Car warranties explained

To help you decide if a car warranty is right for you, we've compiled a short guide that explains how car warranties work in more detail.

What is a car warranty?

A car warranty, also known as 'mechanical breakdown insurance' (MBI), is an insurance policy that provides protection against the cost of parts and labour following mechanical or electrical failure of a covered part.

Policies typically run from one month to five years, with most 12 month policies renewable annually, in the same way that car insurance is.

What is covered by a car warranty?

As with most other insurance products, the cover available will vary between different policies and between different providers. Generally, a good car warranty will cover major mechanical components such as:

• the engine
• transmission system
• fuel and ignition systems
• cooling system
• electrics
• gearbox
• steering
• suspension
• non-frictional clutch and brake system parts

When buying a car warranty or evaluating the cover available on an existing warranty, you should pay attention to:

• Wear and tear
  The value of wear and tear cover should not be underestimated, however not all warranties will include it. Of the ones that do, some may require that you contribute a percentage of the parts and labour costs involved whilst the best policies will ask you to contribute to parts costs only. It's important to establish the warranty company’s policy on this before buying. If they don't provide wear and tear cover then you may find (to your expense) that most claims can be rejected based on the age and mileage of the car.
• Consequential loss
  Good warranties will cover you for damage to an insured part caused by the failure of a non-insured part.
• Betterment
  If you do make a claim then a new part will be fitted that is better than the original one; in such cases you may be expected to contribute towards the cost of the part. Some warranty companies may also expect you to contribute to labour charges. Clarify this point before buying.
• Oil leaks
  Some parts may leak oil when they fail, therefore although you might think they are covered some warranties will also have an exclusion that will prevent such a claim due to the oil leak.

What is excluded?

Most warranties exclude normal wear and tear to tyres and wheels, exhausts, the vehicle's catalytic converter, brakes and clutch along with damage to bodywork, paintwork, glass and headlights.

Some warranties will cover the air-conditioning system although it's normal for audio equipment and satellite navigation systems to be excluded.

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