Car warranty and insurance come in handy for both new and used cars. But there may be a few doubts as to which one has a higher significance or what they offer. This blog highlights the essential points to keep in mind about the two, their key differences, and the better one to opt for.
Warranty
When we purchase a new car, the manufacturer or the seller promises to replace or repair the car over a particular time. This legal assurance in a piece of paper is termed a warranty. Additionally, it is also a guarantee that the car sold to you is not defective and acts as a shield to protect us from unforeseen financial burdens. But, the warranty might not cover the repairs that are caused by any external agents ( such as rash driving or accidents) and the terms vary from manufacturer to manufacturer. There is another term called ‘extended warranty’ that needs to be familiarised before purchasing a car. It’s an add-on warranty that we have to purchase to keep our vehicle under warranty once the standard one expires. The extended warranty does the same work as a standard one except that is for a longer period.
Coverage
Coverage of a warranty (also for extended warranty) plan mostly has the options of
- Cost of the engine and other electrical components inclusive of expensive and imported parts.
- Labour expense if the cost goes out of hand.
Exclusions
- Regular Maintenance- Your car requires regular service for an extended lifetime. Regular maintenance can be an engine check, changing the car fluids etc. Most of the warranties do not cover this.
- External agents- Damage to the exterior components of the car due to accidents or calamities cannot claim the manufacturer responsible and hence the warranty does not pay for such damage.
- Extras for your car- To enhance our car’s looks we might purchase additional decors that the warranty will not cover.
- Changing the structure- Major structural changes are punishable under the law. But minor changes such as changing the paint colour, wheels etc are allowed but the manufacturer cannot pay for them.
- Damage caused to wear-and-tear items like brake linings, windshield wiper blades, oil discs, brake pedals, and tyres.
Insurance
In layman's terms, insurance is a cover that protects something (car in case of car insurance) due to external damage such as accidents, natural calamities etc. We pay small amounts as premiums to the insurance company and they in turn cover our damages. Some of us are extremely optimistic and our cars might never face any external damage and insurance becomes irrelevant here. But, in India, as per the Motor Vehicles Act, it is mandatory that all vehicles that operate in any public space must have a motor vehicle insurance cover. Policyholders must have at least ‘third-party liability’ motor insurance coverage even when opting for the basic insurance plans.
Types of Insurance and their Coverage
- Third-Party Liability Coverage
Protection from third-party injuries or property damage is provided by third-party insurance. It includes death, property damage, vehicle damage, and bodily injury. Drunken driving collisions are excluded from third-party insurance. - Own Damage Coverage
This car insurance policy covers the cost of repairs that have occurred to your car. This does not cover the regular service or maintenance costs. - Personal Accident Cover
This insurer pays for the medical expenses we incur in case of an accident. - Comprehensive Car Insurance Policy
It is like a package deal in insurance wherein it covers third-party, non-collision damages, and accident coverages. - Zero Depreciation Insurance Policy
The country's car insurance policies come with the option of adding this policy. If your car is damaged and you need to replace some of its parts, the insurer will base the claim settlement on the depreciated value of the damaged parts.
Exclusions
Regular wear and tear, mechanical or electrical breakdowns, and natural or man-made disasters are not covered by auto insurance. Additionally, it doesn't pay for or cover damaged parts.
Differences in a nutshell
|
Car Insurance |
Car Warranty |
|
|
Third Party Liabilities Coverage |
Yes |
No |
|
Accidental Damages Coverage |
Yes |
No |
|
Faulty Parts Replacement |
No |
Yes |
|
Mandation |
Yes |
No |
|
Vehicle Theft Coverage |
Yes |
No |
|
Mechanical and/or Electrical Failure Coverage |
No |
Yes |
|
Regular Maintenance or Servicing Coverage |
No |
No |
|
Natural Calamities Coverage |
Yes |
No |
|
Car Upgradation |
No |
No |
|
Time Period |
Upto 3 years |
Upto 5 years |
Which one is better?
A car insurance and a warranty serve different purposes for a new or a used better. Both have their pros and limitations. As per the facts and comparison it is best if we have both of them . It is important that we select the right insurance based on our requirements and purposes. The need of an extended warranty is debatable. Happy and fun Learning!
