Should You Buy an Extended Service Plan?

An extended car warranty refers to mechanical breakdown coverage offered by a vehicle manufacturer. However, this term is often mistakenly used to describe coverage from third-party companies. Independent providers offer similar protection through vehicle service contracts, but we’ve used the terms interchangeably in this article for convenience.

An extended service plan can help you finance car repairs and is one way to plan for the long-term cost of car ownership. But extended service plans may not be the best option for everyone.

In this article, we’ll describe extended service plan coverage options and costs to help you decide whether an extended warranty is right for you.

We’ll also introduce you to some of the best extended car warranty companies on the market so you can make sure to get coverage from a reputable provider. Start comparing quotes from three of our top recommended providers above.

What is an Extended Service Plan?

An extended service plan, also known as a vehicle service contract or an extended warranty, is a contract that promises to pay for certain repairs should a mechanical breakdown occur.

All new vehicles come with a factory warranty that covers defects in materials and workmanship for a certain period of time. The length of your factory warranty will depend on your manufacturer, but even the best new car warranties expire eventually, and at that point, you’ll be on your own to cover repairs.

An extended service plan can help you plan for the costs of unexpected breakdowns. Your contract will detail what components are covered, as well as the process for filing a claim. Here’s how a typical extended service plan works:

1. When a breakdown happens, drivers can generally take their vehicles to any repair facility certified by the National Institute for Automotive Service Excellence (ASE^®).
2. The repair shop will contact your contract administrator to authorize any repairs before beginning work on your vehicle.
3. If repairs are covered by your extended service plan, your contract administrator will likely pay the repair shop directly for parts and labor.
4. All you’ll need to pay out of pocket at the time of repairs is your deductible, which can range from $0 to about $200.

What Does an Extended Service Plan Cover?

An extended service plan covers a number of different vehicle components depending on what plan you choose. The most common extended service plans are powertrain and bumper-to-bumper coverage.

Powertrain plans are usually the lowest-level extended service plans offered by a warranty provider. These cover the components of your vehicle that make it move, including the engine, transfer case, transmission and drive axles.

The most comprehensive extended service plans are called bumper-to-bumper plans. Bumper-to-bumper contracts cover nearly every vehicle component. They can either be stated-component plans, in which case your contract will list every covered part, or they can be exclusionary plans, meaning your contract will only list the parts of your vehicle that are not covered.

Items that are typically not covered by any extended service plan include:

• Exterior trim
• Seat belts
• Wiper blades
• Brake pads and shoes
• Catalytic converter
• Shock absorbers and struts
• Bumpers
• Maintenance services
• Collision damage
• Environmental damage

In addition to covering select components, most extended service plans also include additional perks such as:

• Rental car reimbursement while your car is in the shop
• Trip interruption allowance if your car breaks down far from your home
• 24/7 roadside assistance for services like lockouts, flat tires and battery jump-starts

How Much Should an Extended Service Plan Cost?

According to our research, an extended service plan should cost anywhere from $1,700 to $4,000 depending on a number of factors like the type of vehicle you own.

Here are some things that will be taken into consideration when determining price:

• Your vehicle’s make and model: High-end models or luxury vehicles often require more expensive repairs, so they’re more expensive to cover.
• Your vehicle’s age and mileage: Older vehicles are more likely to need major repairs, which makes them more expensive to cover.
• The coverage level you choose: The more comprehensive your coverage is, the more it will cost you.
• The term length you choose: The longer your contract term, the more you’ll pay.
• The deductible you choose: If you choose a low or $0 deductible, you’ll end up paying more in premiums.
• Your location: Extended service plan costs may be higher or lower depending on where you live.
• Where you purchase coverage: If you purchase a plan from a dealership, it may be subject to dealer markups. If you opt for third-party coverage, your price may be more negotiable.

According to our research, a full-coverage plan for a vehicle with fewer than 30,000 miles can cost anywhere from $1,700 to $3,500 for between three and seven years of coverage. A basic powertrain plan may run you around $1,900 to $4,000.

Is an Extended Service Plan Worth the Money?

An extended service plan is worth the money for many drivers because it can help guard against costly mechanical repair bills.

Should your engine or transmission need to be replaced, it can easily cost upwards of $5,000, according to RepairPal. Having the protection of an extended service plan can bring drivers peace of mind knowing they will not be suddenly faced with such an expense.

The chances of needing a costly repair like an engine replacement may be low if you have a newer or more reliable car, so for many drivers, it may be more economical to save for repairs yourself rather than purchase an extended service plan. However, in a 2018 survey by Pegasystems Inc., 60% of drivers who owned an extended auto warranty reported benefiting from it within the last year.

Ultimately, whether an extended service plan is worth it will depend on your financial situation and whether an unexpected repair bill could leave you stranded

What Company Has the Best Extended Service Plan?

There is no one-size-fits-all best extended service plan for every driver. Anyone looking to purchase an extended service plan should do ample research, comparing coverage and getting quotes from multiple providers before signing a contract.

Our review team has read through extended service plan contracts from all of the top companies in the industry. Based on our research comparing coverage details, costs, customer service ratings, and industry reputation, we recommend getting quotes from Endurance and CARCHEX.

Endurance: Best Provider

Endurance has some of the most comprehensive extended service plans in the industry. There are six Endurance coverage options to choose from:

• Supreme: Exclusionary bumper-to-bumper coverage
• Superior: Comprehensive stated-component coverage
• Secure Plus: Enhanced powertrain coverage
• Secure: Basic powertrain coverage
• Select Premier: Specially coverage for high-mileage vehicles
• EnduranceAdvantage^TM: Maintenance and repair coverage

Endurance provides some of the best benefits in the industry. Along with standard perks like rental car reimbursement and trip interruption allowance, Endurance gives customers one free year of Endurance Elite Benefits. The Endurance Elite Benefits provides benefits including 24/7 roadside assistance, identity theft services, key fob replacement, two tire repairs or replacements, total loss protection and a collision discount.

To learn more about this provider’s costs and customer reviews, check out our full Endurance warranty review. To reach out for an extended service plan quote from Endurance, click below.

CARCHEX: Best for High-Mileage Cars

Coverage for high-mileage vehicles is often more expensive than new car protection. CARCHEX sells some of the best-value high-mileage coverage with contracts that extend as high as 250,000 miles. The company also has an impressive reputation, partnering with notable companies like Edmunds.com and CARFAX.

CARCHEX offers five levels of extended service plan coverage:

• Titanium: Bumper-to-bumper exclusionary coverage
• Platinum: Comprehensive stated-component coverage
• Gold: Mid-tier coverage
• Silver: Enhanced powertrain coverage
• Bronze: Basic powertrain coverage

Every CARCHEX extended car warranty plan includes benefits like courtesy towing, 24/7 roadside assistance, rental car reimbursement and trip interruption reimbursement.

You can read more about this provider in our in-depth CARCHEX review. To start comparing costs, you can get a free, personalized CARCHEX quote below.