If you’re buying (or own) a new or used car, deciding what extended warranty protection to get can be a challenge. There are likely several different providers and coverage options to choose from. It’s important to make an informed decision. You want to have the right protection when your vehicle breaks down. We put this extended car warranty Canada guide together to help you make that decision.
What’s covered under an extended car warranty in Canada?
When you buy a new vehicle, it will come with a comprehensive (also known as basic) warranty from the manufacturer. It usually lasts for 3-5 years and 60-100,000 kilometres. This warranty covers almost all the major and minor components of the vehicle. You will also get a powertrain warranty that typically lasts a bit longer. It only covers the parts of a car that provide power and make it move. That involves the engine, transmission, and drivetrain. Once these have expired that’s when an extended warranty kicks in.
An extended car warranty can come in many different forms. Price and coverage level depends on various factors including brand, model, mileage, and age. You will have to decide what is important to have covered and at what cost. Do you want protection for all the bells and whistles or limited protection for some basic items?
A good comprehensive extended warranty will cover most of the working parts of the vehicle including steering, electrical, engine, air conditioning, transmission, and suspension components. It is what is often referred to as “bumper to bumper”. But, you can find coverage that includes all or just a few of these parts. Pay attention to the fine print and avoid relying on brochures that gloss over the details.
Extended warranties will not cover things like cosmetics, general maintenance, or wearable parts. You can, however, get added protection for these items. You may be offered a service warranty or service plan by the dealership. These are different than extended warranties. They provide prepaid routine services like oil and fluid changes or brake pad replacement. They don’t provide a lot of benefits other than putting you out of pocket in advance and ensuring you return to the dealership for servicing.
Here are 12 things you must consider when researching extended car warranties.
1. Can I cancel my warranty at any time?
If you decide to sell or trade your vehicle or write it off, can you get back some of what you paid? Many warranties, especially from the manufacturer, offer no refund after 30 days. If you spent several thousand dollars, that could mean a lot. A good warranty will provide you with a limited refund for the unused time or mileage if you don’t have claims and need to cancel.
2. What happens if I don’t make a claim?
Some warranties offer a “no claims bonus” after the policy expires. Providers often add this hoping it will deter you from claiming at all. You will also pay extra for it. Will you decide not to make a claim hoping to get a refund? You can’t sell, transfer, or write off the vehicle. Also, it may only be a credit to use if you return to the same dealership for a new vehicle. You also have a short time to apply for the refund at the end of the warranty, often only 30 days or less.
3. Am I able to transfer the policy in any sale?
Check to be sure if you sell your vehicle, you can transfer the warranty. Your needs and situation are always changing. That’s why the transfer clause is such an important feature. Having an active warranty is an investment in the future of your vehicle. It increases a vehicle’s resale value and provides added confidence to any potential buyer.
4. Can I choose any shop for repairs?
The freedom to visit any licensed shop in the event of a claim is important. Do you have a favourite shop or a mechanic you trust? Do you prefer an independent shop or a dealership? What if you are travelling? If you can’t choose the shop, you could be stuck waiting for approval or an appointment.
5. How are claims handled and paid for?
Your claim should be as smooth as possible. Your warranty provider should handle everything for you and keep you informed — from estimate review to approval and final payment. Make sure your warranty provider will pay the shop for your repair when it’s finished. Why pay out of pocket for repairs and wait for reimbursement?
6. Does the policy include OEM parts?
Many repairs on newer vehicles can’t happen without OEM (original equipment manufacturer) parts. If you are returning to the dealer for repairs, you need to have OEM parts included in your warranty. Many aftermarket parts are as good or better, but you will want the option for OEM. Not having it can affect parts availability and repair times. Check if the warranty includes it or if it is an extra cost.
7. Does the warranty require extra maintenance?
Some warranty providers stipulate extra maintenance requirements. Such as getting an oil change every four months regardless of driving habits. One miss and they can deny your claim. Get a policy that doesn’t need more maintenance outside of what the manufacturer recommends.
8. Is the policy with a licensed Canadian insurer?
Extended warranties are long-term commitments. Make sure your policy is with a licensed Canadian insurer with A-rated financial status. This ensures your claim will always be paid. Warranty service contracts are different. After Sears went bankrupt, all the service contracts they issued disappeared.
9. Am I getting full comprehensive coverage?
New vehicles are very complicated. Failures are as often electrical as they are mechanical — and they can keep you off the road as well. Seriously consider having full comprehensive protection that covers electronics and advanced tech. Anything else isn’t worth it on newer vehicles.
10. Can I get a policy at any time?
Buying a warranty is a big decision, so take your time. Do your research and think everything over. Dealerships will often say you only have a few days to decide and that you can’t get a warranty anywhere else. Don’t be pressured into a decision, you have options. If you buy new, a lot can happen in 3 or 4 years before the warranty kicks in.
11. Should I buy the basic powertrain option?
GM, Ford, Honda, and most other automakers limit their comprehensive coverage to three years but powertrain to five. This is because most warranty problems happen on the comprehensive side. Powertrain issues can be large claims. Yet, powertrain-only warranties won’t provide enough protection for newer vehicles.
12. Have I seen the warranty provider’s reviews?
Let’s face it: extended warranties haven’t always had the best reputation. But online reviews can help you level the playing field against shady companies. Read up and see what is happening to other customers. Dishonest sales tactics or poor claims service will reflect in reviews. Check resources such as the Better Business Bureau.
Whatever way you decide to proceed, be sure to ask questions and understand your coverage. Remember it’s a two-way street. Know your obligations as well, such as service requirements and procedures for making claims. A great extended warranty can help you avoid large, unexpected repair bills that can be a financial strain.