Deductibles for Extended Car Warranties

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To be clear, deductibles are the out-of-pocket expenses paid towards a vehicle repair and claim towards an extended car warranty agreement. The amount of the deductible is agreed upon ahead of time and would affect the cost of the warranty, similar to insurance contracts.

How Deductible Works

In a scenario where you have a $500 dollar repair that is covered under the extended warranty agreement and your deductible is $300 dollars. You will be required to pay $300 dollars towards the $500 dollar bill and the warranty company will put in the other $200 required to close out the balance.

Low vs High Deductible

With a lower deductible, you would expect to pay more upfront for your extended warranty contry. While higher deductibles can be expensive when there are many smaller issues, you may save in the long run because your extended warranty is a lot cheaper.

It is important to consider your scenario and your ability to pay. Typically most people will go with a medium to high deductible, as the most important coverage are the big ticket repairs in the thousands of dollars, and not the smaller parts. The primary point of the extended warranty is that you are not put in a position where you cannot pay for the repair, not to cover maintenance costs from the use of the vehicle.

Understanding the Deductible

In the extended warranty industry, you need to be consider the fine print and the agreement on what the deductible would cover. Is it one part? One repair? One visit? These questions are extremely important in understanding how much money you need to pay upfront for a car repair claim down the road. We have heard some complaints where car owners had to pay their deductible multiple times due to the extended warranty company claiming that they were separate failures or that multiple visits triggers multiple costs and therefore your deductible multiple times as well.

While these worse case scenarios do not happen often, it is always better to get a good understanding of the deductible portion of the extended warranty agreement. Additionally considerations need to be made for the size of the deductible, as the larger the deductible the less of a benefit you will get from your extended warranty. Small repairs will typically get topped up by the warranty claim, with the car owner footing the majority of the bill.

Deductibles are a fact of life in the insurance and warranty world. The presence of deductibles are not necessarily a bad thing, as they make the extended warranty rates more reasonably priced.

For additional information about extended warranty, browse our topics below.

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