What does a car warranty cover?

Car warranties: What's covered?

First, it’s important to establish one thing all car warranties have in common: Auto warranties only cover unexpected repairs needed due to factory defects.

A warranty is the automaker’s promise to fix problems that shouldn’t be problems in the first place.

For example, the transmission is covered if you’re driving along and it suddenly starts lurching and won’t shift out of second gear for no apparent reason. Similarly, if your infotainment screen suddenly goes black and won’t respond to any inputs, the repair would very likely be covered under your warranty.

The common thread between these issues is they don’t seem to have any cause. You didn’t pummel your transmission at the racetrack or pour coffee all over your center stack, and there’s no one and nothing to blame but the people who put the car together. Automakers call the underlying issues that cause these kinds of problems “defects in materials or workmanship.”

Most people don’t fully understand how car warranties work

We surveyed 1,000 drivers, and only 55% of them said they knew what a warranty covered. That’s not ideal, but what’s worse is that about half of those people were actually wrong about what warranties will pay for.

» RELATED: Nearly 13% of Americans can’t afford a $1,000 out-of-pocket car repair

Types of car warranty coverage

Most new cars actually come with multiple warranties that are designed to cover different replacement parts for different lengths of time:

• Bumper-to-bumper warranties: Bumper-to-bumper warranties cover practically every part between your bumpers (minus the kinds of exclusions we mentioned earlier). You may also see them listed as “basic” or “limited” warranties. Technically, they cover every part except the ones listed under the exclusions in your contract, so be sure to read that section carefully.
• Powertrain warranties: A powertrain warranty covers your engine, transmission and drive axle (the part that brings torque to the wheels), as well as other essential components that make the car go. Powertrain coverage often outlasts bumper-to-bumper warranties, though. Some, like Hyundai’s, go as long as 10 years/100,000 miles.
• Hybrid/EV battery warranties: These cover the big, main battery powering your hybrid or electric vehicle and certain other expensive battery-related components. They typically guarantee the battery will keep working and retain 70% maximum charge up to a certain number of years or miles, typically around eight years/100,000 miles.
• Emissions/rust/corrosion warranties: These warranties cover very specific scenarios or component groups, such as rust underneath the car or your emissions system.

What isn't covered by a car warranty?

Warranties won’t cover a mechanical breakdown related to accidents or collisions (that’s what your car insurance policy is for). Weather damage, vandalism, misuse or abuse (like racing, off-roading or towing too much) and neglect (like missing maintenance or abandoning your vehicle) aren’t covered either. Not even the most comprehensive bumper-to-bumper warranty will cover:

• Routine maintenance like oil changes and tire rotations.
• Normal wear and tear on items that have short, predictable life spans, such as brake pads, tires and wiper blades.
• Cosmetics like leather upholstery, dashboard trim or scratches on your carbon fiber finish.
• Body panels like doors, bumpers and other painted pieces (although you may get some paint protection through your factory anticorrosion warranty, explained below).
• Any other exclusions listed in your warranty agreement. For instance, catalytic converter coverage is complicated because it’s such an expensive part.

It’s important to familiarize yourself with the exclusions in your contract so that you’re not surprised later on when your claim is denied. “It seemed like everything is covered. But when I went to go and get some stuff done, it turned out it wasn't covered,” reported a reviewer in Georgia. “I can understand that stuff can't be paid for but with things like spark plugs -- that's not a regular everyday thing that you have to change.”

What to know about aftermarket parts

Aftermarket parts lead to countless claim denials. We asked a claims adjuster with Mopar, the brand that handles parts and warranties for Jeep, Dodge, Ram, Chrysler and Alfa Romeo, about the most common reason he denied warranty claims: “Unauthorized lift kits,” he said. “If we find out that you installed a lift kit that wasn’t one of ours, we’ll automatically deny any claims for any suspension or transmission work.”

» RELATED: Do car warranties cover windshields?

What kind of things would void my car warranty?

You can reasonably expect your warranty to be voided if your vehicle is:

• Flood titled
• Salvage titled
• Found with an altered odometer
• Subject to extreme environmental damage

You can see how a warranty administrator would look at a car with these issues and say, “Yeah, we definitely can’t guarantee the parts after that.”

Why would my claim get denied?

There are also some situations that may result in denied claims but leave your remaining warranty intact, such as:

• Aftermarket part installs
• Chip installs/engine logic alterations
• Racetrack or off-road use
• Nonrated towing
• Missed regular maintenance intervals (e.g., delayed oil changes, bald tires)
• Damage short of a total loss

The key difference is that, in the first list, it’s reasonable to assume that every part of the car has been affected, and as a result, factory quality can’t be guaranteed. But, in the second list, only some of the areas of the car may be impacted, and therefore, it wouldn’t be right (or, in some cases, even legal) to void your entire warranty.

Real-world example

If you’re 2,000 miles late for an oil change, your warranty provider may deny your claim for an engine repair, but they shouldn’t deny your claim for a sunroof repair. Similarly, if you install a custom engine part, you run the risk of your warranty provider denying all powertrain-related claims. But no matter how much horsepower you add, they shouldn’t deny claims for a dead infotainment system.

The key takeaway is this: Even if something doesn’t void your warranty altogether, it may effectively “void” coverage for certain areas of your car. So approach aftermarket parts and off-roading/racing with caution.

» TIPS: How to get your warranty claim approved

Types of car warranties

There are a few different types of car warranties, and different coverages are available from each one. We’ve broken down the various options below, but contract details may vary, so it’s always best to read any warranty agreement carefully before you buy.

New car warranties

Also known as manufacturer's warranties or factory warranties, new car warranties are included with all brand-new vehicles.

The minimum new car warranty term is three years/36,000 miles, which means the warranty lasts until the vehicle is three years old or has 36,000 miles on its odometer, whichever comes first. However, some car makers offer considerably more.

NOTE: Factory warranties always follow the car, not the owner. So, if you buy a used car that’s two years old and has 20,000 miles on the odometer, it should have some factory warranty left, barring any warranty-voiding misfortunes.

» COMPARE: Best new car warranties

Certified pre-owned warranties

Certified pre-owned (CPO) warranties are coverage plans manufacturers or individual dealerships may include with a certified pre-owned vehicle purchase. They’re typically bumper-to-bumper warranties lasting two years/24,000 miles or less.

Extended auto warranties

Extended auto warranties, also known as vehicle service contracts, are optional warranties that give you comprehensive coverage beyond what your factory warranty offers. A common term length for an extended warranty is seven years/100,000 miles, meaning it would extend a four-year/50,000-mile factory warranty by another three years/50,000 miles.

In most cases, bumper-to-bumper coverage offers the best bang for your buck.

You can purchase extended auto warranties from the manufacturer of your vehicle, like Honda, or from a warranty company, like Endurance. Some automakers require you to purchase your extended warranty before the factory warranties run out, while third-party car warranty companies are generally more flexible.

Types of extended warranty coverage

Extended coverage options vary considerably, but here are the main three categories you’ll see:

• Platinum/Diamond/Supreme plans are generally bumper-to-bumper-equivalent plans, but be sure to read the fine print before you buy.
• Gold/Silver plans typically offer something in between bumper-to-bumper and powertrain, with coverage for a few hundred parts.
• Powertrain plans are pretty much a direct extension of your factory powertrain warranty, with coverage for a few dozen engine, transmission and drivetrain-related components only. Some companies offer Powertrain Plus plans that sprinkle in coverage for a few other components, too.

How to choose

While the Gold/Silver plans may sound like the best value, based on our experience pricing out hundreds of extended auto warranties from top-ranked providers, bumper-to-bumper plans tend to be the best overall value because they cover hundreds or thousands more parts for around 10% to 40% more.

In fact, we spoke to around 15 dealerships representing various automakers that told us they no longer sell Gold- or Powertrain-equivalent extended auto warranties because so many customers ended up dissatisfied with how many unexpected repairs weren’t covered.

How much does an extended warranty cost?

Average extended car warranty costs range from $600 to $1,000 per year. More expensive or less reliable vehicles generally cost more to cover. As you might expect, the price of an extended warranty tends to rise as your vehicle ages. Luxury brands and high-maintenance models tend to have higher warranty costs. Most people finance a warranty through lump-sum, short-term or monthly payments.

When is extended warranty coverage worth it?

So, is it worth paying thousands of dollars to extend your factory warranty? It depends. In general, an extended car warranty is most likely to be worth it if:

• You drive a vehicle with below-average expected reliability.
• The cost of a warranty plan is less than you expect to save on covered repairs.
• A surprise repair bill could be financially ruinous.
• You don’t mind paying a few thousand dollars for extra peace of mind.

You can get an overall idea of your vehicle’s expected reliability from J.D. Power’s annual U.S. Vehicle Dependability Study. Then you can see how much repairs might cost from tools like Kelley Blue Book’s 5-Year Cost to Own tool, Edmunds’ True Cost to Own (TCO) tool and RepairPal’s estimated annual repair cost.

Compare those costs to how much an extended warranty would cost you (we recommend getting quotes from multiple warranty providers) to decide whether an extended warranty is financially worth it for you.