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Car Insurance vs. Extended Warranty: How Do They Compare?  

30 January 2024

Written by Simon England

|  5 Minutes

When it comes to protecting your investment in a vehicle, the terms “car insurance” and “extended warranty” are sometimes used interchangeably, causing confusion for many car owners. However, they serve distinct purposes, covering different aspects of your vehicle’s well-being. Car insurance is a necessity as cars cannot legally be driven without it; extended car warranty, however, can be bought to follow on from the manufacturer warranty when you first buy a car, and provides extra peace of mind should your vehicle encounter wear and tear, saving you money on parts and labour costs.

In this comprehensive guide, we will explore the differences between extended warranties and car insurance, as well as how the two can go hand in hand. We will also discuss the pros and cons of extended car warranty, the benefits of having both car insurance and extended warranty, and how our warranty policies at ALA can help you.

What is the difference between extended warranty and car insurance?

Car insurance and extended warranties are both financial safeguards for your vehicle, yet they address different types of risks. Car insurance primarily covers damages resulting from accidents, theft, and other unforeseen events. It typically includes liability coverage, which pays for damages and injuries you cause to others, as well as comprehensive and collision coverage for damages to your vehicle.

An extended warranty is essentially a protection plan for the mechanical and electrical components of your car. It can be bought towards the end of or after the original manufacturer warranty expires, offering coverage for the repair and replacement of certain covered parts.

The fundamental difference lies in the types of risks they mitigate. Car insurance is geared towards protecting you from financial losses due to accidents and external events, while an extended warranty focuses on covering repair costs for your vehicle’s internal components.

At ALA, we have different levels of warranty perfectly suited to your preferences. We also provide specialist warranty for electric vehicles and vans to give you full coverage should you experience any mechanical issues. You can start building your warranty quote here.

view from back seat of car of someone driving with the sun setting

Do I need extended warranty if I have car insurance?

Whether or not you need warranty alongside your car insurance depends on your priorities and the level of protection you desire for your vehicle. Car insurance is legally mandatory and is crucial for covering damages in the event of accidents or unforeseen circumstances. However, it typically doesn’t cover the costs associated with mechanical breakdowns or wear and tear.

An extended warranty, on the other hand, steps in when your manufacturer’s warranty expires, providing peace of mind by covering repair costs for specified components. If you plan to keep your vehicle for a few years and want to mitigate the risk of expensive repairs, an extended warranty can be a valuable addition to your protection strategy.

ALA Silver, Gold and Platinum policies are perfectly suited to almost all vehicles; the policy you choose can depend on several factors, including the age of your vehicle and mileage. To find the best warranty policy for you, you can read our full terms here.

Do I need extended warranty?

Deciding whether to invest in an extended warranty requires careful consideration of your driving habits, the age of your vehicle, and your financial situation. Here are some factors to weigh:

  • Vehicle age: If your car is relatively new it may still be covered by the manufacturer’s warranty, so you may not need an extended warranty immediately. However, as your vehicle ages and the original warranty expires, the likelihood of mechanical issues increases meaning potential unexpected costs.

  • Driving habits: Consider how much you use your vehicle and under what conditions. If you frequently embark on long journeys or have a high-mileage commute, the likelihood of wear and tear on your vehicle’s components is higher, making an extended warranty more appealing.

  • Budget: Evaluate your budget and assess whether you can absorb the costs of unexpected repairs. Large, expensive failures can and do occur, but not to everyone. If this would put a strain on your finances, an extended warranty can provide financial security by effectively spreading the cost of repairs. To find out how much our extended warranty policies could cost you, you can build your bespoke quote here.

driving a car

What different benefits do extended warranty and car insurance offer?

Car insurance benefits:

  • Accident coverage: Car insurance provides coverage for damages resulting from accidents, including repairs to your vehicle and liability protection for injuries or damages caused to others.

  • Theft protection: Car insurance typically covers the theft of your vehicle, offering reimbursement or replacement.

  • Legal requirement: Car insurance is legally required, ensuring you comply with local regulations.

  • Extended warranty benefits:

  • Mechanical breakdown coverage: An extended warranty covers the costs of repairs for mechanical and electrical components after the manufacturer’s warranty expires.

  • Peace of mind: Knowing that major repairs are financially covered can provide peace of mind and protect your budget from unexpected expenses.

  • Customisable plans: Our extended warranty plans come with various coverage options, allowing you to tailor the protection to your specific needs.

How ALA Warranty can help.

While car insurance and extended warranties share the goal of protecting your vehicle, they serve different purposes. Car insurance is essential for addressing damages resulting from accidents and external events, while an extended warranty focuses on covering the costs of mechanical breakdowns.

Whether you need an extended warranty depends on factors such as your vehicle’s age, your driving habits, and your budget. By understanding the distinctions between the two, you can make informed decisions to ensure comprehensive protection for your automotive investment. Our warranty policies at ALA provide full coverage following the end of your manufacturer warranty, giving you peace of mind and saving you money should your car experience wear and tear or a mechanical failure.

To find out more, get in touch with our team today.

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