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What is a car warranty?

A man flicks through some paperwork.

Running a car isn't cheap. As well as paying for petrol, insurance, tax and MOTs, there are also those surprise costs when something goes wrong and your car needs to be repaired. If your car's prone to issues or you simply want to safeguard yourself from expensive garage bills, then a car warranty could be for you.

A car warranty — or mechanical breakdown insurance — covers you for the costs of parts and labour to fix certain mechanical or electrical faults with your car for an agreed period of time. The parts covered vary with each warranty, so reading the small print's really important.

What if my car's new?

New cars bought from the manufacturer typically come with a three year warranty, or a warranty that covers you up to a certain mileage (often 60,000). During this time, you're protected against most faults that aren't considered "wear and tear", such as those related to the engine, transmission, gearbox, suspension, steering or cooling system.

Only certain warranties will include cover for wear and tear, and even still, you might be required to pay towards parts and labour costs.

When your car's three years old or has travelled the specified distance, you'll have the option to extend your warranty for an additional price. You'll need to decide quickly, as the new cover must carry on from the manufacturer's warranty uninterrupted.

Remember, buying a used car doesn't always exclude you from a manufacturer's warranty. If the car's three years old or less, or its mileage is under the distance specified by the manufacturer, then the warranty will still apply when the car changes hands.

What other types of car warranty are there?

Aside from a manufacturer's warranty, used car dealerships — in particular car supermarkets and independent dealers — also offer warranties either as part of a car's price, or for an additional fee. Often, they'll sell you a car with a short warranty on it (around three months) and ask if you want to pay to extend or upgrade the cover.

Alternatively, you can choose an after-market warranty which can be tailored to suit your personal requirements. However, your options will depend on the type of car you drive, its age, and your annual mileage. If you opt for this type of warranty and your car's older than three years, you'll be asked to provide your MOT certificate and prove that your car has been serviced within the past year.

If you've already got a warranty but it's up for renewal, it could be cheaper to purchase new cover as opposed to extending your existing one, so spend some time researching for the best deals.

Do I really need a car warranty?

On the surface, purchasing a car warranty seems like a no-brainer, but you've got to consider the money you'll be shelling out for the cover in the first place. According to industry statistics, four out of ten cars aged 4-9 break down every year, with an average repair bill of £376.19. With the cost of a warranty likely to be greater than the average repair bill, you need to decide whether it's worth the money.

One advantage of a car warranty's that it's likely to include a level of breakdown cover, though you'll be expected to arrange recovery and reclaim costs. A disadvantage, however, is the warranty could have claim limits for individual parts, as well as a total claims limit matching the car's value.

Choosing a car warranty

There are a number of things to be aware of when choosing a car warranty. In particular, you should look out for claim limits and excess charges, and make sure you're fully aware of what level of cover is involved. Bear in mind that buying the cheapest warranty available is a false economy and might not provide you with the level of protection you need.

Some car warranties have an early claims clause, meaning you won't be covered within the first few weeks of taking cover out. Also, you need to check that the cover doesn't apply to a specific chain of garages, as having to travel long distances for repairs could be a major issue.

There are a couple of terms you need to look out for to avoid getting a poor warranty:

  • Betterment: This is when your car's value is bumped up as a result of a repair, and your provider may ask you to contribute a large sum of money towards parts.
  • Consequential loss: This is when a part fails as a result of another part failing which isn't covered on the warranty. You'll end up footing the bill for the covered part because the fault was caused by a non covered part.

The best car warranties are explicitly clear about what is and isn't covered. If you want the best deal, you need to do your research, compare cover options and be sure to always read the Ts & Cs.

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