Car Warranties

Car Warranties

I am going to have a look through exactly what car warranties are, what different types are on the market for you, and what you should and should not have.

As per usual that will take me several thousand words so for those who just want an abridged sum up, here you go.

Warranties are a non mandatory insurance policy that you may wish to take out for your car. If you look around for opinion you will find some people disgusted some delighted.   As with all insurance policies there will be people who paid into a policy for 3 years only to find that they were not covered.  These people (quite rightly in most cases) you will find on message boards ranting about how they were ripped off.   There is also the other customer who took out a policy only to have a massive grenading of their cars internals soon after and found the warranty company were good to deal with and fixed the car with little or no quibbles.  Like all Insurance policies you will find that the more you study the small print and are aware of what you are covered for the better. It’s not an absolute given but generally the more you pay the higher level of cover you will have. Don’t expect much for £100.  So that’s the overview, for the full version on where the value of car warranties lie then please read on.


Car warranties are considered a norm in the car trade. The companies that sell warranties are legally bound to honour their warranty, and although there are no real dodgy companies, there are definitely companies that are considerably harder to get satisfaction out of than others.  Before I go on I would like to just do a quick overview on car Warranties in general. Warranties have been with us a long time and it would be fair to say that many of the early warranties were barely worth the paper they were printed on.  When early customers tried to pursue a claim they found they were being turned down on the grounds that they had actually “used the car” needless to say a lot of companies that were in the industry initially are no longer in existence.

The idea however was liked by the trade. Prior to warranties car dealers had to deal directly with screaming customers, with the advent of car warranties dealers were able to distance themselves from the situation, with any claims being between the customer, their garage and the warranty company. The other benefit for dealers was being able to tell a customer to bring the car to a local garage instead of having to get it back to them. Telling them to take it to a local vat reg’d garage was much more conducive to maintaining a good relationship with a customer.  As car warranties became more accepted they became a sales tool for dealers where they would include a year’s warranty with a used car. It then evolved to be a source of income with Dealers offering a basic nuts and bolts warranty as standard but offering to upgrade the customer to the gold or 5 star at cost which added a small bit to a deal or a good chunk if you signed someone up to 3 year deal.

Now like car choices I don’t really get involved in whether you should or should not have a warranty that’s really a choice for you to make based on your circumstances’ and the deal you are being offered.  Like many insurance situations you may be the type who likes to take a chance or you may be the type who would much rather have some peace of mind.  If you do decide to go ahead with a warranty you need to know that there are different options for you ,and you don’t have to accept what the dealer is pushing under your nose. Your warranty should be best tailored to your needs so let’s see what you can get.

First off I am not in favour of long-term deals ie 3 years. This can seem like good value at the time, for example one year is £320 but the 3 year deal comes in at £800.  You never know how long you will keep a car. Even the best car in the world might not suit your requirements in 6 months time. If you must, then always check that the warranty is transferable to a new owner, even if it is, there are usually some restrictions on the new owner and there is always an admin fee to process the paperwork which can be in the region of £50.  I would argue that it’s not a great sales tool and you will not recoup the full value of your investment if you sell it on.

Make sure your car meets the requirements. This seems obvious but warranty companies will be quick to sign you up. You need to make sure your car is covered for the period you have taken out, i.e. it does not become void when your car hits 5 years old. You also need to check if there are any mileage restrictions. It’s not worth your money signing up to a 10K a year agreement when you know for a fact you will do 20K. All warranties will want you to show that your car has been serviced recently and on schedule and that all further service work and MOT is on schedule and to manufacturer specifications.  Most are happy with a Vat registered dealer but you need to check the actual policy for what is stipulated, If your car is due a service 1,2 or 3 or requires a cambelt change then you better make sure it’s done on time or else your warranties worthless.

Make sure any warranty you take out is regulated by the FSA. By doing this you have the benefit of a 14 day cooling off period if you feel you have been miss sold. More importantly it means your warranty is valid even if the garage goes belly up. It was a good Idea for a while for garages to sell their own brand warranty. Some big car companies have folded in recent years so don’t feel like anyone is bulletproof.

Excess: All Insurance policies have an excess where you pay the first part of a claim, and this will lower the price of your premium. Paying the first £100 on your car insurance when your car is totalled is not so bad, paying the first £100 on a warranty claim where most claims come in around £200-£400 is not so clever, so weigh up how much you want to gamble.

Claims Limit:  Check the policy for a claims limit, Ideally you want it to cover the majority of what can go wrong on your car, so a minimum of about £5000.  The better policies will cover the cars value. Also be aware of any restrictions on number of claims, obviously if your car is spending more time in the garage than on the road then you might want rid anyway, but in the meantime if you have bought a warranty you want to know how many times they will look after you before they say sorry no more.

Which Garage can you use and what’s the labour rate:  Most policies allow you to use any vat registered garage. However some can have restrictive hourly labour rates, which means your local garage won’t touch the car and you certainly won’t get it near a main dealer.  Check what they allow so you are not restricted.  This is of particular note if you have a garage that you deal with and trust. In the instance of a claim your mechanic will have to negotiate with the assessor from the warranty company and will become your public defender. If the car warranties labour rates will not cover your mechanic make sure you can pay the excess (within reason) to get your mechanic to look after the job.

How long do you need to be with the car warranty company before you make your first claim? This was a measure that was fairly introduced by warranty companies to stop garages and people from making dubious claims. For example if you knew your car was developing a problem then get a warranty and  two weeks later when it goes bang you’re covered. Not anymore!. Warranty companies have to cover themselves to be sure they are not being stuck with a problem that was known at the time of sale or warranty subscription. However warranty companies have stretched this out, so you want to make sure it seems fair and that you are getting a year’s cover and not missing a few months.

What your claim will be disputed on:

Betterment: Look out for this clause in your policy, basically if the warranty company feels that they have added value to your vehicle by enacting a repair, then they may seek to get you to pay the difference between what the car was worth and is now worth(in their opinion). The obvious example is if the engine is replaced in your 80K car they may feel that they have added say £600-£800 value to your car. The better policies are generally fair on betterment but some feel they have added value with any work carried out so be aware of what’s in the small print.

Consequential Loss: This basically means that the main problem was caused by the failure of another component which may not have been covered by the policy. Therefore the consequential loss is not their problem. An example of this would be your radiator failed; you continued to drive the car overheating it and blew the head gasket. If you ever have a mechanical problem you should attend to it immediately and in the event of a claim never admit to knowing there was a prior problem. Any advisories on an MOT for example will go against you. A policy will give a clear list of what’s covered and what’s not and the better car warranties cover most things just be aware.

Wear and Tear:  Or more euphemistically “normal deterioration”. We all have different definitions for what is wear and tear; just make sure that your definition matches your warranty companies. For you wear and tear would be tyres, clutch, brakes that kind of thing. For a warranty company wear and tear covers every nut and bolt on your motor car from the day it left the factory.  A cheap warranty will not cover wear and tear and you need to examine it closely to see if it is of any worth to you.  The better warranties cover wear and tear, but even then not everything is covered, and it’s on a sliding scale of depreciation for year and mileage  so be happy with what you are paying for.

You can take out a car warranty any time after you buy a car or when your existing manufacturer’s warranty expires.  So shop around and compare like for like cover. I think some of the comparison websites cover car warranties now so you should be able to check all in one swoop. Car dealers generally make a bit of profit from the warranty they sell you. They may still be able to offer you a decent deal and it might suit you to have it as part of your deal, just don’t take the salesman’s word for it, take home a copy of the policy and have a read before you make up your mind.  Main dealers can offer an extended warranty on your car when your three years expire. As it’s from the Main dealer you would presume it’s the best, you would presume wrong. Again each deal has to be weighed up on merit.  Some manufacturer car warranties are very good, some are just underwritten by a third-party at a cost and some are just plain bad.

As I mentioned from the outset legally a warranty company has to provide the level of service they are contracted to you to provide.  The problems arise when people presume they will just be covered.  You need to go into this with your eyes wide open and know exactly what you are paying for.  If you want roadside recovery and transport to a garage included don’t presume you are covered ask the question and be sure.  If you want European cover or the use of a rental car, again don’t presume ask the question and make sure you have paid for the cover you require.  Car warranty companies are not in the habit of handing out free money and will investigate every claim thoroughly, if you have a valid claim with valid cover it should go through with limited drama. Even when a claim is accepted you may find there will be extras that you are asked to pay these depend on the warranty. Many are fair; some are niggly like repairing an engine but not paying for new spark plugs and oil. If you feel you are being treated unfairly then you should fight your corner with the warranty company you will find they can be flexible.  If you have read through your policy and feel that you are being treated unfairly then you have redress through the law and should seek a legal view. On the whole car warranties are a vastly improved product but their purchase is really a matter of personal choice. If you feel you have had a particularly good or bad deal you should take the time to pass the details on to us to have a look at for future reference.

As usual your comments are welcome.