Every new car comes with the assurance of a manufacturer’s warranty; the challenge is that the factory warranty (sometimes called a bumper-to-bumper warranty) doesn’t last forever. Many mainstream brands offer protection that only lasts three years or 36,000 miles. A powertrain warranty may extend to five years or 60,000 miles. That’s not very long when considering that the typical modern automobile can reach 200,000 miles, according to Consumer Reports.

Once the new car warranty expires, owners are responsible for auto repair bills, which can include expensive work like engine or transmission replacement. Many drivers reduce the risk of breakdowns by purchasing an extended warranty (also called a vehicle service contract or auto protection plan). However, such an approach isn’t as easy as it sounds because every owner’s driving habits, vehicles, budgets, and risk tolerance differ. These are factors that impact coverage type and cost.

We’ve compiled this no-nonsense auto warranty checklist to help with the extended car warranty shopping process. Review these details before talking with a warranty provider so you can focus on your needs.

Identify Your Vehicle Type and How You Use It

The first step in completing your auto warranty checklist involves identifying your vehicle type:

• New Vehicle: A new owner will likely have sufficient warranty coverage from the car’s manufacturer. So, an extended car warranty may not be a priority. However, the earlier you secure additional protection, the cheaper the cost.
• Used Vehicle: The equation changes if you’re driving a used car with an expired warranty (or a warranty that’s about to end). Without coverage, any repair bills will come out of your pocket.

Vehicle usage also comes into play when considering an extended warranty:

• Frequency: Is your car used daily for commuting, or is it driven more casually?
• Distance: Are you mainly driving short distances or covering longer trips?
• Locale: Stop-and-go suburban and city driving will stress a car’s mechanical systems more than highway use.
• Function: Driving off-road or towing a trailer can put additional strain on major components like the suspension and cooling system.
• Commercial Use: Vehicles used for rideshare services or delivery functions may require specialized coverage.
• Make/Model: Not all cars are created equal. While brands like Toyota, Honda, and Subaru are known for durability, others don’t have the same reputation. In addition, more and more automakers, ranging from BMW and Mercedes-Benz to Ford and Hyundai, have introduced high-tech components that only add to higher repair bills.
• Age: Vehicle age is a significant contributor to car troubles. Given enough time, any mechanical system can eventually fail, regardless of the car brand.

Separate Mechanical Failures from Wear and Tear Issues

While some auto warranty companies cover routine wear and tear parts and maintenance, this is the exception, not the rule. Most extended warranty programs are designed to offer protection against unexpected mechanical breakdown. The service agreement will specify what issues are considered covered repairs. You’ll want to thoroughly understand these differences before pursuing extended warranty protection.

Gauge Your Financial Risk Tolerance

An extended warranty isn’t necessary if you have the financial ability to pay for car repairs. That may seem reasonable if the mechanic’s bill is a few hundred dollars, but what happens if you need to replace the transmission? According to Endurance Warranty claims data, the average cost to replace a transmission is almost $4,700.

Is that an expense you can handle out of pocket without creating a financial hardship? If the answer is no, you’re an ideal candidate for an extended warranty. In effect, you’re trading the uncertainty of paying for car repairs in exchange for a predictable upfront or monthly warranty cost.

Here are the financial factors that should be considered:

• Remainder of any factory warranty
• Available savings or emergency fund
• The age of your vehicle
• Common problems associated with your vehicle

Many extended warranty companies offer a choice of warranty claim deductibles (usually $0, $100, or $200), enabling you to balance coverage cost with out-of-pocket expenses.

Factor in Where and How You Drive

Where and how you drive can affect your car as much as its age and brand. Extreme temperatures are notorious for taxing automobiles beyond their limits. For example, hot climates can shorten the lifespan of air conditioning and cooling systems. Meanwhile, brutal winters can strain starters and alternators. Beyond environmental elements, mountain driving can accelerate the decline of brakes and transmissions, while frequent off-road driving can impact the drivetrain and suspension.

Maintenance also determines whether an extended warranty is worthwhile. Staying on top of routine maintenance means you’re less likely to encounter a breakdown. However, failing to take care of recommended servicing can void warranty coverage. Lastly, you’ll want to steer clear of aftermarket parts. These can also void warranty protections or require adding specialized coverage to your plan.

Match Your Risk Profile to the Right Type of Coverage

Warranty plans can vary by provider. So, you’ll want to identify the coverage type that best matches your acceptance for risk. For instance, you’ll want maximum coverage if you’re unwilling or unable to pay for significant repairs.

Here’s an overview of some coverage options

• Exclusionary coverage is usually the highest-level plan offered by an extended car warranty company. It provides protection most similar to the manufacturer’s warranty that accompanies a new car. There are the fewest exclusions, which are detailed in the fine print of the service contract.
• Powertrain warranty coverage is the least expensive option, protecting the engine, transmission, and drive axles. For example, Endurance Warranty offers these types of coverage plans for many vehicles.
• Stated-component coverage details exactly which parts are protected. Depending on the plan, this starts with a powertrain warranty and then adds various systems or select components.
• Supplemental coverage adds specialty riders for high-tech electronics, commercial use, aftermarket components, and maintenance allowances.

Here are a few coverage scenarios to review:

• A driver with a modest budget may want to take advantage of exclusionary coverage to minimize out-of-pocket repair expenses.
• A car owner with a modest emergency fund may be willing to pay for minor repairs out of pocket, but wants the extra security of a powertrain warranty for potentially pricier trouble.
• Another driver looking for expanded protection opts for stated-component coverage that safeguards the powertrain, electrical system, steering, brakes, suspension, and air conditioning.
• A rideshare driver will want to add commercial use coverage and a low deductible to protect against more frequent and expensive repairs.

Research Warranty Providers Carefully

Buying an extended warranty doesn’t mean having to visit a dealership. You’re more likely to save money by going through a reputable third-party provider that sells plans directly to consumers. You’ll avoid paying a markup and sometimes high-pressure environments. Unfortunately, the extended warranty industry has its share of scams, so you’ll want to research:

• Reputation (BBB and online ratings, independent reviews)
• Claims approval process and track record
• Authorized repair facility (any licensed shop or a restrictive network)
• Specific coverage terms (review the contract for exclusions and conditions)
• Coverage waiting period (often 30 days)
• Payment options (upfront payment or monthly premiums)
• Benefits (like roadside assistance, towing, rental car reimbursement, and trip interruption protection)

Build and Use Your Auto Warranty Checklist

Before contacting any warranty company, put your coverage needs in writing. This easy step will minimize distractions and help you focus on your car and budget. Use the table below as a guideline.

Where Endurance Auto Protection Fits In

Since 2006, Endurance Warranty has established itself as the preferred auto protection plan provider for a wide range of vehicles. Today, the company serves almost two million customers and has a proven record of paying hundreds of millions in covered claims. Endurance offers numerous plans for most cars and budgets. Covered repairs can be handled through any licensed repair facility, including dealership service departments and specialty shops.

Learn more about all Endurance coverage by requesting a FREE quote or visiting our online store to see your price and plan recommendations. Advisors can also be reached at (800) 253-8203 for one-on-one support and advice.

Explore the Endurance blog for expert-written articles about DIY maintenance, warranty insights, car reviews, and more.