Understanding the difference – Car insurance vs Car Warranty!
Car insurance and car warranty have one thing in common – both are applicable for cars. Other than this, the two are as much different as chalk and cheese. When you buy a car it is mandatory by law to have car insurance before the car hits the road. For car warranty too, it is mandatory for new cars to be accompanied by the manufacturer’s standard warranty.
Both are facilitated by car dealers who make sure that the cars that they sell meet with all legal requirements. In addition, there is another type of car warranty that ifs offered to car buyers. It is the car warranty insurance. But truly speaking it is not insurance at all. More about it has been discussed in this article that differentiates between car insurance and car warranty in more detail.
What is Car Insurance?
Car insurance covers the risks that are inherent to the car and also the risks involved in driving it. The insurer takes the obligation of evaluating the risks and provides financial cover to affected parties in accordance to the terms and conditions set out in the policy.
There are different types of car protection available that covers different types of risks. Buying car warranty insurance is the discretion of the car owner, except for one particular insurance, which is the third-party insurance that is mandatory by law. This insurance provides financial protection to any other person or property that can be injured or damaged by the car owner. Since neither the car owner nor the car owner is protected by this policy, it is a practice to take additional insurance cover like comprehensive insurance, for it.
Car warranty
Car warranty is an undertaking given by the manufacturer or a service provider that takes responsibility for repairs of the car during the period of warranty. There are two different types of car warranty that are available.
Manufacturer’s warranty – Every new car that is sold is accompanied by the manufacturer’s warranty that takes care of all repairs of the car. The cost of warranty is built into the price of the vehicle. This is also known as bumper to bumper warranty because almost every part and all kinds of repairs are covered by it. The warranty is limited for a fixed period of time or the distance driven during that time, whichever is occurs earlier.
Extended warranty – Also known as car warranty insurance, this is not insurance at all but a modified form of the manufacturer’s warranty. This is actually a service contract that is executed by a third party, which may or may not have the backing of the manufacturer.
It operates in line with the manufacturer’s warranty but quite different from the bumper to bumper coverage as there are many exclusions and limitations to the repairs that are admissible. Extended warranty is effective after expiry of the manufacturer’s warranty and has to be purchased separately either at the time of purchasing the vehicle or at a later date but before the expiry of the manufacturer’s warranty.
