After purchasing a vehicle, you want to do everything possible to keep it safe. There are two ways to do this, car insurance and car warranties. Although both offer protection, they work in unique ways. Below is a breakdown to help you understand what makes them different.
As you know, you cannot legally drive a vehicle unless you have insurance. Although mandated by law, you can still choose from several types of coverage. Depending on what you select, the policy serves to cover the cost of repairs or replacement if you get into an accident, or it only covers another party if you are the at-fault driver.
Insurance also covers personal injury. However, some insurance policies include things like vandalism, certain Acts of God, and property damage. You need to choose a policy based on various factors such as the year of your car, the type of vehicle, how many miles you typically drive, and so on. A qualified insurance agent can help you make the right decision.
Here are the different options you have for car insurance.
• Comprehensive – If your car gets damaged by a covered event, such as hitting a deer, falling object, theft, vandalism, and fire, the policy will likely help pay for the cost of repairs.
• Collision – In this case, the policy covers damages to your vehicle if you get into an accident with another car or object.
• Liability – While liability insurance does not cover your car or you, it does take care of another party’s medical expenses and property damage if you are the at-fault driver in an accident.
• Uninsured or Underinsured – People cannot drive without having insurance, yet many do. Then some drivers have coverage, but it is not adequate. To protect yourself, you can add this to your car insurance policy.
• Personal Injury Protection – In some instances, this type of coverage helps with medical expenses associated with injuries sustained in a car accident.
• Medical Payments Coverage – While your standard car insurance policy includes medical bills, it may not suffice. So, to enhance protection for you and any passengers, this is an option.
Because insurers offer different coverage, limits, deductibles, and more, it is important to find the best car insurance policy for you to ensure you get the best price for an outstanding policy.
As mentioned, similar to car insurance, warranties help protect your vehicle. The most significant difference between the two is that a warranty does not include you, passengers, or other parties. It is strictly for your car. Another difference is that, unlike car insurance, there is no mandate to have a warranty.
There are two primary types of car warranties, one that costs nothing and the other you pay for. These include the manufacturer’s warranty and an extended warranty.
• Manufacturer’s Warranty
If you purchase a new vehicle, it is automatically covered by a manufacturer’s warranty. That means if something breaks or malfunctions, the automaker takes for the cost to repair or replace the item. For this, you pay nothing.
Keep in mind that a manufacturer’s warranty can differ from one automaker to another. For example, you might see one with five-year or 50,000-mile protection and another with 10-year or 100,000-mile protection. Regardless, if anything goes wrong with your new car during the timeframe or designated miles, whichever comes first, the manufacturer handles repair and replacement expenses.
• Extended Warranty
As the name suggests, this type of warranty goes beyond what the manufacturer covers. You can purchase an extended warranty at the same time you buy a new vehicle or older model or on a car that you own outright. Regardless, an extended warranty comes from a third-party provider.
Most third-party companies that sell extended warranties allow you to choose where you have repairs done. Unfortunately, with some, you have to stay within an approved network. So, when searching for the best extended warranty, make sure you go with one that gives you the freedom to choose.
An extended warranty also includes specific repairs. While some providers are quite liberal, others limit what they cover. Again, be sure you go with a third party that has extensive coverage. One last thing is that some providers require a deductible before you can have work done on your vehicles, while others do not.
The Bottom Line
Both car insurance and car warranties help pay for repairs to your vehicle. But as you can see, they work in different ways. Some individuals feel extended warranties are a rip-off. However, even with a deductible, the cost of a policy is generally less expensive than what you would pay to have your vehicle fixed, especially if you drive a newer model with high-tech features.