Extended car warranty guide 2025

All new cars come with a manufacturer’s warranty, which is designed to reassure buyers that they’re choosing a dependable model. The warranties given to new cars can offer peace of mind for anything from three years to a decade. However, if you plan to keep your car for longer than that or you’re buying a used car that’s no longer covered by a manufacturer’s warranty, you could always get the same reassurance by taking out an extended warranty.

No matter whether it's provided by the manufacturer or a third-party company, a car warranty is an insurance policy that’s designed to cover the cost of repairing or replacing faulty components. However, the different types of warranty you can buy can affect what components are covered and the service you can expect.

Here, we share the different types of extended warranty available and what you should consider before you sign up.

What are the different types of extended warranty?

There are three main types of extended car warranty – sometimes referred to as mechanical breakdown insurance. They are:

Manufacturer’s extended warranty – provided by the company that made your car. Repairs are conducted by mechanics trained by the manufacturer and use genuine parts.
Used car warranty – offered by independent used car dealerships, these warranties vary in length and cost. Most warranties provided by used car dealers are run through a third-party company, so check what’s covered and whether you could get a better deal elsewhere before you sign up.
Independent extended warranty – cover from a third-party company. Traditionally, independent warranties are cheaper than the cover manufacturers provide and are often customisable – meaning you choose factors such as a claim limit and whether wear and tear parts are covered.

What do extended warranties cover?

Whichever type of warranty you choose, the foremost requirement is that it should protect you against the unexpected failure of important components and systems on your car, such as the engine, gearbox, electrics, steering and suspension. Items that stop working due to wear and tear can also be covered, as we’ll explain later, but it’s the expensive major components that you need to worry about first. 

All extended warranties should tell you which items they cover, as well as stating any that are excluded. If that’s unclear, or the policy’s terms and conditions aren’t easily accessible, our advice is to steer clear of that product. 

Many warranties sold by independent companies will allow you to choose the level of cover you require and the items you want covered. So, if you want insurance against the braking system or infotainment system failing, for example, you can specify this. The cost of the warranty will generally depend on the car’s age, the make and model and the mileage you typically cover each year.

What should I look out for? 

The range of warranty products available is wide, and you need to make sure that you’re comparing like for like, as well as that the products you’re considering will be suitable. There are three key phrases that you need to understand and watch out for in your extended warranty contract: ‘betterment’, ‘consequential failure’ and ‘wear and tear’. 

Betterment means that if your car requires a new part to get it up and running again, some warranty providers will send you a bill, because the new part is better than the original one and, as such, has increased the value of the car. If that part is a new engine or gearbox, it could leave you facing a bill for thousands of pounds. Make sure you understand the warranty provider’s position on betterment before you sign anything. 

A consequential failure is when a part that is covered by your warranty fails and also causes the failure of another part that isn’t covered. Some providers will make you pay for repairing the parts not explicitly covered by the warranty. 

As for wear and tear, no warranty provider can cover all consumables – even the more comprehensive ones don’t usually cover things like batteries, brake pads and clutch plates – but we’d strongly recommend that you choose a policy that includes cover for various other items that are likely to wear out or fail over time. Make sure you understand what level of wear and tear cover it offers up front. 

Some policies stipulate that you must have your car inspected prior to wear and tear cover being offered. In this instance, you’re likely to have to pay for any necessary repairs before the policy starts. If you don’t, you either won’t be able to take out wear and tear cover, or it might be deferred for a period of time, so the insurer isn’t liable to pay for parts that are already at or close to the end of their working life when the policy starts. 

Other things to consider

Like manufacturers’ warranties, extended warranties will only cover cars up to a specified age and mileage, and if you exceed the stated mileage, you will invalidate your warranty. 

It’s also important to find out whether there’s a cap on the amount of money the policy will pay out for a single failed item; this could be as low as £1000 under the cheapest level of cover. 

When it comes to labour costs, you need to check that they’re included and if there’s a maximum hourly rate. Some cheaper policies will only pay out for work that’s charged at a maximum of £35 an hour – far less than the rates charged by many service departments. 

Unlike manufacturer-provided new car warranties, which can’t tie you in to main dealer servicing, extended warranties – both aftermarket and manufacturer-supplied ones – can legally stipulate that the car must be serviced by a franchised dealership or one of the provider’s partner garages. If you want to pick the garage yourself, don’t take out cover that restricts your choice. 

Most extended warranties will require you to have your car serviced within 30 days of the stipulated date, and you’ll need to stick to this in order to ensure that your cover remains valid. Book your car in for servicing as close as possible to the specified date, and be sure to speak to the warranty provider if you think you’re going to miss it. 

It might be worth opting to include a small excess fee with your premium, because this could save you a significant amount of money.

Where can I buy an extended warranty?

When buying a used car, don’t simply buy the warranty that’s offered by the dealer without considering other options. Instead, shop around on comparison websites. There are numerous providers out there and some great deals to be had. 

Whichever warranty you choose, we’d recommend going for one from a provider that’s signed up to The Motor Ombudsman’s Vehicle Warranty Products Code. This means you’ll be getting a warranty that is backed up by Trading Standards, plus you can benefit from The Motor Ombudsman’s help should something go wrong. 

Stand-alone warranty providers often offer cheaper policies than those from car makers, but the cover might not be as comprehensive and they might not cover betterment or consequential failure items. That said, some aftermarket providers also offer different tiers of cover, allowing you to choose what’s included. Just remember to do your research up front to ensure the policy you choose covers everything you expect it to. 

Click here to get a quote on an RAC warranty, thanks to What Car? partner ALA >>

What do I do if something goes wrong?

If you have a complaint, write to the warranty provider, stating the relevant facts. If your complaint isn’t dealt with satisfactorily and the warranty provider subscribes to the Vehicle Warranty Products Code, you should lodge a formal complaint with the The Motor Ombudsman. 

If the warranty you’ve chosen isn’t backed by the code, you should approach the Financial Ombudsman Service, which handles complaints relating to insurance products. 

Am I actually better off without a warranty?

You don’t have to take out an extended warranty when you buy a car, of course; your decision on whether to do so will depend on how risk-averse you are, how much disposable income you have to pay for any repairs yourself, and how reliable your car is. 

The most recent What Car? survey of the most reliable cars showed that 28% of cars aged between six and 20 years old suffered a problem and that 16% of the issues were fixed for free by franchised dealerships, despite the fact that many of them were out of their new car warranty period. And there’s a good chance that you won’t need the cover of an extended warranty if you buy one of the more reliable makes and models. 

To highlight the differences in costs to fix issues, we’ve used our survey data to outline the average annual repair costs for four of our favourite used cars, all first registered in 2020.

For example, 14% of current-generation BMW 3 Series owners had issues with their car, according to our data; however, 79% of the cars with faults were covered by the manufacturer – with 7% paying less than £50 and 8% paying over £1500. For peace of mind, a 12-month extended warranty for a BMW 330e ranges from £243 to £2246.

As for the latest-generation Honda Jazz, only 12% had a problem, and of those, all were fixed under warranty. The cost of a 12-month extended warranty for a Jazz made in 2020 spans from £178 to £778.

Out of the 36% of Skoda Octavia owners who encountered an issue with their car, 97% of the faults were fixed for free. All owners who did have to pay to fix faults were charged between £201 and £500.

Meanwhile, although a quarter of Volkswagen ID 3 owners who took part in our survey had an issue with their car, 80% of faults were fixed under the company’s warranty. 8% of owners who had to pay for repairs were charged between £201 and £300, whereas 4% were charged more than £1500.

How extended warranty providers compare on price

We’ve compared the cost of an extended warranty for four used cars that we love, bringing together cover provided by the car maker and from five independent providers. We’ve gathered quotes for the most comprehensive cover available from each source, for cars first registered in 2020 that have covered 50,000 miles. 

The prices are for 12 months’ cover, paid in one lump sum, which feature no excess charges and a claim limit of at least £5000 unless stated otherwise.

The levels of cover do vary, so we’d advise you to check out exactly what’s included in any extended warranty policy before you buy it.

* £60 hourly labour rate
** £100 voluntary contribution
*** £300 excess fee
**** £50 hourly labour rate

For all the latest reviews, advice and new car deals, sign up to the What Car? newsletter here

Read more: Your legal rights if something goes wrong with your car >>