Warranty vs. Insurance Whats the Difference?

Although choosing the right car may be perplexing, protecting it and its long-term usefulness needn’t be. Preserve your investment by understanding the difference between warranties and insurance. The one is a guaranty to replace defective components, the other safeguards the value of the car and protects you against financial loss.

Types of Warranties

Vehicle warranties are written guarantees by motor manufacturers and dealers to replace or repair defective vehicle components for a given period of time. Policyholders should carefully read and understand the warranty fine print as the cover provided and specifics vary between the various warranties. Here are the most common types:

Basic Warranty or Manufacturers’ Warranty – Covers specific components of a new car that must be fixed, where necessary, by the dealer’s workshop free of charge. To keep warranties valid, car owners should only service and repair their vehicles at authorised franchises or dealers. Here are examples of components that are typically covered and not covered by basic warranties.





Tyre and wheel wear and tear

Transmission system


Fuel and ignition system

Catalytic converter

Cooling system



Damage to bodywork





Non-friction clutch

Audio equipment

Brake system parts

Satellite navigation system

Dealership warranty - These written guarantees are sold by dealerships and used by vehicle owners to ensure their car’s safety, reliability, and roadworthiness, but not wear and tear. They contain stipulations which need to be followed to safeguard cover, for example, required procedures should a component break down. 

Powertrain warranty - Guarantees the mechanical components of your car that produce kinetic energy, such as, transmission, drive shafts, axle and clutch, but not the engine.

Rust and corrosion – Formal assurance that holes in your car’s metal resulting from rust will be repaired.

Emissions warranty –Covers your car for emission problems incurred over a specified number of years or distance. 

Extended warranty or aftermarket warranty - Manufacturers’ warranties only last a stipulated number of years making it important to take out extended warranties. However, these often cover fewer components than the original warranty.

Read more: How Car Insurance Works

Warranty vs. Service & Maintenance Plans

If you’re confused by the difference in warranty cover compared to service and maintenance plans: · Warranties cover inherent faults, defects, and the breakage of specific vehicle parts. · Service plans pay for routine servicing costs including filters, brake fluid, oil, spark plugs, and coolant. · Maintenance plans settle costs associated with component wear-and-tear, for example, the clutch, exhaust, and wiper blades.  

Common Types of Car Insurance

In return for a monthly premium, car insurance safeguards your vehicle’s value and protects you against vehicle-related financial loss. The most common types of cover for damages are:

  • Collision cover for vehicle-related expenses
  • Liability insurance pays for people, property and court costs
  • Comprehensive insurance covers theft, fire, vandalism and extreme weather conditions
  • Medical insurance compensates for injuries sustained in a car accident

Insured or underinsured cover pays for expenses caused by other, uninsured drivers in an accident

How Reasons for Cancelling Car Insurance and Warranties Differ

Insurers have the right to cancel a warranty or insurance if vehicle owners do not adhere to stipulations and conditions. To prevent cancellation or claim rejections:

  • Service your car as stipulated – Although agrace period may be allowed, it’s usually not for long periods or for many more kilometres than agreed.
  • Have your car repaired by registered dealerships – Your warranty can be voided even if you only change your oil yourself. Keep all service records and receipts as proof of proper maintenance.
  • Do not abuse misuse or neglect your car – Only use your car for the purpose for which it was designed, for example, sedans are for tar roads, not dirt roads. Maintain it regularly.
  • Research before upgrading – Researchaftermarketupgrades carefully before installing them as they can cause your warranty to become void.

To prevent car insurance cancellation and claim rejections:

  • Pay your premiums timeously.
  • Disclose vehicle and driver details factually as insurance policies only cover the named driver (or drivers) and specified vehicles in event of an accident.
  • Disclose accurately your name, age, insurance, driving, credit, and health history.
  • Don’t drive recklessly especially if your policy includes a “failure to take care” clause as these insurance policies won’t cover you if you were speeding or disobeying a road sign.
  • Secure your vehicle as required as many insurers state that you must take adequate security precautions concerning your vehicle including parking your car in a garage or installing an alarm.

Read more: 3 Things You Should Know About Car Insurance

As there are numerous ways to protect your car, such as vehicle insurance or component cover, contact your nearest Auto Pedigree dealer for all the various products and services we offer.

Disclaimer: This information is for educational, or entertainment purposes only. It must not be construed as advice, legal, financial, or otherwise. We do not make any warranties about the completeness, reliability, and accuracy of this information.