Similarities & Differences Between Extended Warranties & Insurance
Similarities and Differences Between Extended Warranties and Insurance
It is tricky that the extended warranties are confused with insurance as both functions sound the same. However, they differ to certain extent. In common, both mechanical breakdown insurance and extended warranty help car owners avoid large car repair bills requiring repairs to be performed at an authorized repair facility.
In contrast, many differences are drawn between the extended warranties and insurance.
Initially, when considering who offers the policy for the said alternatives lies that mechanical breakdown insurance policy is issued by the car insurance company that s similar to your auto insurance policy whereas on the other hand, the extended warranty is offered by the automaker or by an independent third party.
Insurance policy for any automobile is a statutory requirement provided that it covers third party in full. Therefore, insurance makes a high demand when it comes to secure the vehicle with only third party policy or a full policy. However, the extended car warranty is taken only at the interest of the owner with no statutory restrictions, when they feel that the coverage values them when their vehicle’s condition is prone to repairs.
A mechanical breakdown insurance policy is paid with premiums to cover the vehicle for a set period of time such as six months to an year with a renewal policy as long as you demand the coverage. The costs are spread out overtime and can drop the coverage at any time. An extended warranty is paid upfront and for a set fee, which can be negotiated. This price can be rolled into the car loan if the owner choose, which essentially allows to spread the payments through third party over time with interests attached.
Both mechanical breakdown insurance policy and extended car warranties are equipped with copayments, however with a distinction drawn as the insurance require a set fee per repair visit regardless of the number of repairs made which is practiced only with few extended warranty issuing companies, where in contrast, they charge a set fee per repair even when repairs are completed in the same visit.
The insurance and extended car warranties have restrictions on the age of the vehicle and the mileage of vehicles that are covered which vary from one provider to another. Insurance in this regard tends to be more restrictive than that of extended warranty.
When the transfer is considered, it is definite that the insurance can be transferrable to another party during a sale whereas extended warranty implies various regulations as discussed below.
The majority of dealerships will not allow you to bring a car and then transfer your auto warranty coverage from one vehicle to the next. Often times a used car warranty transfer is not possible. The used car warranties are written in such a way when the sale of a car takes place, the warranty becomes void immediately. However, when extended car warranties are considered, they are often transferrable at the state of ownership change applying for both years and mileage.