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What Does a Car Warranty Cover?

What Does a Car Warranty Cover

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Choncé Maddox
Updated October 23, 2022
5 Min Read

Whether you buy a new or used car, a vehicle is a pretty big purchase. Knowing that you have a car warranty can provide some comfort. A car warranty could help you save money on repairs but it really depends on your situation and the type of warranty you have.

It’s important to understand how car warranties work and what they actually cover. Sometimes, you’ll have the opportunity to purchase an extended warranty if you feel it’s necessary. Here’s what you need to know about car warranties and when you should consider one.

What is a car warranty?

A car warranty is sometimes called a service contract and it’s an agreement that provides protection for specific mechanical breakdowns. New cars come with a car warranty (also referred to as a factory warranty) that is provided by the vehicle manufacturer. It covers the cost of parts and labor for certain repairs that occur during your specified warranty period. According to Kelly Blue Book (KBB), the typical car warranty lasts three years or for the first 36,000 miles that you drive your car (whichever comes first).

What are the different types of car warranties?

New and used cars can come with a car warranty. For a new car, there are two main components to consider.

The first is bumper-to-bumper coverage which covers repairs to things like your car’s air conditioning system, engine, suspension and the front-and-rear brakes. Basically, it’s comprehensive coverage for parts between your car’s front and rear bumpers with the exception of damage due to normal wear and tear.

The other component is powertrain coverage which includes all the parts of the car that connect the power to the wheels. This includes the engine and transmission. With a new car, be mindful that you may have one of these options, and bumper-to-bumper, which covers a wider range of issues, is the most comprehensive.

With a used car, you can still get a warranty, but it will likely be an extended warranty. This provides some protection even if the manufacturer’s warranty is expired. Some extended warranties will cover major systems with some exclusions.

Other specific types of car warranties include:

  • Restraint Systems Warranty: Covers damage to your car’s seatbelts and airbags
  • Emissions Warranty: Covers the parts of your car that contribute to keeping your emissions low.
  • Corrosion Warranty: Covers body parts of your car that could rust through.

How do car warranties work?

You’ll need to get a car warranty right when you buy your vehicle in order to use it. Understand the type of warranty you have and what it covers. Car warranties don’t cover wear and tear or maintenance but rather mechanical failures due to fault from the manufacturer.

If your vehicle breaks down, you can take it to a licensed repair facility for repairs and utilize your warranty coverage. If you purchased a new car from a dealer, it’s best to take the car to the dealer’s service center so they can pull up your warranty information.

Some car warranties do allow you to choose your own mechanic so long as it’s a licensed facility. You may need to contact your warranty company to file a claim and wait for them to mail you a check based on the mechanic's quote. However, most companies communicate with the mechanic and pay them directly so you won’t have to worry about handling it.

A car warranty isn’t insurance

Car warranties are not insurance but do have some similarities. Unlike insurance, your car warranty coverage is limited and can expire with time. Warranties also don’t cover vehicle damage due to accidents or natural disasters like auto insurance would.

Additionally, auto insurance can cover medical expenses for you, your passengers or the other driver if it was due to an accident.

How much does a car warranty cost?

The cost of a car warranty for a new car is already factored into the price of the vehicle. This means you don’t have to buy a car warranty separately, though dealers can (and do) sell extended warranties.

With a used car, you will need to pay a separate price for an extended warranty. This can range from $1,600 to $3,200 on average and may be added to the final price of your car if you’re buying it through a dealership.

The price of a car warranty depends on factors such as the make or model of the car, current mileage, coverage amount, and contract length. You can also try to compare quotes for an extended car warranty from different companies to shop prices and coverage levels before making a decision.

Olive is an independent car warranty company that provides comprehensive and powertrain warranties with transparent pricing and different coverage options to fit your budget. With Olive, you can actually sign up conveniently online and even pick your own deductible and repair facility. 

When should you get a car warranty?

When buying a new car, a car warranty is automatically included with the price. Dealers will offer an optional warranty extension, though you may want to consider if you need it or not. Dealer provided warranties require you to get your maintenance at the dealership, and they may have high deductibles. Still, this could provide some peace of mind, especially to ensure you’d get some good use out of your car during those first few years even if an unlikely issue did occur.

A used car is subject to more breakdowns due to its age and condition. You may want to get an extended warranty if you have a used car and are worried about a major mechanical breakdown such as an engine or transmission failure.

Be mindful that you will need to keep up with regular maintenance like oil changes and other services to avoid a mechanical breakdown due to wear and tear that may not be covered under your warranty.


What happens if I have a problem with my car?

If your car is starting to have problems, you’ll want to take it to a mechanic’s shop to diagnose the issue. Some shops will run tests for free but only if you agree to get the work done with them. Check first to make sure the mechanic you’re using can access your car’s warranty in the event that the issue is covered under the warranty.

How do you check whether a car is still under warranty?

The easiest way to check if your car still has a warranty is to call the dealership or the warranty company. You can also refer to any documents you were provided with when you got your warranty. You’ll need your car’s VIN number which is a 17-digit number unique to your vehicle.

Check your odometer to see how many miles have been driven since your warranty period started to confirm that you’re still within the mileage and number of months that the terms stated.

Does a car warranty cover accidental damage?

No, a car warranty won’t cover damage to your vehicle that’s caused by an accident or a collision. Car warranties tend to cover mechanical failures and other parts issues that can be due to issues with how the car was manufactured. For accidental damage, this is where car insurance can come in handy.

Make sure you have a reasonable amount of car insurance coverage to protect your vehicle if something hits your car or if you hit someone else and it causes significant damage.

All you need to do is make regular premium payments and pay your deductible if you have to make a claim. Then, your car insurance policy can cover accidental damage.

Does the warranty transfer to the new owner if I sell my car?

Not all car warranties are transferable to new owners. If you have a manufacturer’s warranty for a new car, it can transfer to the new owner if there is still time left for coverage. For example, if you buy a two-year old car that has 20,000 miles on it, you may still have at least a year left given the standard 3-year manufacturer’s warranty.

If you purchased a warranty through a private company, it may be transferable depending on the type of warranty and terms. You will need to contact the company and confirm in writing that you wish to transfer the warranty. Realize that you may need to pay admin or transfer fees so be sure to contact the warranty company and confirm the process before selling your car.