While vehicle prices keep going up, along with the complexity of repairs and the costs of owning them, extended warranties have become an increasingly common part of the car-buying decision in the United States. Whether it is a new vehicle, a used car, or certified pre-owned, buyers are trying to find ways to control unexpected repair costs and additional peace of mind beyond the standard warranty period set by the manufacturer.
According to Coherent Market Insights, the growing adoption of vehicle service contracts is a key contributor to the overall growth of the extended warranty industry. Rising repair costs, longer vehicle ownership cycles, and increasing electronic content in modern vehicles further drive the market growth.
Read the full market analysis here:
Extended Warranty Market – Coherent Market Insights
Knowing what a typical auto extended warranty includes, and how the coverage varies for new, used, and certified pre-owned vehicles can help purchasers select the right protection plan.
What Does an Auto Extended Warranty Typically Cover?
An auto extended warranty, often called a vehicle service contract, pays for repairs or replacements of certain mechanical and electrical elements after the factory warranty expires. Coverage varies based on the provider and plan tier, but includes:
- Engine components (cylinder block, pistons, crankshaft)
- Transmission and drivetrain systems
- Electrical systems, including sensors and control modules
- Steering and suspension components
- Air conditioning and heating systems
- Fuel system components
Most of the car insurance policies cover additional services like roadside assistance, towing, car rental reimbursement, and trip interruption. The higher-end policies may provide “bumper-to-bumper” protection, while limited policies cover the primary power train parts.
Today, many companies offering extended auto warranties have explicitly defined both the parts and services covered in their protection plans, in addition to additional services for customer convenience and protection. For example, in September 2025, in Endurance Warranty’s latest offerings of extended auto warranties, the vital parts covered include an engine, transmission, and powertrain, coupled with vital systems such as electrical systems, and even air and heater systems, and fuel systems, in addition to the basic coverage of repairs. Endurance Warranty’s plans further include additional vital services such as roadside assistance, towing, rental car, and trip interruption.
(Source: Endurance Warranty Services, LLC.)
Coverage for New Vehicles
Extended warranties for a brand-new automobile are normally purchased to extend the coverage beyond the manufacturer's warranty. This is for a period of three to five years. They are generally purchased to safeguard the owner as the car matures in age and the possibilities of requiring repairs rise. This may be mechanical or electronic.
Extended warranties for new vehicles usually cover everything, from advanced electronics to infotainment systems and driver-assistance technologies. As cars have progressively started depending on software-driven and sensor-based systems, even small component failures tend to result in exorbitant repair costs. Therefore, for many buyers, extended coverage presents a key opportunity to lock in predictable ownership costs and minimize long-term financial exposure.
In October 2025, Kia India extended its warranty coverage up to seven years for new vehicle buyers. The local example serves a broader global move of longer-term coverage for new vehicles to reinforce reliability, customer confidence, and long-term cost protection across core vehicle systems.
(Source: VOLKLUB)
Coverage for Certified Pre-Owned (CPO) Vehicles
"Certified pre-owned" vehicles lie in the middle ground between the two. "CPO vehicles" always come with an extended factory warranty on all essential components and the possibility of continued warranty coverage, as well as other benefits like the "roadside assistance" and "rental car benefits."
Extended CPO warranties are considered to be more extensive than typical warranties sold to used vehicle owners, owing to an assessment process of the vehicle and its reduced risk profile. Such warranties are of interest to buyers who want reliability without incurring the high costs of purchasing a brand-new vehicle.
For instance, the Certified Pre-Owned (CPO) program of BMW comes with protection that commences when the initial manufacturer’s warranty expires, and it includes an additional one-year, unlimited mileage warranty on primary parts like the engine, transmission, and electrical components, in addition to roadside assistance, thus showing the level of protection offered in the OEM-approved CPO programs.
(Source: BMW)
What’s Usually Not Covered?
Despite their benefits, auto extended warranties do not cover everything. Common exclusions include:
- Routine maintenance (oil changes, brake pads, tires)
- Wear-and-tear items
- Cosmetic damage
- Damage from accidents, misuse, or lack of maintenance
Understanding exclusions is critical to setting realistic expectations and avoiding disputes during claims.
Why Auto Extended Warranties Matter More Today
Increased complexity in automobiles and growing car repair costs are causing extended warranties to move from a supplementary sales product to a valuable investment mechanism. As highlighted in Coherent Market Insights’ analysis of the extended warranty market, service contracts are increasingly viewed as a way to protect long-term vehicle value and stabilize ownership costs across new, used, and CPO segments.
For buyers navigating today’s auto market, knowing what’s included—and choosing the right coverage—can make a significant difference in both cost control and peace of mind.
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