How to choose an extended car warranty

5 steps to choosing a reputable car warranty company

Choosing the right plan/provider combo can take time and research upfront, but the more thought you put in, the better your chances of making a smart purchase.

Here's how to choose the best auto warranty for you in five easy steps.

1. Pick your coverage

First, pick your desired level of coverage. An extended auto warranty can pay to fix your vehicle when it malfunctions. However, your warranty only applies to specific components. Decide what parts you want covered and find plans that meet your needs.

For example, a drivetrain warranty would cover important components like your car's transmission, drive axle, drive shaft, differential and transfer case, whereas a powertrain warranty would cover all of those parts and your engine.

Drivetrain warranties are rare these days. Most providers offer powertrain coverage and up.

Bumper-to-bumper, or exclusionary, warranties cover everything except specific components listed in the contract. Those exceptions typically include wear-and-tear components (like brakes and wiper blades) and routine maintenance (like oil changes and tire rotations). You’ll often see bumper-to-bumper plans marketed as “Platinum” or “Supreme.” (You may also see a “Gold” or “Silver” plan option that offers coverage somewhere between a powertrain warranty and a bumper-to-bumper warranty.)

Naturally, the more coverage you want, the more you’ll pay. But, according to several car dealers and extended warranty providers we spoke with, over 80% of customers end up choosing their most comprehensive options because they provide by far the best coverage-for-dollar value.

» MORE: What does a car warranty cover?

2. Find a warranty company that fits your needs

Second, make sure you and your warranty company are a good fit. Find out if your auto warranty company works with mechanics in your area and covers vehicles matching your car’s age, make and mileage. You can also do this step in reverse and call your preferred local mechanic to ask which extended warranty providers they like working with.

» MORE: Extended warranties for cars with over 100K miles

In addition, every extended warranty provider will have its own list of regular maintenance items you must perform to keep your warranty coverage active. In most cases, you’ll simply be required to follow the manufacturer’s recommended maintenance schedule listed in your owner’s manual. Take notice of these maintenance requirements and ensure they fit in your overall budget.

3. Read reviews

Third, read reviews about the company you're interested in. Look for comments about customer service, response times and payment options. It's particularly helpful to read reviews from people who live in your state or drive a similar vehicle. Seeing what past or current customers have to say is a great way to learn what to expect from your auto warranty provider.

As you research, try to find reviews from customers who have actually filed claims. Some extended warranty companies focus more on initial sales than customer support, and reading about how customers are treated during the claims process can reveal which companies truly back up their products.

For instance, Patricia from Arkansas wrote: “I had a policy with Endurance on a previous car. When I needed repairs on that car the claim process was a breeze. I took my car in to be repaired and gave my account number to the technician. The dealership billed Endurance and I drove away with a like new car. I made my decision then and there that I would buy an extended warranty on my next car.”

Once you’ve found a provider you can trust, find at least two more. You’ll want to have a shortlist prepared in order to save money in step four.

» LEARN: How to avoid the worst extended auto warranty companies

4. Get multiple quotes

Fourth, get multiple price quotes. Costs for vehicle service contracts usually aren't posted online, so you need to compare offers to verify you're getting a good deal.

On average, extended auto warranties cost about $2,500, but prices vary widely based on your vehicle’s make, model, age and coverage. Your cost will also depend on your warranty provider. We’ve seen quotes for Platinum plans on the same car change as much as $1,500 between providers. That’s why getting several quotes is so important.

In terms of payment, some providers require a lump sum upfront, while others let you pay in installments. Some warranty companies even allow you to pay month to month until you no longer want coverage.

When comparing quotes between providers, be sure you’re comparing apples to apples. One provider may have a lower quote but a different payment plan or a higher standard deductible for each repair.

5. Read the fine print

Fifth, read the fine print of a sample contract before and see how the company handles things like waiting periods, making claims or canceling coverage. Then, make sure your final contract contains the terms you want.

This step is important because even a top-tier bumper-to-bumper warranty from a reputable company still won’t cover:

• Preexisting conditions
• Issues that arise during your waiting period
• Maintenance
• Normal wear and tear
• Any parts listed under the “Exclusions” section of your contract

It’s common for people with extended warranties to feel frustrated when their claims are denied, but more often than not, it’s simply due to limitations that are listed in the contract. That’s why it’s critical to read your contract front to back before purchasing so you know exactly what’s covered (and what isn’t).

» LEARN: What voids a car warranty?

Who has the best extended car warranty?

At the end of the day, the best extended car warranty company is one that has good reviews, a plan that fits your needs and an affordable price. There’s no universal best choice when it comes to extended car warranty companies — one might have better coverage, while another offers low rates for your brand of vehicle.

You won’t really know which car warranty company is best for you unless you put in some legwork. While it may take a bit of research, it should end in you getting a good warranty at the right price.

» SEE OUR TOP PICKS TO GET STARTED: Best extended car warranty companies