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Car insurance vs a car warranty

If you're confused, you're not alone. While these terms can sometimes be used interchangeably, they serve very different purposes.

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The difference between car insurance and a car warranty

Both auto insurance and auto warranties provide protection for your vehicle. However, while there are some similarities, car insurance and car warranties are very different in terms of what they cover and require.

Car insurance is legally required in most states and can provide financial protection if you're

  • Involved in an accident
  • Victim of a theft
  • Experience damage due to a natural disaster

A car insurance policy can include several coverages, like

It's important to note, state required coverages are for “liability”. Liability Coverage is what helps pay for damages and/or injuries you cause to others if you're at-fault for an accident. If you have a loan or lease, you may also be required to have coverage that helps protect your vehicle like Collision and Comprehensive. These are sold by insurance companies.

A car warranty helps cover the cost for certain types of repairs due to

  • Vehicle failures
  • Defects
  • Mechanical breakdowns — including parts and labor

Example: Your car breaks down due to a transmission problem. A car warranty or extended warranty can help pay for the repairs. Unlike car insurance, a car warranty isn't required by law.

Simply put, car insurance protects you after an accident whereas an auto warranty only applies to mechanical failures of your vehicle. Some people choose to buy both car insurance and an auto warranty or extended warranty, especially if they have an older vehicle that is no longer covered by the manufacturer's warranty.

Car warranties and extended warranties are typically sold through vehicle manufactures, dealerships, and third-party vendors.

Warranties, insurance, and Emergency Roadside Assistance

In general, there are many reasons people buy a car warranty. Whether it's for peace of mind or Emergency Roadside Assistance, make sure you get what's best for you. The good news is, many insurance companies offer Emergency Roadside Assistance which can be added onto an auto insurance policy for a small fee.

As for insurance, beyond any requirements, it's also important to get the protection you need. At Liberty Mutual we can help you get the coverage you need at a great price. For help figuring out how much you may need, you can check out our coverage calculator.

See how much you could save on car insurance when you only pay for what you need.

You could save up to 12% when you buy customized car insurance online

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Please note: Information presented on this page is intended to be general information about insurance and is not specific to Liberty Mutual policies. Policies and coverages vary by state and insurer. Contact your insurance company to understand specifics regarding your policy and coverages.