Whether you own a new car or a used car, you'll likely have heard of car warranties and car insurance. While both offer car owners financial protection and peace of mind, there are some distinct differences between the two that all Canadian motorists should be aware of. If you want to learn more about the difference between a car warranty and car insurance, stick around to find out.
What is the difference between a warranty and car insurance?
Ultimately, the difference between a car warranty and a car insurance policy is:
- Extended warranty is optional and expires after two to five years, while car insurance is mandatory and renewed each year.
- Manufacturer's warranty is included in all new car purchases, whereas car insurance is not automatically included.
- Extended car warranty covers faults to a vehicle's physical components, while car insurance coverage protects policyholders if they are in an accident and unforeseen damages occur.
How can I avoid having to buy a car warranty?
To avoid having to buy extended warranties and avoid costly vehicle repairs, routine upkeep on your vehicle throughout the year is recommended. Luckily, BrokerLink has got you covered when it comes to maintenance tips and tricks:
Is a warranty worth it on a car?
Whether or not a car warranty is worth it depends on your needs and vehicle. If you've purchased a used car, getting an extended warranty can help give you peace of mind, knowing that any mechanical breakdowns and other things like roadside assistance will be covered. That being said, an extended car warranty is an added cost that may not make sense for a lot of drivers, given their current budget. To prevent the need for extended warranties, conducting routine maintenance on your vehicle is a must. Scheduled car maintenance throughout the year can help slow down the rate of normal wear and tear and keep your vehicle in good condition for as long as possible. Finding an auto mechanic in your area who you can trust to perform your maintenance can make a world of difference and keep your car maintenance costs as low as possible. So, don't forget to do your research.
Is a warranty the same as insurance?
No, a car warranty and car insurance are not the same thing. If you purchase a new vehicle, it will come with a warranty from the manufacturer, which will cover repairs or replacement parts if there is a recall on your car's make and model. Car warranties typically expire after a certain amount of time. You also have the option of purchasing an extended warranty that can continue covering your vehicle once the original warranty period is over. In contrast, car insurance is mandatory and meant to cover accidental damages to your vehicle, whereas a car warranty covers manufacturer issues.
What is a car warranty?
A car warranty is a guarantee of quality given to those who purchase a new vehicle to ensure that the owner has financial security for a specific period should the vehicle need mechanical repairs, faulty electrical parts, or recalls on parts. There are different types of car warranties, including the following:
Manufacturer's warranty
A manufacturer's warranty, also known as a factory warranty, kicks into place when someone buys a new car. Depending on which car you buy, the manufacturer's warranty will expire after a certain amount of time. However, it will not cover wear and tear, oil changes, and other maintenance tasks that are the responsibility of the owner. Once the warranty expires, you'll be responsible for paying any repairs out of your own pocket.
Extended warranty
Car owners also have the option of purchasing extended warranties from third-party providers that can kick into place once the manufacturer's warranty expires for an extra cost. Again, it will provide financial protection to you for any mechanical and electrical parts that break or are recalled. Depending on the type of warranty, you may also have roadside assistance included in your coverage. Extended car warranties can last anywhere from two to five years following the expiration of a manufacturer's warranty.
What does a car warranty cover?
Depending on the extended car warranty you choose to purchase, what is covered may differ slightly. However, it will typically cover the following:
- The alternator, ignition system, and starter motor.
- Windshield wipers.
- Vehicle software like GPS.
- The fuel pump and the injectors.
- Gearbox.
- Steering wheel buttons.
- The water pump and radiator.
- The suspension system.
- Car engine, transmission, and axles
- AC and heating systems.
- Things like microphones, speakers and radio parts.
- Brake pads.
What does a car warranty not cover?
So, what does a car warranty not cover? Essentially, any type of accidental damages that occur to your vehicle, whether it be due to a collision or non-collision event, will not be covered by your warranty. Additionally, if your vehicle breaks as a result of your own doing, mechanical negligence, or normal wear and tear due to your vehicle's age, you will not have coverage.
What is a car insurance policy?
Car insurance, unlike car warranties, is a contract between the car owner and an insurance provider. It provides the owner with financial protection and protects their legal interests if they are involved in an accident.
What does car insurance cover?
There are numerous types of auto insurance coverage available for drivers to purchase. Some of the types of insurance you should consider include:
Third-party insurance
Third-party insurance is mandatory insurance coverage. . It protects the policyholder's finances and interests in the event they cause injuries or property damage to a third party while operating a motor vehicle. If a lawsuit is filed against the policyholder, this insurance will cover the cost of medical bills, legal fees, repairs, and other settlement expenses.
Accident benefits
Accident benefits coverage is also mandatory for all Canadians. If you get into an accident where you, your passengers, or pedestrians are injured, regardless of who is at fault, this car insurance will cover the cost of all medical bills, rehabilitation, lost wages, and other costs so you can recover without worrying about incurring costs.
Uninsured or unidentified motorist coverage
If you are involved in a car accident with either an uninsured or underinsured driver who is responsible for the collision, your uninsured motorist coverage will kick in and cover the costs of your car repairs. This auto insurance will also cover you if you are involved in a hit-and-run. Again, this car insurance is mandatory for all Canadians.
Comprehensive coverage
Comprehensive car coverage plans are optional for car owners. If your vehicle is damaged due to a non-collision event that is listed in your policy, your comprehensive coverage will cover the cost of repairs up to your policy limits. For example, fire, vehicle theft, vandalism, and certain natural disasters are typically covered events listed in standard policies. You will, however, need to pay a deductible before your insurance company will cover the rest of the costs.
Collision coverage
Collision car coverage is also optional for car owners. This car insurance will cover your vehicle repair costs if your car is damaged in an at-fault collision. Similar to comprehensive auto insurance, you'll need to pay a deductible amount before your insurance company pays the rest.
Accident forgiveness
Accident forgiveness is a type of insurance coverage that protects policyholders from experiencing a rate increase following their first at-fault accident. It's a great option to add to your overall insurance portfolio if you are a new driver or have never been in an at-fault accident. To ensure you remain accident-free, brush up on safe driving tips brought to you by the experts at BrokerLink!
Contact BrokerLink for quality coverage today!
Whether you want to save on car insurance, learn more about preventative auto insurance, or have questions about whether an electric car requires less maintenance than a traditional gas vehicle, the insurance experts from BrokerLink are here to help. You can reach us over the phone during business hours or visit us in person--we've got offices across Canada! Alternatively, you can get a free, competitive insurance quote from the comfort of your own home using our online quote tool!
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