Extended car warranty insurance

In Australia, new cars come with a manufacturer's warranty that covers defects and certain repairs for a set period, usually 5-7 years or 100,000km (whichever comes first), though some brands offer unlimited kilometres.

Once that warranty ends, extended car warranty insurance can offer similar protection for a longer time.

This guide explains what's typically covered by extended warranties, the cost of a policy, and the pros and cons to help you decide if it's right for you.

What does extended car warranty cover?

Extended car warranties typically cover what was included in the original manufacturer's warranty, for a longer period of time. The exact details will vary between different car brands and insurance companies, but some common features include:

As there are differences between specific brands and insurers, it's really important to read both your original manufacturer's warranty, and the product disclosure statement of your extended car warranty, to be sure of the details. If you're unsure about anything, ask the insurer.

What isn't covered by car warranty insurance?

Not all repairs are covered by car warranty insurance. One important factor to be aware of is that an extended car warranty isn't a replacement for car insurance. It doesn't cover any costs associated with a car accident, hail damage, fire or theft.

The specifics will be detailed in your original manufacturer's warranty and the subsequent extended car warranty policy, but some common exclusions are:

• Certain parts and components aren't covered
• Any mechanical or electrical issue that was due to damage, rather than a fault
• Damage which is the result of a crash, impact, fire or theft
• Consumable items such as oil, lubricants and coolant
• Mechanical failure caused by neglect or misuse
• Mechanical failure if you don't service or maintain your car
• Repairs to modified components of your car
• Parts that frequently require replacement, including spark plugs, brake pads and batteries
• Any repairs that are required after the set period, or kilometre limit, set out in the policy

How much does extended car warranty insurance cost?

The price of an extended car warranty can vary from hundreds of dollars to thousands of dollars, depending on the type of car and length of warranty.

To find out exactly how much an extended warranty would be for your car, it's best to speak to an insurer directly.

Is extended car warranty insurance worth it?

When deciding whether car warranty insurance is right for you, you should consider the benefits and weigh them against the costs. Some other points to think about include:

• Inherent defects. Is your car known to frequently have inherent defects? More than half of all Australians have car problems within a few years of buying, and most of them go right back to their dealer first.
• Replacement costs. Is your car known to have expensive parts or be difficult to repair? If so, extended car warranty insurance may be worth considering.
• Driving habits. How quickly will you hit the kilometre limit of your warranty? If you're driving significantly more than the average person, your warranty might not cover you for long.

Frequently Asked Questions

• What does a car warranty cover?

  A car warranty typically covers the repair or replacement of parts that fail due to manufacturing defects. This includes the engine, transmission and other key components. It does not provide any coverage or benefit in the case of a car accident.

• What is the best car warranty company?

  The best car warranty company depends on your needs, but companies like Allianz, Swann Insurance and Eric Insurance are well-regarded for comprehensive car warranty products in Australia.

• Does a car warranty cover replacement?

  Yes, a car warranty can cover the replacement of parts if they fail due to manufacturing defects. However, it usually does not cover replacements for wear-and-tear items like tyres or brake pads.

• What is normally covered under an extended warranty?

  An extended warranty usually covers similar items as the original warranty, including mechanical and electrical failures. Some warranties have specific exclusions or limitations on coverage, such as for wear and tear or pre-existing conditions.

• Does a car warranty cover interior damage?

  Most car warranties do not cover interior damage, as it is often considered cosmetic. However, some extended warranties or specific coverage options might offer limited protection for the interior.

Written by

Nicola Middlemiss

Journalist

Nicola Middlemiss is a journalist with nearly a decade of experience in personal finance and insurance. She has contributed to Domain, Yahoo Finance, Money Magazine and Insurance Business Australia, offering in-depth insights into commercial insurance in the Australian market. Nicola holds a Bachelor’s degree in English from the University of Leeds and a Tier 1 General Insurance (General Advice) certification, which complies with ASIC standards. See full bio

Nicola's expertise

Nicola has written 256 Finder guides across topics including:

• Personal finance
• Personal insurance, including car, health, home, life, pet and travel insurance
• Commercial business insurance