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What is an Extended Auto Warranty and How Does it Work?

BY: Alex Perrone
A male auto mechanic discusses a contract with a female customer.

If you have a car, you have certainly heard the term “extended auto warranty.” But what exactly is an extended auto warranty? Depending on how well you know cars, there could be more than a few misconceptions about what that means. Some drivers mistake it for insurance, others see it as a guarantee, but the majority of drivers don’t have any idea what that term means at all.

Like many terms in the automotive industry, an extended auto warranty comes with loaded and confusing definitions.

In this article, we are going to lay out what an extended auto warranty is. You will learn everything you need to know about extended auto warranties using the following topics:

  • What Is An Extended Auto Warranty?
  • How Does An Extended Auto Warranty Work?
  • How Do You Qualify For The Best Extended Auto Warranty?
  • What To Look For In Extended Auto Warranty Companies
  • How An Extended Auto Warranty is Different From Insurance and How They Work Together

We will go over all of this and set the record straight when it comes to auto warranties and why Endurance is the best company to provide vehicle protection for you.

So let us begin with clearing up the big question:


Every new car comes with a standard factory warranty. This is a guarantee from the automaker to you that they will cover all repairs stemming from mechanical failure or even subpar manufacturing. It is mostly a means for them to hold their product to a promised standard for a limited period of time.

An extended auto warranty works to continue to help protect drivers after the factory warranty ends. However, according to the Vehicle Protection Association’s definition, an extended car warranty should be referred to as a vehicle service contract or vehicle protection plan.

This is because in order for a product to be labeled an “extended warranty,” it must be included by the manufacturer of the product and be included at the time of purchase. Because these protection plans do not come from Ford, Toyota, or any other automaker, they cannot rightfully be called extended auto warranties.

This is why most providers, like Endurance, use the correct terminology for an extended auto warranty: a Vehicle Service Contract.



Although different in name, an “Extended Auto Warranty” and “Vehicle Service Contract” work the same as your vehicle’s original manufacturer warranty.

Here’s how they work:

  • Choose a Repair Facility – Automakers prefer you keep to their network of dealers and service facilities. But third-party providers, like Endurance, allow you to take your car to any certified mechanic or repair shop you trust.
  • Get Your Car Diagnosed – The mechanics will run several diagnostics to pinpoint the issue with your vehicle, if you don’t already know, in order to relay this to your coverage provider.
  • Give the Mechanic Your Coverage Membership Card – All coverage holders with Endurance are issued a membership card. They will use this whenever their car needs repairs and give it directly to the mechanic so they can relay the claim information to us.
  • Pay the Deductible (if applicable) – Some contracts may or may not have a deductible. This is typically paid at the end of the repair after your car is back in your possession.
  • Take Your Car Home – An Endurance vehicle service contract is designed to cover repair bills in total, including:
    • Parts
    • Labor
    • Any applicable taxes.

As you can see, extended coverage for your car is easy to use. Most contracts come with a waiting period and a premium to be paid through easy, low-cost monthly plans.

It is important to make sure that you only work with credible vehicle service contract providers. You do not want contracts that demand you pay upfront for repairs. Those contracts come with inconvenient reimbursement processes, and claims are more likely to be denied.


The conventional wisdom when shopping for extended vehicle coverage in the form of a vehicle service contract is the only thing that matters is the lowest price. Drivers tend to want the most bang for their buck. And yet, that all becomes a moot point because not every vehicle owner qualifies for the level of coverage they might want.

It is not very difficult to qualify for the coverage you want and need. The key is to be on top of a few things. There are certain limitations for vehicle protection companies that make it impossible for any company, let alone Endurance, to give certain vehicles full coverage.

3 ways to make sure your vehicle qualifies for a full coverage extended warranty:

  • New Cars Welcome: You qualify for the most comprehensive coverage options when your car is newer. As you continue driving your car and it gets older, options to protect key parts begin disappearing. Do not let yourself lose options for a full coverage extended warranty by letting your car get outdated.
  • Lower Mileage = Higher Chances: Much like how old or new your car matters, the mileage is also significant. Things happen, wear and tear or break as your car drives. At lower mileages, you have a higher chance to qualify for a full coverage extended warranty.
    1. Extra Tip: Combining a newer car at a lower mileage also increases your chance of getting the best price.
  • Better Maintained Vehicles Get Better Options: Every driver should keep up with routine maintenance. It is wise to follow the schedule for oil changes, wheel balances, and fluid replacements. All of the above better ensures your car works better, but it also demonstrates to providers that you take care of your car.

Endurance works hard to match the best coverage to every driver and car. While the requirements to qualify for fully comprehensive coverage seem high, many drivers can better work towards it by following those 3 steps above.

Then, it becomes a matter of if they feel they need this coverage.


The most common question Endurance gets beyond what is an extended car warranty is if they need one or not. Quite simply: everyone who owns a car needs extended coverage.

Use the following example: in most states, you are required by law to drive with auto insurance. This is meant to protect you and other drivers should an accident happen. No one ever drives wanting an accident to happen. That’s why they are called accidents, but the contract becomes deeply important should the unthinkable happen.

The same thinking applies to extended vehicle protection plans. While you continue using your car well past the manufacturer’s warranty, you hope it never breaks down. However, should it ever break down, you now have a safety net to help pay for the necessary repairs to get your car up and running again.

A vehicle service contract, also known as an extended auto warranty, is not just a smart choice but also a safe choice. Drivers should continue to be protected from large repair bills if they can.



Now that we’ve discussed the extended auto protection let’s go back and clear up a few things. Every car needs a protection plan because all cars will eventually need service. Now the questions are: what kind of protection, and where do you get it from?

There are many companies that provide some sort of means for drivers to pay for breakdown repairs. Don’t just spend money on the first company that you find.

Here is what you need to consider when shopping for auto warranties:

  • Coverage– You need to know exactly what exactly is covered. Endurance offers different levels of coverage, and other companies follow suit. The key is to know your needs and know each level can vary from company to company. Know what is on the contract.
  • Company– Through careful researching, choosing the right company is a must. Your car is an investment that you didn’t buy on a whim. Apply the same thinking to an extended auto warranty.
  • Discounts– Saving money is the whole reason you need extended coverage in the first place. Getting the right price on a vehicle service contract doesn’t end at the quote. Many discounts include senior citizens, military, government employees (teachers, police officers, and more apply).
  • Additional Benefits– Every contract will come with included perks. These can be helpful in day-to-day driving but also if your car is in the shop. Roadside assistance or rental car service can and should be included.
  • Price– The best price is not necessarily the lowest price. Look at what you’re paying concerning the coverage options you are receiving. Sometimes the lowest price means missing out on things you needed to be protected on your car.



Some drivers think their insurance is enough protection in their day-to-day driving. However, a warranty isn’t the same thing. There are some similarities but let’s clear some things up.

Let’s go back to what an extended auto warranty is. Whenever you purchased a new car, it came with a manufacturer’s warranty. That factory-provided warranty guarantees quality and a way for the automaker to help cover the repair bill should things go wrong in the first few years of ownership.

The same principle applies to a vehicle service contract. Once the factory warranty ends, those repairs will be left to you. If you have coverage from a reputable third-party provider, they will help pay for repairs if your vehicle ever breaks down.

So what is the difference between a warranty and insurance?

Insurance Covers:

  • Accident
  • Theft
  • Damage from vandalism or Nature

Basically, auto insurance covers anything bad that could happen to your car from external factors.

Extended Warranties Cover

  • Mechanical Breakdown
  • Non-wear & tear parts & component failure
  • Powertrain/Engine damage

Essentially, auto warranties cover any electrical or mechanical breakdowns that your car may experience.

Auto insurance exists to protect drivers in case of accident or theft. Insurance will not ever pay for repairs related to mechanical breakdowns. When you add a vehicle protection plan from a company like Endurance, you now have additional protection against breakdowns. Insurance plus Endurance gives drivers total protection.


Shopping for vehicle protection can be intimidating. All drivers will look for different things when choosing their provider.

They will want to ask:

  • What will it cost?
  • Which repairs will the coverage pay for?
  • How financially stable is the company the coverage is coming from?

There are probably a million more questions, but we’re going to explain why Endurance is the best coverage provider for now.

  • Award-winning customer service: Endurance has been nominated (and won) countless awards and certifications for our customer service. We pride ourselves on providing service to our customers from the purchase all the way to when they are using their coverage.
  • All Contracts Are Backed By The Best: Every company is only as good as the company that backs them. While many companies are not administrators of the vehicle protection contracts they sell, Endurance is. There’s no middleman involved. All contracts come backed by AAA-rated AmTrust financial, the same insurance company that backs world-renowned companies such as Volvo, Microsoft, and Mazda.
  • Comprehensive coverage at the best price: Price is undoubtedly a factor when searching for coverage on your new or used vehicle. Smart drivers wishing to have every component under the hood protected with warranty coverage will pay somewhat more for their contract than somebody only wishing to protect a limited number of items. Endurance has options for every kind of driver.
  • Highest accreditations: Accreditation is the key to knowing if you are working with a reputable provider. The two most important accreditation that an extended car warranty company can receive include:
    • The Better Business Bureau (BBB)
    • Vehicle Protection Association (VPA).

Endurance is the nation’s only direct provider of extended vehicle protection that is both A+ rated by the Better Business Bureau and Gold-Certified by the Vehicle Protection Association.

Final Conclusion on Auto Warranties


In discussing the credibility of a vehicle service contract from Endurance, we demonstrate how hard we work to achieve such a high rating among consumers.

We hope you found this article clarifying, as we also want to make it our mission to educate drivers. With all of the information and benefits listed above, the myriad of added perks, and industry-leading service, it’s no wonder why Endurance is the best extended coverage provider to choose!

*A Vehicle Service Contract (VSC) is often referred to as an “extended auto warranty” but is not a warranty.  A VSC does, however, provide repair coverage for your vehicle after the manufacturer’s warranty expires. A VSC is a contract between you and an administrator that states what’s a covered repair and what’s not. Endurance is an administrator of VSCs and does not sell warranties.*

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