Ever Wondered: What is a Car Warranty? What Does a Car Warranty Cover?

Unpacking car warranties as well as the details of different types of warranties – powertrain, bumper-to-bumper, extended and more.

Millions of cars, trucks and SUVs are sold every year with a steady increase in volume year over year. For most of us, our vehicles are very important to us and most likely one of our most valuable possessions. Our cars provide us freedom and get us from point A to point B, and for many consumers, our cars are an extension of our personality.

Whether you’re purchasing new or pre-owned, the car-buying experience can be fun and exciting, but it can also be daunting, especially when you get to the warranty part of the experience. There are so many warranty options it seems. Knowledge and research are valuable assets to have on your side, and we’re here to help you breakdown all that warranty lingo so that you have a better understanding of what’s what when it comes to car warranties.

Warranty Questions Answered in This Article:

We’ll break down what a car warranty is and what it is not, and we’ll delve into the different types of warranties that are available for you to consider. Hang tight and take copious notes because there is a lot to unpack when it comes to the car warranty topic.


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What is a Warranty?what is a warranty

Let’s start at the beginning and answer two basic questions before we dive into this blog in full: What is a warranty? And what is a car warranty?

Warranty: Simply put, and according to the dictionary, a warranty is a written guarantee that is issued to a purchaser of an item by the manufacturer promising to repair or replace defects as needed within a specified time. It’s a written promise from the manufacturer that it stands behind the craftsmanship and workmanship of its product. Warranties are commonplace when it comes to a myriad of products, from electronics to household appliances, and of course vehicles.

Car Warranty: A car warranty is specific to your vehicle. It is a service agreement put in place to protect your vehicle against manufacturer defects in design and installation for a set period of time. They are contracts that state that the car manufacturer or the warranty provider will pay for certain repairs during a set period of time. In plain speak, a car warranty will repair mechanical breakdowns and cover the cost of both parts and labor due to faulty workmanship and/or design, ensuring your vehicle is up to the manufacturer’s standards and that you’re safe on the road. Car warranties will also help to limit your monetary risk and protect you from having to pay out-of-pocket expenses if your vehicle needs to be repaired.

Car Warranty Periods and Coverage Vary

While a car warranty provides peace of mind, not all car warranties are created equal. They vary in terms of warranty periods, as well as what they cover.

How long does a car warranty last?

The warranty period will cover the vehicle for a specified amount of time and for a specified number of miles. For a new car, the warranty period will kick in from the time you purchase it until the specified amount of time or mileage is reached, or whichever comes first. Warranty periods can vary in length, ranging anywhere from 3 years/36,000 miles to 10 years/100,000 miles, but the most common warranty will last 3 years or 36,000 miles, which means that applicable repairs that fall within the warranty period will be covered during that time. For most consumers, the mileage will be reached first. The industry standard for miles driven in a year is 12,000, but that is no longer accurate. According to the U.S. Department of Transportation, the average person drives approximately 14,200 miles per year which means that the average person will see their car warranty expire before 3 years.

What does a car warranty cover?

Car warranties also differ in the coverage they provide. They do not cover everything. Generally speaking, a car warranty will repair broken items that are a result of faulty workmanship due to manufacturer design or installation. Other items may be covered depending on the manufacturer and warranty, so it’s wise to understand what type of warranty you have and know what is covered and what is not. The best place to find your warranty details is in your vehicle’s owner’s manual.

Pro-Tip: If you have questions about your warranty after checking your owner’s manual, call the dealership and ask to speak with the warranty administrator. This person will most likely know the ins and outs of your warranty and be able to answer your questions, including what’s covered, what’s not covered and even claim information.

Warranties Galore – There are so Many Choices!

There are lots and lots of warranty options for vehicles, anything from new car warranties to emissions to corrosion and maintenance. And to make it more confusing, sometimes a warranty will be called by another name. Have you heard of a factory warranty, manufacturer’s warranty and new car warranty? They are all the same, but called by different names. We’ll try to cut through the clutter and provide you with helpful information so that you will be knowledgeable when the car warranty topic presents itself.

When you consider vehicle warranties, think about them in two buckets: a manufacturer’s warranty and an extended warranty. Within these two categories, there are several different types of warranties, like the ones mentioned above. Manufacturer warranties are offered at the time of purchase, and usually for new vehicles or certified pre-owned vehicles. They are backed by the manufacturer. Extended warranties can be offered by the manufacturer too, but you may also purchase them via a third-party. Extended warranties take effect after the original manufacturer warranty has expired. Read on to learn more about each one.

What is a Manufacturer Warranty?what is a manufacturer warranty

A manufacturer’s warranty is one that is offered by the manufacturer. It is sometimes called a new-car warranty or a factory warranty. This warranty is put in place to cover the costs of repairs if the car experiences a malfunction due to some fault on the manufacturer’s side.

There are lots of different manufacturer warranties, but the two most common are the powertrain and bumper-to-bumper warranties. Both the powertrain and bumper-to-bumper warranties are offered on all new cars and are “free” of charge, meaning the cost of the warranties are built into the price of the new car and not an added expense. These warranties are part of a new car or certified pre-owned purchase, so dealers should not charge extra for these. There are other manufacturers’ warranties that are considered add-ons and will cost extra.

What does a manufacturer’s warranty cover?

Generally, manufacturer warranties cover repairs the manufacturer considers defects and/or malfunctions not due to any fault of yours or outside influences. As mentioned earlier, these would be items that break down due to some fault of the manufacturer. But again, not everything is covered.

What is not covered as part of a manufacturer’s warranty? Repairs that are a result of an outside influence, such as an accident, are not covered. Also not covered are damages that may result from the vehicle being used in a way that it is not intended, such as off-roading in your non-off-roading vehicle. Car warranties also don’t cover normal wear and tear.

What happens to a warranty when a manufacturer goes out of business? While we hope that no car owner is ever left without protection, it’s a valid question. What happens to my car’s warranty if my manufacturer goes out of business? Unfortunately there have been some auto brands that are no longer around. Do any of these ring a bell: Mercury, Saturn, Hummer, Pontiac and Oldsmobile? Let’s explore a couple of scenarios.

If an automaker were to declare bankruptcy under Chapter 11, the company would most likely continue to do business, just under renegotiated terms. In this case, warranties would most likely not be affected.

If an automaker were bought out by another, the likelihood is that the warranties would still be honored and not affected.

If an automaker discontinues a brand altogether, owners of the discontinued vehicle brand would most likely be able to get warranty services done at the new parent company’s service locations.

What is a Powertrain Warranty?what is a powertrain warranty

The powertrain warranty is a guarantee from the manufacturer promising to repair issues that may arise with parts of a vehicle’s powertrain and protect against faulty components that are responsible for making the vehicle go, like its engine and transmission.

What does a powertrain warranty cover?

A powertrain warranty covers the vehicle’s propulsion system, meaning the parts in the car that make it move. Think of powertrain items as the big mechanical items and the items that bring power and force to the wheels, like the engine, transmission and driveline components. The powertrain warranty will cover the mechanical items inside the engine, inside the transmission and inside the differential and transfer case. Because these parts are “bigger” and the most important parts of a vehicle, this warranty typically will have a longer warranty period. A typical powertrain warranty will last 5 years/60,000 miles.

Aa recap, what is included in a powertrain warranty? The answer is the big stuff – engine, transmission, drive box, differentials and transfer cases, as well as other driveline components like axles and gaskets.

What is a Bumper-to-Bumper Warranty?what is a bumper to bumper warranty

The bumper-to-bumper warranty is one of the most comprehensive warranties you can get and an easy way to think about it is to take a cue from its name: bumper-to-bumper. It covers just about everything between the two bumpers. It’s built to cover defects in manufacturer’s parts. Unfortunately cars break down from time to time, so this warranty will protect you against failing parts.

What does a bumper-to-bumper warranty cover?

The bumper-to-bumper warranty, also referred to as a comprehensive warranty, usually covers all major systems, like heating and air conditioning, electrical and high-tech systems, steering components and safety features. It covers both parts and labor. For instance, if a knob comes loose or the back-up camera is acting up, the bumper-to-bumper coverage will most likely take care of it for you, as long as you are within the warranty period.

Bumper-to-Bumper warranties don’t last as long as the powertrain, but the warranty period will depend on your specific vehicle. The most common warranty period is 3 years or 36,000 miles. As with all warranties, there are some exclusions. Bumper-to-Bumper warranties will not cover consumables, meaning items that must be replaced regularly due to wear and tear. Repair needed as a result of an outside influence is also not covered. An outside influence could be damage due to an accident or other factors, such as a cracked windshield resulting from a flying rock. Typical items that are not covered are: tires, wiper blades, brake pads and anything else that is expected to wear out regularly. Since wear and tear is not covered under warranty, these costs will be your responsibility and just one of the joys of car ownership.

What is an Extended Car Warranty?what is an extended warranty

Note: What people often refer to as “Extended Car Warranties” are technically called Mechanical Breakdown Insurance (MBI) or Vehicle Service Contracts (VSC), often backed by insurance companies.

Extended car warranties, (MBIS and VSCs), take effect after the manufacturer’s warranties are no longer applicable. Unlike manufacturer warranties, these products have to be purchased and will take over for the manufacturer’s warranty after it expires. You can buy an extended warranty to cover similar issues as the original manufacturer’s warranty from the dealer or you can choose to purchase from a third party company. Many will offer terms and conditions and take into account the make and model of the vehicle as well as mileage. There are plenty of companies that offer extended car warranties. Some are reputable extended warranty companies, but unfortunately some are less reliable or employ aggressive sales tactics, so we recommend doing research into which extended car warranty companies are right for you. Look at reviews and if they are backed by the BBB. Read who has the best extended warranties for used cars at olive.com®.

What happens to an extended warranty when you trade in a car? Extended warranties don’t follow the vehicle the way a manufacturer’s warranty would, nor do they stick with the buyer if the vehicle is traded in. If you have an extended warranty on your vehicle and you decide to trade it in, then the extended warranty will end. Most extended warranty companies will offer a prorated refund for the unused amount if you paid in full, but it’s good to double check the fine print. Some reputable companies like olive® offer monthly payment options with no contracts and the ability to cancel anytime, so you won’t lose anything if you decide to trade in or sell your vehicle. Additionally, olive® allows its customers to transfer the extended warranty to the new buyer at no charge if you decide to sell your car privately.

What happens to extended warranty when you refinance? Both manufacturer’s warranties and extended warranties will not be affected if you refinance your auto loan. It’s wise to review the terms of your contact carefully though because some service contracts may stipulate that the agreement may be cancelled upon refinancing.

What voids an extended warranty?

There are a few things you can do to ensure you don’t accidentally void your extended warranty. First things first, know what is covered and what is not covered and take time to read through the details and fine print. Next, be sure to take care of your vehicle and ensure it is properly serviced according to the recommended maintenance schedule. If a repair is needed that resulted due to lack of maintenance, your claim may be denied. And finally, don’t modify your car. Small modifications may be fine, but bigger modifications may cause other parts of your vehicle to run inefficiently and ultimately cause other parts to fail. Factory parts are designed to work together optimally, so changing them may have negative impacts.

An extended warranty may be a good investment to protect your vehicle after the original manufacturer’s warranties have expired. If you are purchasing a used car that is no longer covered by a warranty, you may want to consider some additional coverage. Check out olive’s blog to help you determine if purchasing an extended warranty on a used car is right for you.

What is a Drivetrain Warranty?What is a Drivetrain Warranty

A drivetrain warranty is not the same as a powertrain warranty, although often they are used interchangeably. Like the powertrain, the drivetrain makes up the parts of the vehicle that bring power to the car, but does not include the engine. The powertrain on the other hand is similar, but it does include the engine and includes the drivetrain. We know it can be confusing, but think of the powertrain as the bigger one that houses the drivetrain components, which include the transmission, drive shafts, axles, CV joints, transfer case, gearbox, differential, wheels (but not the tires) and more.

What does a drivetrain warranty cover?

Drivetrain warranties are rarely sold because most will offer the more inclusive powertrain. As part of a new car purchase, manufacturers will offer a limited powertrain warranty which will cover the engine, transmission and driveline components. These are the parts of the vehicle that transfer power from the motor to the wheels and are responsible for the force of movement.

A drivetrain warranty will cover similar items, but will NOT include the engine. The transmission, driveshaft, axles and wheels are usually covered in a drivetrain warranty. This warranty is not offered by the manufacturer, but may be available via a third party. And just like the powertrain warranty, it usually does not cover wear and tear drivetrain parts, which include CV joints.

What is an Emissions Warranty?What is an Emissions Warranty

An emissions warranty will cover the components that limit your vehicle’s emissions. As part of an emissions warranty, you are covered by the manufacturer for any repairs or corrections that may result from manufacturers defect that cause your vehicle to fail a state or government emissions test. The warranty period for an emissions warranty is typically 8 years or 80,000 miles. Emission warranties will vary because emissions standards are tied to state-specific rules and regulations. Each state determines what level of emissions is acceptable and which components must be repaired if a negative test results. Most emissions warranties will cover faulty oxygen sensors, catalytic converters and exhaust pipes. The emissions control unit is also covered if it is deemed faulty.

What Does a Dealership Warranty Cover

What Does a Dealership Warranty Cover?

A dealership warranty is another way of referring to warranties offered by the dealer, and because dealers may offer a lot of different warranties, there are multiple items that may and may not be covered depending on the warranty type. Dealer warranties can also differ a lot from the manufacturer warranties, so it’s especially important if you’re purchasing an older vehicle to know what warranties are part of the purchase, understanding which ones are dealer-specific and which ones are backed by the manufacturer.

The most common used-car warranty offered by a dealer is the 90-day/3,000 mile warranty, which will usually cover engine and drivetrain issues, limited coverage for power windows, air conditioning and other accessories. These warranties may also include roadside assistance and towing, as well as a specified timeframe in which you can return the car if you’re unhappy with the purchase.

Review the vehicle’s Buyer Guide displayed on the window or somewhere prominently to learn about the vehicle’s details, including warranty information. Dealers are required by the Federal Trade Commission to display warranty information in the Buyers Guide. Reviewing the Buyers Guide will help you understand if the vehicle comes with a warranty or is being sold “as is.” If there is a warranty associated with the vehicle, ask if the warranty is a manufacturer’s warranty and what that warranty includes and excludes.

Pro-Tip: If purchasing a vehicle that is out of its manufacturer’s warranty (a.k.a. factory warranty), review the dealer warranty in detail and know where you are covered. Ask questions, take notes and take names.

What is a Warranty Deed

What is a Warranty Deed?

A warranty deed is a legal document that shows proof of ownership. The term warranty deed is most commonly used in the real estate industry, and not standard language in the auto industry. To show proof of ownership of a vehicle, you’ll have to get your vehicle’s title. Once you pay off your auto loan, the lender will notify the Department of Motor Vehicles of the vehicle title change. Once that paperwork is approved then the title will be mailed to you. That piece of paper shows you legally own the vehicle. Congratulations, you’ve paid off your car! You’ve got the title, and it’s officially in your name!

Other Warranty Info That’s Good to Know

As you’ve read (if you’ve made it this far), there is so much information to digest when it comes to auto warranties, but below are some additional key tidbits we feel are important to be aware of.

Modifying or changing parts will void your warranty. Manufacturers design and choose parts very carefully. These chosen parts and pieces are intended to work properly together, so changing those parts will most likely void your warranty. Little changes and modifications may be okay, but bigger changes most likely not. It may be worth calling into the dealer to double check your changes and/or modifications.

Car warranties and car insurance are not the same thing. A car warranty will protect against defects or repairs that result from manufacturer defects for a specified period of time and/or mileage. Warranties protect against manufacturer defects only and not outside influences like accidents. Auto insurance will offer protection for repairs and damage too, but they will cover you in case of an accident, theft, weather or other factors that do not have anything to do with the quality of the car.

Recalls are always free to repair regardless of whether your vehicle is under warranty or not. If a manufacturer learns of a defect or safety issue that impacts one of its vehicles, federal law requires them to issue a recall order and contact owners to notify them of the issue and explain that the repair will be free of charge.

Car warranties do not cover regularly scheduled maintenance. Maintaining your vehicle according to the manufacturer’s schedule is highly recommended. Warranties do not cover regular maintenance, but there are maintenance plans that some manufacturers may offer at additional cost. Some manufacturers may include scheduled maintenance on the purchase of a new car for a period of time, but this is not standard, so it is best to double check.

Warranties You Can Trust with olive®

Warranties come in all shapes and sizes. When it comes to protecting your car, we recommend considering an extended warranty, especially if your vehicle is older or out of warranty. The peace of mind you will get from an extended warranty from olive® is priceless.

Why choose olive®? It’s simple, there is no waiting period, you can start coverage up to 145,000 miles, there are no annual mileage limits, you’re covered across the United States, monthly payments are manageable, and you can cancel anytime. And with olive® you have the ability to customize your plan by choosing your deductible and monthly payment.

Below is an example of items covered under MBIs and VSCs.

  • Steering System
  • Electrical Components
  • Engine Assembly
  • Drivetrain
  • Transmission
  • Exhaust Systems
  • Alternators, Manifolds, Pumps
  • Heating and Cooling Assembly

Plus, our products, customer service and reputation for excellence have earned us an A+ rating with the Better Business Bureau, and we have partnered with some of the insurance industry’s largest companies to back us.

Get the peace of mind you deserve with olive’s Mechanical Breakdown Insurance. Getting a quote is simple. Just go to https://olive.quote.com/ to get an instant quote today and be covered tomorrow.