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Comparing car warranty and other vehicle insurance products

30 January 2024

Written by Simon England

|  5 Minutes

There are many auto insurance products on the market to cover a wide variety of vehicle-related costs. Some people opt to take as many protection options as they can afford, leaving little to chance. Comprehensive car insurance is the most popular kind of motor insurance even though it is more expensive than third-party only or third-party, fire and theft, with people opting for peace of mind over price. Car warranty can also be a great-value option for covering a range of vehicle faults. Meanwhile, GAP insurance is useful to cover a potentially large financial shortfall after a total loss.

We compare these types of insurance to help you understand which are the best suited to your needs and budget. Find the best type of cover to avoid unexpected costs.

Comparing car warranty and comprehensive car insurance

Both comprehensive car insurance and warranty cover the cost of vehicle repairs. Comprehensive coverage insurance covers damage caused by collisions, severe weather, fire and vandalism. It covers third-party damage if you’re involved in an accident with another vehicle, person, or private property. It also pays out for stolen vehicles or if the vehicle damage is irreparable. Some policies also offer optional covers such as courtesy car, breakdown, and overseas cover, but these usually are an extra cost.

Car warranty covers the cost of repairs resulting from mechanical or electrical failures but not from collisions, environmental damage, or vandalism. Faults can happen suddenly, so with a warranty policy in place, you can drive with assurance knowing you’re covered for an expensive repair if the unexpected happens.

Which is better, comprehensive car insurance or warranty?

Comprehensive car insurance is usually a significant but unavoidable cost for drivers; the UK law requires everyone to have a valid insurance policy to drive on the road. You can choose a third-party insurance policy but if you’re at fault you’ll be left to cover the costs.

Warranty, whilst not an alternative to comprehensive car insurance, is often more affordable and more likely to be claimed on. You’re more likely to break down than get into an accident. It’s always best to choose the highest level of cover to suit your budget, maximise your cover, and save yourself a considerable repair bill down the line.

Comparing factory warranty and extended warranty

Every new car gets a 3-5-year factory warranty to protect drivers from potential faults or failures during the initial ownership period – some extend for up to 7 years but this will not apply to all components. After it expires, this could leave you vulnerable to expensive repair costs if vehicle components suddenly fail. You can even opt for an extended warranty from the dealership but bear in mind that this will be a new policy, not a continuation of your original warranty. You can instead choose cover from an independent warranty provider such as ALA insurance.

Factory warranty

Manufacturer extended warranty

Independent extended warranty

  • Lasts 3-5 years

  • Included for new cars

  • Non-renewable

  • Exclusive to manufacturer

  • Transferrable

  • Lasts 1-3 years

  • Costly

  • Available to buy from dealership only

  • Non-renewable

  • Usually transferrable

  • Lasts 1-3 years

  • Prices vary

  • Available for any vehicle make

  • Renewable (subject to eligibility

  • Transferrable

  • Simple claims process

  • Good customer service

  • Additional perks

Which is better, a manufacturer or third party extended warranty?

Manufacturer extended and independent extended warranties can offer similar coverage, although this depends on your chosen provider and level of cover; the type of cover you can have depends on a few factors including your car’s age and mileage. Read about used car warranty.

Of course, you don’t have to have an extended warranty but for a worry-free driving experience, it can be a worthwhile investment for your car.

Are car warranty and GAP insurance different?

Car warranty and GAP insurance are both insurance products to protect against vehicle-related costs but they are completely different.

GAP insurance is used to top up a total loss settlement so you aren’t left to cover a potentially huge financial shortfall from vehicle finance, depreciation or other expenses. Car warranty covers the cost of vehicle repairs if parts suddenly fail, so you’re not left with an expensive repair.

GAP insurance does not cover repairs but it can help you afford a new replacement vehicle if yours can’t be repaired. Car warranty doesn’t pay out if the car is a total loss but covers the cost of repairing or replacing failed components and labour costs. Like all insurances there is usually a claim limit on both GAP and warranty. There are four different types of GAP insurance and three levels of car warranty with ALA Insurance.

GAP Insurance

Car Warranty

  • Covers financial shortfall after a total loss

  • Lasts 1-5 years (depending upon policy type)

  • Non-renewable

  • 4 policy types

  • No mileage limit on BTI or AVG

  • Pay over ten months or upfront

  • Covers car finance (VR & BTI)

  • Covers vehicle depreciation

  • Covers lease payments and deposit (CHG)

  • £250 excess contribution

  • Covers vehicle repair costs after mechanical or electrical failure

  • Useful after the factory warranty expires

  • Lasts 1-3 years

  • Renewable (subject to eligibility)

  • Pay upfront or monthly

  • 150,000-mile limit (depending upon cover level)

  • 16-year age limit (depending upon cover level)

  • Up to market-value claim limit

  • Wear & tear coverage (Platinum only)

  • Diagnostics (Platinum and Gold)

  • Continental cover

  • Additional benefits

Comparing GAP insurance, comprehensive car insurance and extended warranty

A chart Comparing GAP insurance, comprehensive car insurance and extended warranty

Car insurance is non-negotiable if you want to drive in the UK. GAP insurance and extended warranty aren’t mandatory and they do very different jobs, but you can hold all three policies simultaneously. Of the two optional types of cover, if you were only to choose one type of policy, GAP insurance is usually more affordable although you’re less likely to claim because write-offs are less common than component failure. GAP is also very handy for being able to afford a replacement car if the worst happens. Car warranty is the policy for you if you like the assurance that you’re covered for repair costs after an unexpected breakdown. ALA also offers additional protection, as standard, for when you break down away from home.

Which insurance products are worth it?

Many insurance products have their merits and are reassuring to any driver who prefers not to leave anything to chance. We would recommend you use the insurance products that give you the greatest peace of mind within your budget.

Insurance infographic

ALA extended warranty offers three levels of cover, you can choose the most comprehensive cover you’re eligible for, or you can choose a more affordable package with excellent component cover as standard. There’s something for everyone. We’re making extended warranties as useful and accessible as possible for you.

Learn about our warranty coverage options

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