Car Warranty vs Car Insurance: The Difference and Why you Need Them


Extended warranty and car insurance are two terms that always come up when buying a car, new or used. These value additions are often seen as services that cover the same thing. In reality, though, both of these services cover very separate fields and are required for complete protection on road. We detail the exact differences between a car warranty and a car insurance  as well as why you need them for your car, specifically a pre-owned car.


Like every products we use, our cars come with a basic period of warranty, during which the Company ‘guarantees’ (and not ‘insures’) you that their product will be free from any kind of manufacturing defects and should there be any kind of a problem arising during this period from the day the car drives off from the showroom, the company will replace the parts it deems necessary to ensure proper functioning of the car. The terms of the warranties do not cover any kind of malfunction arising out of negligence on the customer’s part and/ or due to normal wear & tear of parts like the tyres, batteries or even engine oils for that matter. In addition, any labor charges that go towards the repair and replacement are also covered under the warranty, unless stated otherwise. Basically, anytime your car malfunctions or breaks down on its own without any fault of your own or in the absence of any external foul play, the warranty has you and your car covered.

The terms of warranties differ from one car manufacturer to the other, but the basic components covered under the warranty (and what’s not) remains more or less the same. Some of the components covered under the warranty are the engines, electrical equipment, brakes, wires and a host of other components that make your car run.

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A warranty, original or extended, will cover the minor costs of repair after a breakdown or component failure

While most companies maintain a standard warranty cover for 2 years from the date of delivery, individual components can have a warranty of their own ranging from anywhere between 6 months to 5 years or more. One company that holds a distinction when it comes to car warranties is Chevrolet, which provides a comprehensive cover of 3 years or 1,00,000 km on its cars. As mentioned earlier, more often than not these companies also have an option to opt for extended periods of warranty cover (although the terms of service might differ from the standard warranty).

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Car insurance works much in the same way as life insurance does. The insurance policy covers against possible financial losses that can be incurred in unpredictable occurrences on the road. The insurance cover includes the car as well as the driver for the car, the insurance takes care of any financial costs caused by collisions, vandalism, thefts, fire damages and acts of nature like earthquakes or floods. In case of road accidents, having a car insurance will cover any hospital bills, or even in the worst case, compensation for the death of someone involved in the accident.

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The Car Insurance will help cover the financial costs of a complete repair after an accident

Car accidents do happen, and it’s nice to have an insurance in place to cover the expenses that would otherwise be sourced from your own pocket.

Unlike warranty, which is offered by the car manufacturer itself, insurance of your vehicle is provided by standalone insurance companies, which have their own terms and conditions regarding how they deal with the claim process. It’s always advised to completely understand what the policy will cover for you and your car and weigh the benefits of these policies before zeroing in on one for your car.


This was a brief look at what the different fields covered by car insurance and warranty. As clearly stated, both of their areas of cover are non-overlapping and one cannot be ignored in favour of the other. These are basic necessities of the motoring world, not options. Legally speaking, as per the latest amendments in the Motor Driving Act of India, it is mandatory for every car being driven on the road to be covered by car insurance

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Why you should get a Warranty for your Used Car

Since it is required by law to drive an insured car, the question comes down to whether a warranty is required, or even necessary, for used cars. The warranties that will cover a pre-owned car will most likely be an extended warranty unless the car is still under the OEM warranty.

In recent times, there are a greater number of pre-owned cars getting certified. This certification usually ascertains the condition of the car at the time of certification. While this ensures that you buy a car that will work as it should but the certifications cannot guarantee that a component may malfunction as it gets closer to the end of its life. At that point, most parts will require replacements which are costly. In addition, getting the parts replaced with genuine parts will not only ensure that the car will work as intended but also help the resale value of the car.

Quite simply, keeping the car under warranty helps reduce the cost of repairs that are caused by parts coming to the end of their operational lives