Save thousands on vehicle repairs with Endurance.
Get a FREE Quote

Top 5 Strategies for Combining Extended Warranties with Auto Insurance

BY: Adam Karner
Man using his cell phone on the side of the road with a broken down car

There’s no denying that owning a vehicle is one of the most liberating things you can do. But unfortunately, that freedom comes at quite a significant cost. The AAA shared that the annual cost of car ownership recently boiled over the $12,000 mark, so it’ll come as no surprise that drivers across America are searching for ways to keep that to save money where they can.

If you’re one such driver, you’ll undoubtedly be familiar with auto insurance and extended warranties. The two work great in tandem, so it’s highly recommended that you take out both, but there are some things you can tweak and change to ensure you’re getting maximum value for money. Here, we’ll outline five top strategies for combining extended warranties with auto insurance.

Understanding the Scope of Auto Insurance and Extended Car Warranties

You’d be forgiven for thinking that auto insurance and extended car warranties are one and the same, but in reality, they’re both very different beasts. To start off, let’s establish what you can expect from each:

Extended Warranties

Every new vehicle rolls off the production line with what’s known as a factory warranty or manufacturer warranty. This is effectively the automaker’s promise to repair or replace any components that unexpectedly fail due to fault within a predetermined number of years or miles traveled (whichever comes first). How long this lasts will depend on your auto manufacturer, but if there’s one thing that all factory warranties have in common, it’s that once they expire, you, as the owner, are fully responsible for any future repair bills.

To continue enjoying the protection you’re used to, you can purchase an extended warranty (usually via your car dealership or directly from your car manufacturer). This does exactly what the name implies and continues factory warranty coverage beyond the expiration date.

However, there are some major downsides to this more traditional type of extended warranty. For example, all repairs must be done by an authorized dealership, which isn’t good news if you break down hundreds of miles from the nearest one. Also, an extended warranty must be purchased while your factory warranty is still active — leave it just a single day late, and you’re out on your own.

As a result, the vast majority of people prefer to purchase what’s known as a vehicle service contract from a third-party provider like Endurance. This is because third-party providers are incentivized to offer almost as comprehensive coverage at a much more affordable price point, often throwing in some great added perks to sweeten the deal.

Car repairs can be carried out at any certified mechanic or repair shop of your choice, and — providing you meet eligibility criteria — you don’t need to have an active factory warranty to qualify. This is great news for used car owners.

Auto Insurance

So, if an extended warranty covers repair costs in the event of unexpected component failure, what does auto insurance protect you from? To break it down, coverage from an insurance company usually includes:

  • Collision coverage: Covers the cost of repairing damage to your vehicle during a collision, regardless of who was at fault.
  • Comprehensive coverage: Pays for damage to your vehicle as a result of other types of incidents, such as natural disasters, extreme weather, or theft.
  • Underinsured/uninsured motorist coverage: If you’re involved in a collision with someone who doesn’t have insurance and is at fault, this will cover expenses they would have otherwise paid for.
  • Personal injury protection: Covers medical expenses, lost wages, and death benefits for you and your passengers. Required in no-fault states.
  • Medical payments: Pays for medical expenses for you and your passengers, regardless of who is at fault.
  • Property damage liability coverage: This covers damage to property (including other vehicles) if you’re at fault.
  • Bodily injury liability insurance: Covers medical bills and lost wages for the other party if you’re found to be at fault.

Unlike an extended auto warranty, which is an optional extra, drivers are legally required to have a minimum-coverage auto insurance contract in all states except Virginia and New Hampshire. Because coverage requirements vary between states, it’s worth checking what’s necessary where you live.

Strategy 1: Aligning Coverage to Avoid Overlaps

While they cover very different things, there are some areas where auto insurance and your extended warranty or vehicle service contract might overlap. For example, some auto insurance providers allow you to add optional extras such as roadside assistance and rental car reimbursement, but at the same time, some extended warranty providers include these exact same benefits in your coverage plan.

Before you put pen to paper for either, go through your contracts and figure out where you might be paying twice for the same benefit and read the fine print. Make sure you opt for the right level of coverage, and if you spot any exclusions or inefficiencies, talk to the providers in question and see what can be done to resolve the situation. You may be able to remove anything you don’t need and simultaneously reduce the price of your premium.

Strategy 2: Balancing Deductibles for Cost-Efficiency

Where any sort of protection plan is concerned, you can expect to pay a deductible of some sort. This, of course, applies to auto insurance and extended warranties, but you can balance your deductibles for cost-efficiency purposes.

For example, if you think you’re more likely to make a claim on your extended warranty as opposed to auto insurance, you might want to negotiate a higher premium with your warranty provider in order to bring your deductible down. Conversely, you can negotiate a lower premium with your insurance provider and accept a higher deductible. That way, you’ll pay less upfront for your auto insurance and less if a component lets you down. It’s a fine art to get just right, but your providers should be able to help figure things out.

Strategy 3: Tailoring Extended Warranty to Insurance Weak Points

Auto insurance is a legal requirement in most states, so it should always be your starting point. Once you have a provider/contract in mind, it’s a good time to figure out where its weaknesses lie and how you might be able to plug those holes by playing around with coverage options from an extended warranty provider. This might not be possible with coverage specifically (as the two cover very different things), but there might be opportunities for added benefits.

As a quick example, you might be concerned about your key fob, but that isn’t something your insurance provider can’t cover. On the other hand, key fob protection might be an option at your extended warranty provider — in which case you can add it. Think of both contracts like pieces of a puzzle. If some pieces are missing, you can bet that at least one of your providers can help fill them in.

Strategy 4: Leveraging Bundling Options and Discounts

You might find that some dealerships offer options for bundling auto insurance and extended warranties together. These packages will likely come pre-optimized, saving you time and energy. By purchasing both at the same time, you’re also likely to get the pair at a discounted rate, but this can often be a bit of a red herring. Even at a discount, dealership products are usually much more expensive than those you can acquire from third-party providers, so searching for a better deal elsewhere might be worth your time.

Strategy 5: Regular Review and Adjustment of Contracts

Times change, and at some point, you may find that either of your contracts is no longer suitable (or at least not as well optimized as they could be). By regularly reviewing your auto insurance and extended warranty, you can ensure you’re always getting the best possible protection for the best possible price. Perhaps one provider stops offering a specific benefit, or perhaps your annual premium for one service goes up significantly — checking in at least once a year prevents you from being caught out when things go wrong and from paying more than you need to.

The Role of Preventative Maintenance in Coverage Optimization

We should also point out that preventative maintenance has a major role to play in coverage optimization. Whether you regularly visit a mechanic or carry out DIY maintenance at home, keeping your vehicle in top running condition is highly recommended for a number of reasons.

Where your extended warranty plan is concerned, most providers will stipulate that maintaining your vehicle in line with your manufacturer’s recommended schedule is required to keep your coverage active. Components that aren’t adequately maintained are more likely to fail and put additional strain on the components around them, creating a chain reaction of unnecessary wear that providers will not be willing to pay for. By preventing component failure wherever possible, you also avoid repair bills for parts that might not be covered by your plan — and even if they are covered, you avoid paying any deductibles.

As for auto insurance, many incidents are the result of neglected components. To give a more extreme example, a tire blowout on the highway could cause a potentially fatal collision. But by keeping everything in good working order, you’ll automatically be safer on the roads, steering clear of any mishaps and keeping your premium to a minimum.

Pair Your Auto Insurance with the America’s Best Warranty

When taking out an extended warranty, the best way to get maximum value for money is to opt for the best provider. Across the web, experts rate Endurance as America’s top vehicle service contract provider, and our thousands of five-star reviews from happy customers on sites like Trustpilot back that up.

Since setting up shop at our HQ in Northbrook, IL, almost two decades ago, we’ve helped thousands of drivers save serious money on the cost of car ownership. We offer a wide selection of protection plans for a wider range of drivers, with something for daily commuters, rideshare drivers, luxury car owners, and even high-mileage vehicles. We also provide mechanical breakdown insurance for drivers in California.

Not only do we have unrivaled eligibility and affordability, but we’re also the most flexible. If our base plans don’t quite meet your needs, our award-winning customer service team will happily tailor a bespoke plan that suits your specific circumstances.

If that wasn’t enough, we also offer some of the best benefits in the business. Every Endurance plan has great perks, like 24/7 roadside assistance (including towing, battery service, and lockout services), trip interruption costs, and rental car reimbursement. New Endurance customers can also get a year’s worth of Endurance Elite Benefits, adding on tire repair or replacement, key fob replacement, total loss protection, and more. Just pay a small activation fee, and the benefits are all yours!

If you want peace of mind with your used or new car, just pick up the phone and call us at (800) 253-8203 to request a FREE quote. You can also shop online to see your price now on the best vehicle protection.

If you’d like to do some more reading before you leave, we have plenty more helpful pieces, just like this one over on our extended warranty blog. Explore articles about the average cost of repairs, comparisons of car warranty companies like CarShield or CARCHEX, frequently asked questions (FAQs), repair shop or repair facility recommendations, and more.

More like this

Get started with a FREE quote.

        Get a FREE Quote