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Types of Vehicle Service Contracts

Created on 7/27/2023

holding contract

Like all "insurance products", purchasing a Vehicle Service Contract offers you the comfort of knowing you and your family have something to fall back on in the event of a loss. Vehicle Service Contracts help safeguard every part and component of your vehicle, ensuring you never have to worry about the cost of unexpected repairs. That said, not all warranties are created equal.

The goal of this article is to empower you to make an informed decision about the protection you are purchasing on your vehicle by explaining the two main types of Vehicle Service Contracts. So, without further adieu, here are the two main types of coverage included in Vehicle Service Contracts and our recommendation for which one is best.

Setting the Scene:

Let's say you are shopping for a Vehicle Service Contract - commonly referred to as an extended auto warranty. You notice Company A is $30 cheaper than Company B, but Company A is offering PowerTrain coverage, while Company B is offering Exclusionary coverage. Which one do you go with?

PowerTrain Coverage: Less Comprehensive - Less Expensive

PowerTrain coverage only covers the main powertrain components in your vehicle. For gas powered vehicles, this includes the engine, transmission, drive axle, and turbocharger. For electric vehicles, coverage typically applies to major mechanical components like the electric motor and transmission. We recommend double-checking your manufacturer's warranty as electric vehicle manufacturers are still developing and changing their warranties. 

The major downside of PowerTrain is that car owners are at risk of specific parts not being covered. With the complexity of modern vehicles, multiple parts and components are typically required to be repaired or replaced in the event of a mechanical breakdown. PowerTrain coverage means the contract owner has a higher risk of an out-of-pocket expense. With 43% of Americans driven into debt due to car trouble at one point in their life (LendingTree), we know these parts and components may not be affordable for most Americans. If you are looking for the ultimate peace of mind protection plan, PowerTrain coverage is not it. 

Exclusionary Coverage: Most Comprehensive - More Expensive

Exclusionary Coverage is often referred to as "bumper to bumper" protection, as it safeguards every part and component of your vehicle, unless specifically stated under "Exclusions". If you are looking for complete peace of mind that unexpected auto repairs are covered, "Exclusionary" coverage is the best option for you. To view a complete list of what is excluded, visit CarmaCare's Coverage here.

Needless to say, you should always consider what your main priority is. You might ask yourself, would you rather a plan that ensures you are covered for any mechanical issue with your vehicle? Or are you willing to take the chance that your monthly payment may not equate to a full payout at the mechanic when you need it most?