Choosing A Warranty Plan

extended warranty coverage

Some people mistake their AAA coverage as a "warranty plan," but in reality the Automobile Association of America is just a service that helps you avoid breakdowns. For $30-$60/year, you'll get free towing up to 100 miles, free jumpstarts if your battery dies and lost key or lock-out service, in addition to travel agency services, travel discounts, special auto financing and traveler's checks. This is an important membership for any driver to have, but extended warranty plans, by contrast, are designed to save you from emergency expenses due to mechanical failure.

You may be wondering, "Do I need to purchase a warranty plan, or will I be covered by my car manufacturer's warranty?" In some cases, people have purchased two-year extended warranty coverage only to find that they had already been covered just fine by their manufacturer. According to the consumer site CarSmart.com, the best coverage is on high-end luxury sports cars, like Aston Martins, Lamborghinis, Ferraris and Rolls-Royces, which are covered until 999,999 miles.

At the next tier, you're covered for five years (or 60,000 miles) if you drive a Mitsubishi, Kia, Infiniti or Hyundai. You're covered four years (or 50,000) miles if you have an Acura, Audi, BMW, Buick, Cadillac, Hummer, Isuzu, Jaguar, Land Rover, Lexus, Lincoln, Maserati, Mazda, Mercedes, Mini, Porsche, Saab, Volkswagon or Volvo.

You may want to consider purchasing an additional warranty if you're rough on your mid-range vehicle or if you buy a lower range vehicle from Chevrolet, Chrysler, Dodge, Saturn, GMC, Honda, Jeep, Ford, Mercury, Nissan, Pontiac, Suzuki, Scion or Subaru (whose manufacturer warranties only cover 3 years or 36,000 miles.) If you drive a 2008 or later GM model, then you'll be covered for 100,000 miles or five years.

Many people assume that there is such a thing as an "implied warranty" that protects them for so many days after they bring their new car home. Generally, you should not rely on this type of warranty plan. If you're test driving a used car and hear a clunking sound and the salesperson says they'll take care of it, get that promise in writing to document the problem (or simply pass on the car!) If the warranty plan doesn't explicitly say that part will be covered, then the dealer is under no obligation to fix it, legally. Some states have a "lemon law" that says you're entitled to repairs or replacement if the problem cannot be resolved after so many attempts. However, if you're buying a used car "as is," then you automatically void your right to lemon law protection and assume any risk.

If you're buying a used car that costs less than $5,000, then is the warranty plan even worth it? At Warranty Direct, you can get an out-of-warranty plan on any vehicle over 36,000 miles that covers you four years (or 100,000 miles, whichever comes first). If you're buying a car so cheaply, then it's probably not worth your while to pay half that much for an automobile warranty (when you could have saved your money and your stress by just buying a slightly more expensive car with less mileage and a longer manufacturer's warranty). Beware of the cheap plans because they often advertise exceedingly low prices but essentially cover nothing. Some extended warranty plans to avoid include those offered by TheAutoClub.com, Continental Warranty, AaautoWarranty and SmartAutoWarranty.com, which do not offer wear and tear coverage and have garnered over 250 annual complaints.