Car warranties: manufacturer or extended?

Written by Seamus McKale

Reviewed by Daniel Mirkovic

Updated July 11, 2024 | Published July 10, 2024

You can buy an extended warranty for all sorts of things, from phones to dishwashers. One of the most important objects for which many people consider an extended warranty is their car.

Car extended warranties are common, but what exactly do they cover? How are they different from the manufacturer warranty?

Those answers and more follow in this guide to vehicle warranties.

A mechanic's hands, using a white rag to clean a crescent wrench

The important points

  • A warranty covers service and repair costs for a vehicle, for a defined period of time.
  • New vehicles come with a warranty from the manufacturer, but it’s possible to expand this coverage with an extended warranty.
  • Warranties and insurance are two separate things; car insurance is mandatory coverage for sudden and unexpected events. Meanwhile, warranties are optional coverage for mechanical issues or wear and tear.

What is a vehicle warranty?

A warranty covers many repairs that a new vehicle might require over a defined period of time. Car warranties are also known as service contracts or service agreements. While your car is covered by a warranty, you won’t have to pay any repair costs for repairs defined in the warranty.

All new vehicles come with a manufacturer warranty. This covers a broad range of repairs, and is usually limited by time and distance driven. Many manufacturer warranties last between three and five years or 60,000 and 100,000 km (whichever comes first).

Vehicle owners can also buy an extended warranty. Basically, extended warranties add to the end of the manufacturer warranty. However, they don’t necessarily offer the same coverage — the extended warranty will be a different contract. Car dealerships often sell extended warranties, but it’s possible to buy them from independent sellers, too.

While the types of repairs warranties cover vary, there are some things they never cover. For example, any accident-related damage won’t fall under warranty coverage — that’s what car insurance is for. Same thing for damage from things like fire or hail.

Let’s look at what car warranties do cover.

Manufacturer warranty coverage

Let’s start with manufacturer warranties. Every new vehicle comes with a manufacturer warranty. They last for a number of years or kilometres driven, whichever limit comes first. The manufacturer warranty is often subdivided into different coverages. The most important manufacturer warranties are the new vehicle warranty and the powertrain warranty.

  • The new vehicle warranty (or comprehensive warranty) is the complete package. It includes broad coverage for all sorts of mechanical issues that the vehicle might face. Most manufacturers have a three-year/60,000-km limit on this coverage. It doesn’t include wear and tear to components like brake pads, tires, or hoses.
  • The powertrain warranty applies to parts of the vehicle that deliver power to the wheels: the engine, transmission, driveshaft, and axles. The manufacturer powertrain warranty usually lasts longer than the comprehensive warranty, commonly five years or 100,000 km.

Another type is the corrosion warranty. This covers rusting if it’s not the result of damage to the vehicle panels. The comprehensive warranty would also cover corrosion, but the corrosion warranty usually lasts longer. You may also see an emissions warranty. This is a long warranty on specific vehicle parts that reduce emissions, such as the catalytic converter or engine control module.

Manufacturer warranties, unsurprisingly, depend on the manufacturer. If you’re shopping for a new car, pay attention to the warranty as part of your research.

Manufacturer warranties often have conditions. For example, you may need to bring your car to a dealership for repairs or maintenance. At the very least, you’ll have to use a pre-approved mechanic. Major modifications to the car can also void the warranty.

Extended warranty coverage

Extended car warranties are very different depending on where you buy them from.

If you buy an extended manufacturer warranty, it should be very similar to the original warranty. You’d be adding some extra years to your factory warranty.

But you’ll have options if you buy an aftermarket warranty from an independent company. These types of extended warranties are often very customizable. For example, you may find a budget option to cover only the vehicle’s powertrain. Or, perhaps you’re looking for a more upmarket, comprehensive option.

You’ll also often be able to add a deductible to your warranty. This is an amount you agree to pay if you bring your vehicle in for repairs under the warranty (the warranty would cover costs above the deductible). In exchange for adding a deductible, the warranty will cost less.

Extended warranties also often feature extra benefits beyond covering repairs, such as:

  • Roadside assistance
  • A rental car while your vehicle undergoes repairs
  • Trip interruption coverage if your vehicle breaks down while away from home

If you plan to buy an extended warranty, it’s worth shopping around to find the best price and coverage.

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Used car warranties

The manufacturer warranty is easy enough to understand if you’re buying a new car. But how do warranties work if you buy used?

Starting with the manufacturer warranty: it may or may not transfer to the new owner of a vehicle if it’s sold. If you’re buying a used-but-newish car that’s still under warranty, make sure you find out whether that warranty is transferrable. You may need to file some paperwork or pay a small fee to have the warranty transferred to you. However, warranty transfer fees are illegal in Saskatchewan, Quebec, and PEI.1

Extended warranties work basically the same way — they may or may not be transferrable to a new owner. A major difference, though, is that you can buy an extended warranty after you buy a used vehicle, even if the original owner hadn’t done so. So, if you buy a car with an expired manufacturer warranty, you may still be able to add an extended warranty. Keep in mind that warranties get more and more expensive as vehicles get older.

Warranty vs. insurance

One last thing regarding car warranties: they aren’t the same thing as car insurance.

A warranty covers damage that results from manufacturing defects or wear and tear. On the other hand, insurance covers sudden and accidental damage arising from collisions, hailstorms, or other unpredictable events. While some mechanical breakdowns are sudden, they aren’t covered by insurance — they’re an expected result of wear and tear over time. To sum up, warranties and insurance don’t overlap; many drivers have both.

Another important distinction is that car insurance is required by law. You can drive your car without a warranty, but can’t drive without car insurance.

When you buy a new vehicle, it will come with a warranty. It will not come with car insurance. Fortunately, getting car insurance is easy (you can get a quote online from Square One, for example).

Commonly asked questions

How much is an extended warranty on a used car?

The price of an extended warranty for a used car varies greatly depending on the vehicle and the type of warranty coverage you’re looking for. An extended warranty will typically cost somewhere between $1,000 and $4,000.2 You may also find extended warranties on a subscription model, which start around $50 per month.3

Is an extended warranty worth it?

You’ll have to crunch a few numbers to decide whether an extended warranty is worth the cost.

Estimate repair costs over the duration of the warranty, specifically the costs that the warranty would cover. Obviously, that’s hard to do with accuracy. But, you can find maintenance estimates for your car’s model and year, and go from there. Also, consider that the extended warranty would typically kick in as the manufacturer warranty ends. At this point, the vehicle will be a few years old and on the verge of increasing maintenance costs. If you find a reasonably priced extended warranty, you could save quite a bit — potentially.

Of course, some people may consider peace of mind worth something on its own. An extended warranty is a fixed cost, even if you end up paying more for it in the long run than you would repairs. Bonus features like roadside assistance might tip the scales, too.

Are US car warranties valid in Canada?

If you purchase a vehicle in the US and import it into Canada, the manufacturer probably won’t honour the warranty.4 This applies to vehicles imported from other countries as well. If you’re planning to purchase an imported vehicle, make sure you’re clear on the warranty conditions beforehand.

You should be able to find an extended warranty for an imported car, however. Of course, make sure it’s a Canadian extended warranty — any extended warranties purchased in the vehicle’s origin country probably won’t be valid in Canada.


  1. Automobile Protection Association. “Extended Warranty Info.”, Accessed 21 June 2024.
  2. Car Deal Canada. “Are Extended Car Warranties Worth It?”, 25 April 2024,
  3. “Best extended car warranty in 2024.”, Accessed 21 June 2024.
  4. Innovation, Science, and Economic Development Canada. “Warranties.”, Accessed 21 June 2024.

Want to learn more? Visit our Car insurance resource centre for dozens of helpful articles to guide you through the complexities of car insurance. Or, get an online quote in under 5 minutes and find out how affordable personalized car insurance can be.

About the expert: Daniel Mirkovic

A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.


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