Breakdown Insurance, Extended Warranty, Gap Insurance, and Roadside Assistance

Car ownership can become extremely interesting, especially when it comes to big repair bills. When shopping for a new car, or even a used car, it is a good idea to take the potential for repairs into consideration. As you shop you might hear a lot of different terms including “manufacturer warranty,” “Extended Warranty”, “Gap Insurance,” and “Breakdown insurance.” Oh, and let’s not forget, “roadside assistance.”  By the time you visit a few dealerships, it is enough to make your head spin. Here are some definitions and ideas about what these terms can mean to you.

Breakdown Insurance

This insurance covers major repairs to your vehicle. It can be paid yearly, biannually or monthly, just like your auto accident insurance. If your transmission goes out, your motor needs replaced, or you need a drivetrain overhaul, this is the insurance for you. The only catch is that your vehicle is only eligible early in its life. You need to sign up for breakdown insurance before your warranty runs out and it only lasts for the first 100,000 miles on your vehicle. The good news is that it comes with a deductible, and any repair over that is covered.

Extended Warranty

If you purchase a new car, it usually comes with a one- or two-year warranty. An extended warranty adds a year or two onto that warranty. The catch? You need to pay for the extended warranty upfront or get it rolled into your purchase price.

Manufacturer Warranty

A warranty that applies to certain parts, including parts that are purchased new and installed in an older car. However, most such warranties are “limited” meaning that certain conditions must be met.

Gap Insurance

This is insurance that is intended to cover all the stuff that your ordinary insurance doesn’t handle. Just as the name implies, it takes care of the “gaps” that aren’t covered. Its conditions will vary. Sometimes it is worthwhile, sometimes not. Read the fine print carefully.

Roadside Assistance

This is the one you want for things like towing, flat tires, rundown battery or small roadside repairs – the kind that will get you to the next outpost of civilization.  Unlike the warranties and the breakdown insurance, this is not limited by the age of your vehicle. With that said, it might become expensive. For example, changing a tire might be free; but replacing it might require the purchase of the tire. One well-known company advertises that it will change out a battery if your battery tests dead, but it doesn’t state whether the battery is extra.

Service Plan

A service plan is just what it sounds like: a plan to keep up with the regular maintenance such as oil changes, brake pads, and some of that routine “wear and tear” stuff. It can include rotating tires and checking all that little stuff that can wear out just from normal day to day operations. A service plan often goes with an extended warranty because failure to keep up with things like oil changes or just keeping enough oil in the engine can void your warranty.

It is possible that when you purchase your car, you might want to look at a combination of all these insurance or warranty options. They might add a month or two to your car insurance payments or force you to dig a little deeper into your pockets for a bigger down payment, but they can all increase your peace of mind. In a time when the peace of mind is harder to gain every day, that can mean a lot to anyone.