Many Indian consumers find it challenging to distinguish between auto insurance, auto warranties, and auto repair packages when buying a car. There are numerous false beliefs, such as the idea that service packages cover the same territory as warranties or that having auto insurance negates the need for a warranty. Owners may be subject to unanticipated repair expenses and interruptions in their driving experience as a result of this uncertainty.
In this piece, Sujeet Nair, CEO and Founder of Edel Assurance, dispels three common myths and highlights the distinct and essential roles of warranties, insurance, and service plans in providing comprehensive protection.
Myth 1: Car warranty and insurance are the same
The idea that if insurance is in operation, a car warranty is not necessary is among the most common misunderstandings. A lot of car owners believe that since insurance covers damage to their car, it will also cover inside issues like electrical or mechanical issues. This, however, is not at all the case.
● Only in the case of an external incident, such an accident, collision, or theft, does auto insurance become essential. For damages brought on by these occurrences, it serves as a financial safety net.
● On the other hand, auto warranties are not influenced by collisions. Even in the absence of an accident or external damage, they cover internal component malfunctions including engine problems, electrical difficulties, or air conditioning breakdowns.
Example: For instance, if you’re on a long family trip, and suddenly the air conditioner stops working. Insurance won’t help here, since it’s not an accident-related issue. However, an active warranty will cover the repair, ensuring you don’t have to pay out of pocket.
Myth 2: A warranty is unnecessary if you have insurance
● Another common misunderstanding is that having auto insurance does not negate the need for a warranty. In actuality, warranties and insurance work in tandem to provide various forms of coverage.
● Only external dangers, such as theft or accidents, are covered by insurance. Your insurance won’t pay if the cause is internal, such as a gearbox failure.
● A warranty guarantees that problems brought on by electrical or mechanical failures be resolved without attributing them to other circumstances.
When combined, insurance and warranties offer complete protection, shielding against both internal and external threats. Since neither can cover every situation on its own, luxury car owners may rest well knowing they have both.
Myth 3: Service packages and warranties are the same
Many owners mistakenly believe that regular maintenance contracts would cover part repairs, confusing service packages with warranties. The expense of fixing or replacing malfunctioning parts is not covered by service packages, which are restricted to standard maintenance duties.
Service packages and warranties differ in the following ways:
Routine maintenance, including tyre rotations, inspections, and oil changes, is covered by service packages. Although they don’t cover catastrophic repairs or part failures, they guarantee that your car remains in good condition.
Warranties protect electrical and mechanical parts against malfunctions or failures, which ensures that replacements and repairs are done at no extra expense.
Simply put, warranties shield you from unforeseen repair expenses, while service packages guarantee your car is kept in good condition.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.