Used Car Warranty Vs Insurance: The Differences Explained

3:48 AM RAWAT 0 Comments

Auto Insurance

Auto insurance is a legal contract between the owner of a car and an auto insurance company. As the car owner, you are the policyholder. This means that you are expected to pay specific amounts of money (called premiums) at agreed times. In exchange, you enjoy coverage against financial risks such as car theft and fire.

It’s almost a universal rule that you need auto insurance before you can drive on public roads. In case your auto insurance expires and you fail to renew it, you may lose your license if caught.  You may also have your vehicle seized or pay a hefty fine. Other than car theft and fire, auto insurance covers you against the following:

·         Collisions: In case your car is damaged because of a collision, insurance will help you fix it or replace it if it’s totally damaged.

·         Medical covers:  If you or a passenger in your car is injured following an accident, the insurance will cover your medical costs.

·         Liabilities: In case you injure someone, insurance will cater for their medical bills. If it’s their property or car that you damage, the insurance will also compensate them on your behalf.

The Warranty

In the case of a used car, the warranty in question is called an extended warranty. It’s a policy that stretches the coverage of a newly-bought used car. The policy is provided by the automaker or an external company and is meant to cover specific mechanical issues that your case faces, including:
·         Problems with the engine
·         Issues with transmission
·         Parts related to either the engine or the transmission

Generally, it’s important to know what’s included in your extended warranty before you can buy it. Actually, most warranties don’t cover maintenances like worn out brake pads, worn out tires, and oil changes. You may be required to pay specific amounts (called deductibles) before the extended warranty can be useful to you.

Unlike auto insurance, a used car warranty is not a legal requirement. Therefore, you can choose to buy it or not. While auto insurance covers you from external financial risks, an extended warranty protects you when your used vehicle suffers a mechanical issue on its own. So, you can buy it at the time of buying the car or at a later date. There’s no pressure as in the case of auto insurance.


Now, it’s clear who you should call when your used car has a mechanical issue or when you are involved in a mess that’s beyond your control. With both the used car warranty and auto insurance, it’s easy to obtain peace of mind when driving on public roads. They are there to assure you that someone has your back in the event of unforeseen risk.