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When you buy a brand new car, van or motorbike, a manufacturer’s three-year warranty will almost certainly be included in the price. But what happens when the warranty expires? If the cooling system breaks down or the suspension goes, you could be looking at a big bill. You could also end up out of pocket if you buy a second hand vehicle that does not come with a manufacturer’s guarantee.
It’s worth thinking about a car warranty – also known as mechanical breakdown cover - which is a type of insurance that pays the cost of repairs to your vehicle after a mechanical or electrical failure.
You can buy a warranty for both new and second-hand vehicles, or for your current car. Watch out, though, as some insurers do not cover vehicles older than 10 or 12 years. If you car has racked up more than 120,000 miles, you might also be turned away.
Premiums are partly determined by the car’s age, make and model. But some policies offer more generous levels of cover than others – and the more generous the cover, the higher the cost.
Most car warranties cover the vehicle for a set amount of time, or an agreed mileage. So your policy might run for 12 months, or until the vehicle has covered a certain number of miles.
A typical warranty will include failure of the engine, gearbox, transmission system, steering and suspension. But it really is important to check the small print for any exclusions. Most policies exclude normal wear and tear and some insurers refuse to pay out for damage caused by an oil leak.
You should also find out whether the policy covers consequential loss. In other words, would you be able to claim if the failure of a non-insured part damaged an insured component. Check, too, whether you would have to contribute to the cost if your car is repaired and the new part is better than the old one. It’s known as betterment and can trip up the unwary driver.
Warranties come with various restrictions and you can invalidate the policy if you fail to abide by the terms and conditions. Most firms, for example, insist that the vehicle is regularly serviced and has no modifications. Repairs must normally be carried out at an authorised garage and there is usually a limit on the hourly labour rate.
The standard warranty excess is about £50, though you can often pay a higher premium to lower or waive the excess.
It’s also worth bearing in mind that you cannot normally buy a warranty unless the vehicle has an up-to-date MOT certificate. In addition, you will usually have to provide proof that it has been serviced in the last 12 months at a VAT-registered garage.