What You Need to Know About Extended Auto Insurance Coverage – Guest Post

Insurance is essential and mandatory when it comes to owning and driving a vehicle. This is designed to protect you, the driver, your passengers, and any other people who may be involved in any kind of accident.

Extended auto insurance is the additional insurance you can purchase that provides you with more coverage and is designed to cover repairs required once the manufacturer’s coverage has lapsed.

While not as extensive as the “bumper-to-bumper” coverage that comes when you purchase a new car, it does cover the essential car parts. Otherwise, this can be a costly expense without it.

By understanding your options and why extended coverage is beneficial, you can make the right choice when it comes to purchasing insurance.

What is extended auto insurance coverage?

This type of insurance is not mandatory, but rather an elective coverage that you can choose to cover minor repairs. While it does not cover repairs following an accident, it does provide security for faulty or damaged parts.

Extended insurance is also referred to as extended warranties, and there are two main types to be aware of:

• Manufacturer warranties. These come as standard when you purchase a new vehicle (not just new to you, but brand new and never driven before). They cover defects on parts and are usually only valid for a set time or until you reach a certain mileage.

• Third-party warranties. This is offered by the dealership or an insurance company to cover things not done so by the manufacturers. Again, this is for a set amount of time or mileage.

While extended warranties are not for every car buyer, they are beneficial in order to cover the cost of things that you don’t expect. Sudden issues with the power steering or alarm sensors going off in the car are irritating but are usually covered, so the cost of repair to you is minimal to none.

What are the limits of a standard auto insurance policy?

Every insurance policy has limits imposed on it for different things. This means that there is a maximum amount that the insurance company will pay in the event of an accident.

By understanding what these limits are, you can make an informed decision about the type of coverage you want and or need, based on your circumstances.

Liability insurance is mandatory. This comes with every insurance policy. It is designed to make sure that property damage and medical expenses—even expenses related to the other person and their vehicle—are covered.

This coverage is usually capped at around $25,000 for property and another $25,000 for medical expenses.

Uninsured motorists are an issue and may have a knock-on effect on your premiums, but there is coverage for that, again with the same set limits as mentioned above. This type of insurance is designed to cover medical expenses, but may also cover lost wages due to the accident as well.

Separate to the uninsured motorist coverage is the uninsured motorist property damage. While the first covers medical expenses, this covers damage to your vehicle if the other person is at fault and has no insurance. There can be different levels of coverage for this, so it’s best to see what fits into your budget as the higher the coverage, the higher your monthly premiums may be.

Then, we have comprehensive collision coverage. Comprehensive coverage is just that. It covers almost everything that could happen to both people and property, usually with a higher limit, and is sometimes required if you are financing a vehicle.

Collision coverage is limited to any damages that your vehicle receives in the event of a collision. This is not dependent on who is at fault and just looks at fixing your vehicle if possible.

What are the benefits of extended auto insurance coverage?

There are many benefits to having extended insurance coverage on your vehicle. Did you know that this means your vehicle is better maintained, and, therefore, the policy and the vehicle’s worth actually increase over time?

It also guarantees that, in the event of repairs being needed, original parts will be used (not refurbished ones). This also helps to maintain the value of the car.

Several plans can be tailored to your specific needs, so there is no one-plan-fits-all policy. This helps with your budget and provides additional convenience and peace of mind so that if something breaks, you have the help to cover it.

When buying coverage from the dealership, you can take comfort in knowing that the relationship you have built up with them will continue. This means that you can take the vehicle back for any repairs, oil changes or general service, and you are in good hands.

Is extended automobile insurance necessary?

Though this is not mandatory coverage, it does provide for you in the event that you need to replace or repair any car parts.

This coverage also serves as financial stress relief if you are purchasing an “unreliable” brand. This means you can enjoy your vehicle without the added headache if something does go wrong, especially in today’s world where we are all seeing rising costs.

While the best time to purchase coverage is when the vehicle is still under its original warranty, this is not always possible. Extended auto insurance coverage, however, is available to purchase at any time.

To Extend or Not to Extend, That is the Question

Although it is the law to have insurance on your vehicle (not only to protect you and others in the event of a collision), extended coverage is there to help you and your vehicle with routine maintenance and minor repairs.

It can save you a lot of time and hassle if something were to go wrong, such as your power steering failing suddenly, for example. This can be costly as well as annoying.

With the benefit of paying for it now, this type of coverage will save you more money later as it pays for itself when those repairs are needed.

Author

Jessica Coates is a blogger in Toronto. She graduated with honors from the University of British Columbia with a dual degree in Business Administration and Creative Writing. Jessica Coates is a community manager for small businesses across Canada. When not working, she leisurely studies economics, history, law and business solutions.