuses, bulbs and batteries
Wear and tear – this may be an additional cost on some policies or may not be covered at all

Also, a warranty will usually only a cover a part that has actually failed, and so won’t cover anything pointed out by a mechanic during routine servicing or MOT.

How can an extended warranty be invalidated?

Most warranties will state that you must stop driving the car if a dashboard warning light comes on, or if you can hear, see or smell something that means there is likely to be a fault with the car. By continuing to drive the car you could make any fault worse and may invalidate a claim and/or the policy itself. There will normally be a servicing requirement on an extended warranty: some require full service history carried out to the manufacturer’s specifications and if any services are missing or late this would invalidate your cover. If your vehicle has been modified from the standard manufacturer spec, or if you use the wrong oil or fuel in it, you may also find that your cover is null and void. You could also invalidate your cover by not following the claim procedure correctly – if you have any work carried out before getting the claim authorised by the policy provider, they may not cover the costs.

Insured vs Non insured

Not everyone is aware of it but not all warranties are “insured”. An insured warranty involves an underwriter who covers the cost of any valid claims, whereas a non insured warranty can only pay out where there is “money in the pot” so to speak. With an insured warranty the company must also be fully authorised and regulated by the Financial Conduct Authority. This means that they must adhere to high standards or risk being disciplined for misselling cover. With an insured warranty you can also take any complaint to the Financial Ombudsman Service if you’re unhappy with the outcome from the company itself, and you’re also protected by the Financial Services Compensation Scheme, if the company goes out of business.

What to check on a warranty: at-a-glance

Is there a maximum number or value of claims that can be made?
Is there an excess if you make a claim?
Does your car meet the servicing requirements and qualify for cover?
Is there an age or mileage limit imposed during the policy?
Is there a waiting period before you can make a claim?
Is the labour rate limited and if so will it affect you?Do you have to take the car to a specific garage or can you use any which is VAT registered?

It’s important that you check all of these things to ensure you’re getting the cover you think you are, and also that it meets your requirements. We would always recommend fully reading the policy wording either before buying or during the cooling off period, to decide if the cover works for you.