What’s the Difference Between a Motor Warranty and Car Insurance?
Buying a vehicle often comes with choosing a warranty and car insurance plan, but what’s the difference? We break it down so your breakdowns won’t break your wallet.
Anyone buying a new car can expect that the salesperson or dealership will try to sell you a motor warranty or car insurance along with the car. These kinds of consumer protection plans are designed to cover you and your vehicle against certain risks. But do you really need car insurance or a motor warranty? And what’s the difference?
We delve into the details, so you can rest easy knowing your vehicle is safe and your financial world is more stable. You won’t have to worry about finding large amounts of money to cover the costs of unforeseen events like a breakdown or hijacking. A motor Warranty and Car Insurance aren’t the same. Here is the difference between car insurance and a motor warranty.
Differences Between Car Insurance and Motor Warranties in South Africa
Who Offers the Cover?
Insurance companies offer vehicle owners cover for their cars in the form of insurance policies. Motor warranties are offered by the manufacturer of the car, although you can also get warranties from insurance companies and some dealerships.
What Does it Cost?
Insurance for your car costs a monthly premium. The insurer will determine this amount based on your risk profile. You pay the monthly fee, and in return, the insurer will pay out money to cover the costs of insured events. Basic policies cover only third-party claims, but comprehensive plans can cover things like hail damage, theft, accidents, hijackings, and more.
A warranty from the vehicle manufacturer may cost you nothing if you buy your car new. It is simply a promise from the manufacturer that specific parts of your car will keep working the way they should for a predetermined amount of time. If any mechanical parts break down within the cover period, the manufacturer fixes or replaces the part with no cost to you. Some warranties also give you electrical failure cover and will pay for the replacement of components that fail while the warranty is still valid.
If you buy a warranty from an insurance provider or motor warranty company, you may pay a monthly fee. People often purchase extended warranties from insurance companies once the warranty from the manufacturer expires. This often applies to second-hand and older vehicles. They also buy warranties to cover parts of their vehicle that may not be under warranty from the manufacturer.
When Do You Buy It?
Most people buy car insurance when they buy a new or used car, but you can technically buy car insurance at any time for any vehicle that you own. Warranties may come with your new vehicle, or you can buy them when you buy your new or used car.
Owners of older cars can buy a warranty for the vehicle from insurers or motor warranty companies, but they may have to shop around to find a plan that covers older vehicles. You can technically buy this kind of warranty at any time. It is important to keep an accurate service history for your car and to care for it diligently.
What Does it Cover?
If you purchase a car insurance policy, you can get cover for a variety of events. What you get changes depending on your insurance provider, but these are some of the most common kinds of policies and what they typically cover:
Third-Party Only Car Insurance Plans. This type of cover will pay out for damage done to a third party’s property or person involving your car. For example, if you cause an accident and the other person claims back the damages from you, your insurance providers should pay out to cover that amount.
Third-Party, Theft, and Fire Plans. This type of plan covers third-party claims and will also cover the costs of recovering, fixing, or replacing your stolen car. Lastly, if your car is damaged or lost due to fire, this type of policy covers the repair costs or the cost of replacing it.
Comprehensive Car Insurance Plans. These plans give you the most cover, but they also cost the most. It usually includes third-party cover, theft and fire cover, and cover for natural disasters. In addition, many plans will also cover your medical costs and the cost of repairing or replacing your own vehicle if you are in an accident.
Before choosing an insurance plan, you can consider your needs and the cost of the monthly premiums. What you will need to pay and the claims process differs depending on the insurance company you choose. A simple claims procedure and a company reputed to pay out is ideal. Many insurance plans come with added benefits, so choose a product that has all the extras you need.
Most new vehicles come with some form of warranty. Warranties cover mechanical parts of a vehicle for manufacturing faults or malfunctions. If a breakdown occurs and the driver didn’t cause it, the warranty covers the replacement or repair of that part. Your warranty covers mechanical breakdowns and mechanical failures but won’t provide you with service plans or a maintenance plan.
The details about which parts they cover will be in your motor warranty, but they can often include the engine, gearbox, fuel system, electronics, and sensors. A motor warranty does not cover wear and tear, maintenance costs, and services. It also doesn’t cover damage that results from negligence or intentional harm. You may find a type of warranty that works for you in one of these categories:
- New Vehicle Warranty (for new vehicles, also called manufacturer warranties)
- Unlimited Warranty (A warranty that covers you for an unlimited odometer reading)
- Extended Warranty (A warranty that you buy to cover your car after your first warranty expires)
- Pre-Owned Warranty (A warranty for used or pre-loved cars)
- Top-Up Warranty (Like Gap Cover, but for warranties)
Make sure you purchase a warranty or insurance policy from a licensed financial services provider. From brake pads to accidents, you can ensure your wallet won’t suffer if something unforeseen happens. A standard warranty can put your mind at rest about mechanical breakdowns and replacing broken components.
DISCLAIMER: The information that has been provided in this article is for informational purposes only. It should not be construed as legal, medical, or financial advice. Facts in this article are correct at the date of publication.