Car Extended Warranty Insurance
Car Extended Warranty Insurance
New cars always come with a standard warranty package that covers a specific distance or a certain period – whichever is exhausted first. Beyond that, dealers may suggest opting for an extended car warranty plan. Some dealers will also offer car insurance policies.
Most often, people tend to confuse the two as both products offer financial protection from certain liabilities and events. However, their coverage terms are where they tend to differ.
This blog discusses the differences between car warranty plans and car insurance – what they are, who should opt for them and what type of financial coverage you can expect from either product.
What is a Car Warranty Cover?
A car warranty cover is an assurance from the Original Equipment Manufacturer (OEM) that they will fix/replace any faulty parts within a given car warranty period when you buy a new car.
Simply put, it is an assurance from the manufacturer that the car will be free of defects for a specific number of years. If any defects were to arise during that warranty period, the manufacturer will repair/replace the defective part without any additional costs.
Most standard car warranty covers last 1 - 4 years and come with a limit on the total number of kilometres driven – whichever is exhausted first.
Once this standard warranty has been exhausted, you can opt for an extended car warranty.
Further Reading:
You should note that car warranties do have their own terms and conditions.
Additional labour costs for repairs/replacements, if any, will be covered by the manufacturer unless stated otherwise.
General Coverage: Car warranty plans generally cover repair/replacement costs for the mechanical and electrical components of your car. E.g., air conditioning, audio system, safety equipment like airbags, seatbelts, or mechanical components like the engine or gearbox.
General Exclusions: Most standard warranties do not cover maintenance charges on consumables like windshield wipers, oil changes, brake linings, etc.
What is a Car Insurance Policy?
Car insurance is a legal agreement between a car owner and an insurance company where you are offered financial protection against damages to your car and third-party liabilities. This protection is offered in exchange for regular monthly/yearly payments to the insurer.
According to the Insurance Regulatory and Development Authority of India (IRDAI), it is mandatory for all car owners to have at least a valid third-party car insurance policy. If you are caught driving without valid insurance, you will be fined.
Important:
Ensure the insurance company is IRDAI-approved and is listed on the IDRAI’s list of general insurers to avoid faulty purchases.
Unlike standard car warranties that come bundled with your new car on purchase, you must voluntarily opt to buy car insurance either from the dealer or an insurance company like Tata AIG. The insurance plan will require a separate fee payment.
Car Warranty Plan Types
New Car Warranty
Offered with your purchase of the new car. It usually lasts 1 - 4 years with a limit on the total number of kilometres – whichever is exhausted first. Covers the repair/replacement of electrical and mechanical parts of the car at no additional cost.
Extended Car Warranty
Optional warranty that can be bought on the new car’s purchase or after the standard car warranty cover expires. It is usually cheaper to buy one when buying your car and it can be bought through the dealership or directly from the manufacturer.
Most manufacturers generally have a clause that only allows you to opt for extended warranty benefits before the standard warranty ends.
We recommend checking the terms and conditions to ensure when you can buy one if you want to get an extended warranty cover, as this can vary across manufacturers.
Extended Car Warranty Coverage and Exclusions
Coverage
Covers engine and electrical components.
Cover labour costs for complicated repairs/replacements.
Exclusions
Regular maintenance services and repairs.
Repair/replacement for regular wear and tear from usage. E.g., wear and tear of the clutch, bread pads, suspension, etc.
Age-related problems like paint fading, rust and degradation of seat upholstery.
Accidental damage due to road accidents, natural disasters, theft, negligence, etc.
Any modifications made to the car during its car warranty period will terminate the warranty cover and declare it null and void.
It will not cover labour costs if you get the car repaired at a non-authorised service centre.
Difference Between a New Car Warranty and an Extended Car Warranty
| Parameters | New Car Warranty | Extended Car Warranty |
|---|---|---|
| Cost | Free. Offered on car purchase at no extra cost. | Optional. Must be bought at an additional cost. |
| Car Warranty Period | 1 - 4 years or 5 years at most. Coverage begins as soon as you buy the car. | Varies across manufacturers. Can sometimes be customised. |
| When Can I Buy One? | Comes with the new car. | The manufacturer, dealership, or a third-party provider (for used cars). |
| Coverage | Varies across manufacturers but generally covers repair and replacement costs of: | |
| Electrical components. Mechanical components. Corrosion/Rust of body parts (as defined by the manufacturer). Roadside Assistance (for luxury car brands). | Electrical components. Mechanical components. Complicated repairs/replacements. | |
Used Car Warranty: Do Used Cars Come With a Warranty Cover?
Used cars do not come with a default cover, so you must buy an extended warranty cover from a third party if you want to opt for a used car warranty plan.
Some used car dealerships have started offering warranty covers for their cars on purchase. However, these are less comprehensive than the manufacturer’s car warranty cover. They cover all parts of the engine and transmission and skip over its electrical parts.
Further Reading:
Sometimes, when buying from an independent seller, the car may already be under the manufacturer’s warranty cover and will still be valid when the car’s ownership is transferred over to you.
In other words, the standard and extended warranty is attached to the car rather than the vehicle owner and will still be valid if the car gets transferred to a second owner.
Extended Car Warranty Vs Insurance
| Parameters | Extended Car Warranty | Car Insurance |
|---|---|---|
| When Can I Buy One? | Car manufacturers/ third parties like dealerships | Offline or online general insurance companies |
| Is It Mandatory? | No | Yes. Car owners must at least have a third-party policy. |
| Cost | Cheaper when bought on car’s purchase. | Varies depending on policy type. Third-party car insurance is generally cheaper. |
| Coverage | ||
| Faulty Components | Repais/replacement costs covered | Not Covered |
| Damages Covered | Mechanical and electric failures as defined by the manufacturer. | Accidental damages like road accidents, personal injury from accidents, natural disasters and theft of your car are covered under comprehensive plans. |
| Mechanical/Electrical Failure | Covered if they are included under the car warranty cover’s terms. | Not Covered |
| Theft/Total Loss Coverage | Not Covered | Covered under comprehensive plans |
Extended Warranty Benefits:
Save on Repair Costs: Repairs for major components like the engine, gearbox, or electrical components like air conditioning can be high. In these cases, an extended warranty cover is ideal, especially if you frequently use your car for work.
Increase Your Car’s Longevity: If you intend to use your car long-term, an extended car warranty plan can be beneficial. It can save you from paying labour charges for complicated repairs, which can be expensive.
Better Resale Value: An extended warranty cover can increase your car’s resale value, helping you get a better deal for your car. This is because potential buyers are assured a layer of financial protection on their purchase.
Who Should Buy Extended Car Warranty?
People who plan to use their car long-term, over 2 - 3 years.
People who use thier cars extensively and put a lot of miles on them.
People who drive diesel vehicles since diesel engines have more complex parts and repairs are more complicated.
People who stick exclusively to the manufacturer’s service centres for repairs.
People who can not afford to pay for larger repair costs if they own an older car.
Things to Consider Before Buying Extended Car Warranty Covers
An extended warranty plan may not be the right choice if you plan to resell your car after a few years, even if it can help increase your car’s resale value.
It can cost you a significant amount of money, even when buying it at the same time you buy your car. Be sure that you absolutely need the coverage before spending your hard-earned money on it.
It will not cover wear and tear damages that can arise after 2 -3 years of owning the car. So maintenance and repairs for brakes, clutch, suspension, etc., will not be covered. The warranty will only cover more complicated or more extensive repairs.
You may not use the warranty coverage. Most modern cars are unlikely to suffer huge mechanical or electrical failures within just a few years of purchase.
If you are buying the warranty from a third-party provider, the coverage can be more limited than the manufacturer’s car warranty plan.
How to Buy Extended Car Warranty?
You can purchase an extended car warranty through a dealership or manufacturer when first buying your new car. It is often cheaper when done this way.
You can also buy it later on, but most manufacturers have a time limit on when you can upgrade/extend your warranty.
Before buying the cover go cover over coverage terms and ensure it offers the converge you are looking for.
You can also opt for third-party extended warranty plans if you are looking for more affordable options.
How to Buy Car Insurance?
At Tata AIG, you can buy third-party or comprehensive car insurance for your new car. This entire process can be done online in just a few clicks! Here is a step-by-step process:
Visit our Car Insurance page.
Enter your car registration number and click Get Price.
Fill out the insurance application form and upload the required KYC documents – ID proof, address proof, bank details, etc.
Select the add-ons you want (for a comprehensive plan). These are not mandatory and can be skipped.
Submit your car insurance application form and pay the fees.
After verifying your car insurance application, we will send a PDF copy of your policy to your registered email.
Further Reading:
Car insurance renewals can be done online on our website and must be done within the grace period – 90 days within policy expiry. You can also renew your policy 15 - 30 days from the due date, which is recommended for long-term policies.
We also offer online car insurance claim facilities where you can initiate, submit and track your claims process online to stay updat
Wrapping Up
A car warranty cover and a car insurance policy are both practical assets to have as a car owner. They both offer financial protection under different circumstances, with one covering for the other’s exclusions.
If you plan to use your new car for the long term, opting for an extended cover can be beneficial, as it can save on major repair costs. This, combined with a car insurance policy from Tata AIG, can offer all-around protection from most perils.
Disclaimer / TnC
Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.
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