Are Extended Vehicle Protection Plans Worth It?

A vehicle is a long-term investment. The Energy Information Administration reports that the average age of in-use, light-duty cars in the U.S. increased to 10.3 years in 2017. We are keeping our cars longer, which means your factory warranty is most likely expired, and your aging car is unprotected from an expensive breakdown. 

Extended vehicle protection plans come at an additional cost to vehicle owners in return for coverage on major vehicle system repairs. Are extended vehicle protection plans worth it? When it comes to time, money, and peace of mind, extended protection plans provide important benefits. 

Keep reading to learn about extended vehicle protection plans that you can afford, so you won’t break the bank to get protection.

What Is an Extended Vehicle Protection Plan?

An extended vehicle protection plan, also known as a vehicle service contract, is similar to an insurance policy, except it covers the costs associated with mechanical breakdowns rather than accidents. 

Unlike a true warranty, a vehicle service contract is not included in the financing of a new car. It comes at an additional price and is only valid once the factory warranty expires.

Woman driving in car

Extended Vehicle Protection Plan Coverage

There are generally two types of extended protection plans: powertrain and exclusionary. Factory warranties will have terms for both, but you normally choose a specific coverage level with extended protection plans.

What are powertrain and exclusionary vehicle protection plans?

  • Powertrain Vehicle Protection Plan—A powertrain protection plan is the most basic and affordable option for vehicle coverage. These vehicle service contracts cover the cost of repairs or replacements on your vehicle’s engine, transmission, and drive axle. Factory powertrain protection plans often last longer than the new vehicle limited protection plan, so an extended powertrain vehicle protection plan won’t be necessary until your vehicle has more mileage or years under its belt.
  • Exclusionary Vehicle Protection Plan this extended vehicle protection plan covers all major vehicle systems. The contract usually lists only the components that are not covered. These coverage plans are more expensive, but they also cover electronic components (wipers, sunroof switches, seat warmers, etc.), steering, suspension, heating, cooling, braking, and more. Factory exclusionary vehicle protection plans do not last as long as powertrain vehicle protection plans, so you will need to replace your plan earlier.

Car dealerships and third-party providers generally offer both types of vehicle protection plans. Sometimes, they also offer “in between” coverage levels that are more comprehensive than powertrain vehiclfe protection plans but still more basic than an exclusionary vehicle protection plan. For example, CARCHEX offers five levels of coverage (Bronze, Silver, Gold, Platinum, and Titanium) that start from basic powertrain coverage and progress to full vehicle coverage.

Protection Plan Exclusions You Should Know

Even if you purchase an exclusionary protection plan, no extended vehicle protection plan covers every single item in your vehicle. There are several exclusions to be aware of before you make a purchase. Your plan will most likely exclude:

  • Damage caused by wear and tear
  • Accidents or recklessness
  • Damage caused by weather
  • Repairs due to lack of maintenance
  • Tires, wiper blades, brake pads, and car battery
  • Cosmetic repairs (paint, seat upholstery) and independent modifications

When you shop for an extended vehicle protection plan, you may come across companies that require a vehicle inspection in order to purchase a plan. CARCHEX does not require a vehicle inspection, which makes plans more accessible to drivers who need them.

Is an Extended Vehicle Protection Plans Worth It?

The average cost of an extended protection plan from the dealership is between $1,000 and $1,500. This may seem like a lot, but consider the price of common repairs. 

A year-long study by RepairPal reported that average car repairs peaked at $492 in one month, which is 11% of the average American household’s monthly pre-tax income. In addition, a timing chain replacement on a vehicle like a Toyota RAV4 can cost more than $1,000 with labor. 

Here are the costs of common vehicle repairs across different car manufacturers:

If you’re a driver who can’t readily afford these costs, an extended protection plan can provide reassurance and save thousands of dollars in repairs in exchange for small, monthly payments. 

Many providers offer payment plans at low monthly installments, so you can budget for surprises with greater peace of mind. You can even pay deductibles as low as $0 for some plans. CARCHEX keeps coverage affordable (as low as a few hundred dollars) by using our buying power to find the most competitive plans for our customers. 

How Extended Protection Plans Benefit Drivers Beyond the Cost of Repairs

There are a multitude of hidden benefits behind extended protection plans. Many of them have nothing to do with alternators or gaskets at all. 

What other perks make extended protection plans worth it?

  • Resale Value—Even if you never use your extended protection plan, having one at all can increase your resale value once you sell your vehicle to a new owner. Most plans are transferable, so the next owner can have the same peace of mind. 
  • Roadside Assistance—Are you prepared in the event of a breakdown? Do you need a rental car while your car is in the shop? Do you need emergency gas delivered to your vehicle? Extended protection plans usually offer roadside assistance benefits, such as rental car reimbursement, towing services and more. 
  • Repair Facility—Don’t know the price of a transmission repair? Worried you’ll be overcharged? Extended protection plan providers deal with the mechanic on your behalf, so you don’t have to negotiate prices or deal with paperwork.
  • New and Used Vehicles—Vehicle service contracts offer coverage for both new and pre-owned vehicles. You’ll get coverage customized to your car’s age, mileage, and model.

Dealership vs. Third-Party Protection Plan Companies

Why choose a third-party protection plan company over your vehicle’s dealership? The answer is flexibility. When you use a third-party protection plan company, you get more options from more protection plan administrators, so prices go down. You’ll also get the flexibility to choose from thousands of repair facilities, rather than being forced to drive all the way to the dealership. Take Lexus extended vehicle protection plans, for example. The dealership only offers three extended vehicle protection plan coverage options with pricing options solely from the dealership. However, CARCHEX offers five coverage levels from competitive plans, and you can choose from 30,000 repair facilities.

Make It Worth It: Get the Most from Your Extended Protection Plan

Don’t lose out on all of the benefits of an extended protection plan. Use your contract to its full potential by following these important guidelines:

  • Take advantage of sample contracts online. These contracts will give you an idea of what is and isn’t covered, so you can ask the right questions before you speak to potential providers.
  • Ask the representative the following questions about your service contract: How long does it last? Are there deductibles, service fees, shipping costs, or reimbursement limits? Are there clauses that deny coverage, and is accidental damage included? Can I get a full or partial refund if I cancel the plan?
  • Adjust the purchase price of your vehicle service contract by raising or lowering your deductible. You can lower your deductible by increasing your (still affordable) monthly payments.
  • Save more on your extended protection plan by purchasing sooner rather than later. The price of a vehicle service contract rises as your car ages and accrues miles. Purchase the extended plan while still under your factory warranty, but don’t use it for repairs while you’re still covered by the manufacturer. You may get a much better price.
  • Consider an extended protection plan for cars over 100,000 miles. Ask about plans that are recommended for vehicles with high mileage. Extended protection plans may cover vehicles up to 120,000 miles, and as Americans drive their cars longer, it’s important to find long lasting coverage.
Couple looking at car warranty contract

How Do You Use an Extended Protection Plan?

When you purchase a vehicle service contract, there are several steps you should take to get the most from your plan. 

  1. Read Your Contract Carefully—Even before you purchase an extended protection plan, you should ask about what items are excluded from coverage. Once you have a contract, read it from beginning to end to determine where and when coverage is accepted. 
  2. Get Routine Maintenance—Mechanics recommend that you get an oil change every 3,000 miles or three months and replace your lights, wiper blades and engine air filter every 6,000 miles or 6 months. Many extended vehicle protection plan contracts require you to prove that you regularly service your vehicle, so that it’s clear when a breakdown is due to a defective part rather than neglect. 
  3. Call Your Claims Department—When it’s time for a repair, call your claims department representative and head to your repair facility. When you purchase a CARCHEX plan, the claims department will speak to the repair facility directly to approve repairs and make a direct payment. All you have to do is pay your deductible, if you have one. 

Third-party extended protection plan companies market insurance-backed plans from trusted administrators who can prove that they have the cash-reserves available to make payments. Therefore, you don’t have to worry about losing your money if the obliger can’t pay for the repair.

CARCHEX Extended Protection Plans Are Worth It

No matter what vehicle you drive, CARCHEX can help you find an extended protection plan that suits your car and your lifestyle. Are extended vehicle protection plans worth it? With CARCHEX, they certainly are. Call (877) 226-7328 to get a free quote or fill out the online form.

While some people refer to them as “extended warranties” CARCHEX protection plans are technically vehicle service contracts that protect your vehicle from mechanical breakdowns. For more information, see this FTC link or learn more here or by reviewing CARCHEX’s website.

CARCHEX markets and sells vehicle service contracts on behalf of third-party vehicle service contract providers, and your vehicle service contract will be between you and the provider. This website site is intended solely for the purpose of providing general information regarding the purchase of vehicle service contracts. Specific contract terms, rates, taxes, fees and other charges are determined upon validation of vehicle information and acceptance by the vehicle service contract provider, for which CARCHEX is not responsible. Vehicle service contracts may not be sold where prohibited by law. is an authorized retailer of CARCHEX and powered by Home Media, LLC. © 2024 CARCHEX. All rights reserved. All other marks are the property of their respective owners.

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