Extended car warranties are often misunderstood, with over half of consumers unsure about their true nature. While many new cars come with a factory warranty, the question of what to do when it expires. Extended warranties can provide peace of mind, but they’re frequently viewed as unreliable due to poor-quality, uninsured options in the market. Uninsured warranties lack regulatory protection, leaving consumers vulnerable to denied claims with no recourse.
On the other hand, insured warranties, regulated by the Financial Conduct Authority, offer a more reliable service. They are supported by the Financial Ombudsman Service and the Financial Services Compensation Scheme, ensuring better customer protection. This article explores the differences between insured and uninsured warranties, highlights common misconceptions, and provides guidance on how to avoid falling victim to subpar auto warranty products.
Car warranty is a type of automotive protection which helps avoid a significant repair bill after an unexpected mechanical or electrical failure. Usually, new cars come with a three to five-year factory warranty which covers the initial period of ownership. However, what happens of your car malfunctions after your manufacturer warranty ends.
Extended car warranties are often viewed as a scam product because of some providers offer a sub-par service which doesn’t actually give customers the peace of mind they want. Scam car warranty products are usually uninsured which means there is no recourse for customer to dispute their warranty claim.
“If you buy a policy on an uninsured basis, you have no recourse whatsoever. It’s entirely subjective to the company that supplied it as to whether they feel it’s appropriate to pay out.
With an insured policy that’s all taken out of our hands. If there’s a disagreement, ultimately, the customer can go to the Financial Ombudsman Service and ask them to adjudicate”.
– Simon England, Managing Director at ALA Insurance
There are two types of aftermarket warranties, insured warranties and uninsured warranties. Insured warranties act as insurance products and therefore must be regulated by the Financial Conduct Authority. The Financial Services Compensation Scheme also protects your policy in case the underwriter can’t afford to pay your claim. Finally, insured providers must uphold any complaints raised via the Financial Ombudsman Service.
Extended warranties advertised as anything other than an insurance product are most likely uninsured warranties and may not come in clutch when you really need them. Providers offering insured warranties are much more likely to prioritise their customer’s needs and offer a better quality product. Uninsured warranties are often cheaper and can seem ‘too good to be true’ but generally a cheap product offers no option to dispute your claim if you’re unsatisfied, the warranty company is new to the market, or the product is subpar.
“And if you are going to get a cheap policy, it could be because they’re new into the market, or it could be because the features and benefits of that policy just aren’t as good.”
– Simon England, Managing Director at ALA Insurance
There are some key things to look for when shopping for an extended warranty policy online. Firstly, check that the product is insured. Bear in mind that a company can be listed on the financial services register while also selling uninsured products. Check that your warranty product is protected before purchasing.
Other ways you can avoid falling victim to an extended warranty scam is to check the reputation of the firm. Third-party ratings from Trustpilot are a great way to understand the legitimacy and trustworthiness of warranty provider. Here’s our best advice for choosing a legitimate company:
If a car warranty policy and quote seems too good to be true, it probably is.
Get your ALA Warranty Quote today
Unlike other automotive insurance products such as GAP insurance, car warranty can be quite complex when it comes to component cover. Policy exclusions and limits vary depending on the level of cover that you choose and not understanding your component cover is one of the easiest ways to get caught out with an expensive repair. Here are some common misunderstandings when it comes to buying warranty online.
Gradual wear and tear can result in a vehicle failure even if you service your vehicle regularly and follow the manufacturer’s maintenance guidelines. Unfortunately however, many warranty providers don’t cover wear and tear at all.
Older cars are more prone to failures from wear & tear which is why warranty policies for older cars usually don’t include wear & tear cover. ALA Insurance offers wear & tear cover for all platinum policyholders – available for vehicles less than eight years and with a mileage of 80,000. This can be really helpful for the peace of mind that if a component fails for almost any reason, you can avoid a significant repair bill.
Another common assumption about insurance providers in general is that they avoid paying out for your vehicle repair. It’s always important to understand that insured products are regulated by the FCA which means they have to offer a fair price for their component cover.
[60% thought that extended warranty providers avoid paying out]
“50% of the people where we get claims declined is because they haven’t understood the policy’s coverage.”
– Simon England, Managing Director at ALA Insurance
ALA Insurance prioritise informing their customers, this means making the warranty coverage options transparent and simple to understand. We never try and mislead customers into buying a policy they don’t understand the terms of. However, the policy exclusions vary between coverage levels which means there will always be a chance you’re not covered if you opt for a less comprehensive plan.
For the best peace of mind that virtually all your vehicle components are covered, choose Platinum car warranty.
PLEASE ENSURE YOU READ YOUR POLICY-SPECIFIC COVERAGE BEFORE BUYING CAR WARRANTY
The vast majority of the negative attitudes towards extended warranty come from a lack of honesty from staff. While policyholders can sometimes make mistakes when selecting the right coverage option, we never mislead our customers about what’s included on their cover. The best approach to avoid tripping up is to speak to one of our friendly staff members about which policy is best suited to you. Our customer service phone number is 01653916637.
[60% thought that warranty providers aren’t transparent]
“We are very consumer-centric, and our brand has a reputation of being honest and trustworthy”
– Simon England, Managing Director at ALA Insurance
Read over 18,000 five-star reviews
[57.5% believed warranty providers employ pushy sales tactics]
It’s common that insurance providers offer overly sales-y phone calls to boost their revenue but this means that you don’t necessarily get the policy that’s best for you. Most insurance customer support staff are paid on a commission basis – which means they benefit from making a sale.
“What differentiates us as a company, we will never try and sell anybody anything…I go out of my way to employ friendly members of the customer services team, and they are not salespeople.”
– Simon England, Managing Director at ALA Insurance
At ALA, we do things a bit differently – all our customer support staff are paid a fair salary, and no sales’ commission. We inform every consumer we speak to, making sure they choose the best policy for their needs. If our products aren’t quite right for your requirements, we won’t recommend them. We’re so confident in our transparent, customer-centric approach – our cancellation rate is only 1.5%, far lower than the industry average. Our customers understand what they’re buying.
Car warranties are usually associated with new cars in case a component unexpectedly malfunctions during the first years of ownership. The older your car gets, the more likely a component will fail so manufacturer’s don’t offer this cover, even if you take good care of your vehicle.
[55% of Brits thought extended warranty wasn’t available for older cars]
However, there are some generous component cover options available for older motor vehicles. ALA offers covers a huge variety of key components including the engine, fuel system, brakes, suspension, steering and much more. Read about the component cover for the three tiers of coverage.
Read whether warranty is worth it for used cars
The best option for an extended warranty policy is an insured product. Next, you’ll want to check that you’re using a reputable provider. Finally, the smartest choice is to use a policy with the maximum level of coverage available for your car.
If you’re considering buying a cheap warranty product with more excluded than covered components you could be taking a huge risk with your money. Meanwhile, having no policy in place could result in significant repair bill if you break down unexpectedly.
“It’s a legal requirement to have car insurance. But like a house, it’s not obligatory to have warranty. What if that house burns down, or you have a break in? Well, that would be a significant financial burden.
It’s the consumer’s view as to whether they feel that they would get value for money with an insurance product in case the unexpected happens”
– Simon England, Managing Director at ALA Insurance
52% thought warranty wasn’t worth the cost for them. However, a significant number of drivers deal with sudden mechanical or electrical failures from time to time. Extended warranty is a continuous insurance cover which means that you can claim on it multiple times if necessary. When you weigh-up the potential costs of significant repairs with the price of a policy – it’s excellent value-for-money at every level.
We’re market leaders in automotive aftermarket insurance because we place our consumer’s needs central to everything we do. As a result, we have thousands of loyal customers that trust us to have their back when they need it. Explore some of the benefits of ALA warranty:
Is Warranty Worth it for My Vehicle
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Short Term Motor Insurance
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Breakdown Cover
