Auto warranties and insurance companies cover different aspects. Car insurance is mandatory in most states as it helps pay for damages caused by collisions or other accidents, including theft or fire. Moreover, an extended warranty usually provides coverage for mechanical issues and other breakdowns. An extended warranty will not cover regular maintenance; therefore, it is important to get all routine maintenance done periodically. These type of warranties work best for new cars. Companies offering extended warranty sometimes offer perks like free towing and roadside assistance as well.

A new car warranty is normally included in a car’s purchase price. Extended warranties, on the other hand, are service contracts that would need to be purchased separately. An extended car warranty from a dealership could cost you anywhere between $1,000 and $1,500. Most third-party warranty companies and organizations offer several plans and payment options so that you can easily select a plan that fits your budget.

Car insurance
Car insurance helps covers financial losses that arise due to unexpected occurrences while driving. Car insurance will also compensate for the car if there is any loss or damage caused to it. The driver is also eligible for insurance cover in the event of any physical injury, loss of limb, or in an unfortunate event of death. If the car is involved in any collision, accident, or there is damage to the car due to mischief or theft, it can also be covered with the right car insurance policy. An insurance cover could also compensate the owner for any loss or damage to the car due to unprecedented natural calamities such as an earthquake, flood, or fire.

Extended car warranty vs. insurance
While the extended warranty is provided by the car companies or third-party companies, insurance is provided by independent insurance companies.

Most states in the country have made it mandatory to avail car insurance; however, purchasing an extended warranty for your car is absolutely optional. The main difference between a car warranty and car insurance is the type of coverage each type offers.

An extended warranty could be used to extend the duration of your new warranty or to help cover a used car. Although it generally entails two parts, such as the following, car insurance provides more comprehensive coverage.

• Bumper-to-bumper: This typically covers items like a car’s electronics and the air conditioning system.
• Powertrain: This typically covers the car’s engine and transmission.

Coverage provided by car insurance:

• If someone is injured by your car due to the driver’s mistake, the liabilities can be covered.
• Payment of repairs or replacement of car in case of damage due to a collision on the road.
• Compensation from fire, theft, floods, or other causes.
• Payment of medical expenses if you are hit by an uninsured driver or if you or a passenger are involved in an accident.

Some insurance companies also offer perks like towing coverage and roadside assistance. However, it is important to note that the prices of these plans vary from one state to another.