Buying an extended warranty for your car can be a sensible precaution, but it’s important to understand exactly what you’re getting
An extended car warranty is effectively an insurance policy. So, much like covering the contents of your home, your decision on whether or not to buy one boils down to your attitude to risk, and the value of the item concerned. You have to ask yourself, is it worth it?
If you’ve bought an old banger from a backstreet garage for £500 cash, and every day on the road frankly feels like a bonus, then the answer to that question is probably no. But if there’s more money at stake, then you might want to protect your investment should things go wrong.
So what are the chances of that happening? In reality, the longevity of your car has very little to do with luck, but instead boils down to its provenance, coupled with the typical lifespan of its parts. If you know this, then you can make a calculated decision about whether it’s worth shelling out on some extra cover when the manufacturer-supplied warranty expires.
That information is more readily available than you might think. Aftermarket cover provider Warranty Direct, for instance, publishes aReliability Index offering a simple online guide to how likely your car is to fail, and which parts will go first.
A four-year-old, 1.6-litre petrol-engined Ford Focus Zetec, for example, has an RI rating of 60 (compared with an average of 100), meaning it’s relatively reliable. The index says 23 in 100 cars will require an annual claim at this age, with electrical faults most likely, followed by engine and then axle and suspension. One year’s cover from Warranty Direct for this car will cost you about £350.
Then there’s reliability surveys, such as JD Power, which reveal owners’ real-life experiences of living with different cars.
It’s also important to consider whether your extended warranty will cover the parts most likely to fail. Time to check the terms and conditions.
Most packages will cover major mechanical components, such as the engine, gearbox and fuel and ignition systems, while wear and tear parts, such as the clutch, brake pads, and exhaust, are commonly excluded. But claim limits can vary dramatically – from £150 to £5,000 per claim – as can other exclusions, so it’s important to do your homework.
Citizens Advice says disgruntled extended warranty buyers most often call to complain about misleading sales, hidden opt-out clauses and inadequate repairs. While industry complaints handler, Motor Codes, argues unclear terms and conditions are the main cause for complaint. Its spokeswoman admits, however, that in many cases “the consumer simply has not read the warranty documentation to understand the coverage”.
What these products tend to have in common, though, is their basic remit to retain your business. That’s often achieved by restrictive clauses in the policy terms and conditions which state that you must have servicing and repairs carried out at the supplying garage or dealer network. An extended warranty, unlike new car cover, is not bound by the EU Block Exemption rules which allow new car owners to shop around when getting their vehicles repaired. So you may not be able to return to your preferred local mechanic for the duration of the cover, even if their rates are more competitive.
If you’re buying older stock, or shopping outside the dealer network, then the supplying garage may offer an independent warranty with more exclusions or restricted claims limits. Alternatively, aftermarket providers such as Warranty Direct and Click4 can tailor cover to your car’s age and mileage.
Extended warranty providers are bound by the Competition and Markets Authority guidelines. These state that certain information, such as pricing and cancellation rights, should be made clear at the point of purchase.
If you do have a grievance, Motor Codes runs its own Vehicle Warranty Products Code. Motorists can visit to check which providers have agreed to abide by its rules, or call its hotline on 0800 692 0825 for help resolving a dispute. Better still, check your policy wording thoroughly before you buy, and you hopefully won’t have any cause for complaint.