The Truth About Aftermarket Extended Car Warranties
Why You Should Avoid Buying an Aftermarket Extended Car Warranty and Stick with an OE Warranty
I’ve seen it all when it comes to extended car warranties. I’ve heard the stories of countless customers who got burned by aftermarket warranty providers who promised peace of mind but delivered nothing but frustration. If you’re considering purchasing an extended car warranty, let me be blunt: if you’re buying a new car and have a choice between an Original Equipment (OE) factory warranty or an aftermarket warranty, avoid the aftermarket warranty at all costs. Here’s why:
1) Aftermarket Extended Car Warranties Are Riddled with Exclusions
One of the biggest issues with aftermarket extended car warranties is their long list of exclusions. These companies are in the business of making money, and they do that by limiting what they cover. Sure, they’ll tell you they cover major repairs, but once you read the fine print, you’ll realize how many loopholes they’ve left themselves.
For example, your engine fails due to an oil pump issue. If the warranty provider determines that you missed one oil change—even if it wasn’t relevant to the failure—they can deny your claim. OE warranties, on the other hand, come with far fewer restrictions. If your vehicle is maintained per the manufacturer’s guidelines, they will likely stand behind their product.
The other part of the exclusion game is where the aftermarket extended car warranty company weasel out of coverage by claiming they cover the powertrain, but then find a failed part that isn’t covered in the list of covered components. Here’s an example.
A car comes in with a cracked flywheel. The flywheel is part of the engine’s starting mechanism, and it transmits power through the transmission. To replace a cracked flywheel, you have to remove the transmission, and in some FWD vehicles, the engine and transmission must be removed as a unit. So, it’s part of the powertrain. But I’ve seen aftermarket warranty companies cover the powertrain in one section in the “COVERED” portion of the warranty but exclude the flywheel in the “EXCLUSIONS” section.
2) The Definitions Game
A failure is a failure. Right? Wrong. Aftermarket companies play games with their definitions of failure. For example, the weasel companies will only cover a failed part if it failed due to a defect. Defective parts usually fail within the factory warranty period. If they fail at 80,000 miles, it’s usually due to wear and tear. However, weasel warranties exclude coverage for wear and tear. OE car warranties, on the other hand, explicitly cover “wear and tear” as long as you’ve performed the recommended maintenance on the vehicle.
3) The Prevailing Labor Wage Game
In cases where an aftermarket warranty does cover the warranty, they often refuse to cover the estimated labor from your shop. They’ll claim that your shop’s hourly labor rate exceeds the “prevailing hourly rate” in your area. Your shop disagrees.
That leaves you with the job of calling a sampling of shops in your area to find the prevailing hourly labor charges so that you can fight with the warranty company. That’s your job, not the shop’s.
4) The Flat Rate Hours Game
All shops quote a repair based on a published flat rate labor guide. Several companies publish these guides, like Alldata, Mitchel On Demand, Chilton’s, and Motor. So, your shop provides an estimate to your aftermarket warranty company based on a well-known flat rate guide publisher. However, the warranty company uses a different flat rate guide and says the job should take 3 hours less than your shop’s quote. The shop refuses to budge, and so does the warranty company. Guess who pays the 3-hour difference? You.
5) Low-Quality Repairs from Unauthorized Shops
Another massive drawback of aftermarket extended car warranties is that they often dictate where you can have repairs performed. Many of these providers push customers toward lower-cost repair shops to save themselves money, which can lead to poor workmanship and subpar parts being used in your vehicle. If you own a high-end or performance vehicle, this is especially problematic because aftermarket warranties typically won’t cover repairs at specialized or dealership service centers.
With an OE extended car warranty, you’re guaranteed factory-authorized service from certified technicians who use genuine OEM (Original Equipment Manufacturer) parts. That means you get the highest-quality repair possible, preserving your car’s reliability and resale value.
6) The Approval Process
The first thing the shop has to do when you bring your car in is to call your warranty company for approval to perform the diagnostic. I’ve seen instances where the shop was on hold for approval for over an hour. So, right off the bat, your shop is getting screwed by the warranty company.
Once the diagnosis is made, the shop has to call again for approval to complete the repair. If it’s a big repair, the warranty company will insist on sending an inspector to view the damage. That can take days, sometimes more than a week. The shop can’t tie up a bay for that long, so your car gets pushed out onto the lot, partially disassembled, and you and the shop have to cool your heels, waiting for approval.
7) The New/Used Parts Game
So the warranty company is about to approve the repair. Which parts will they cover? New OE parts, aftermarket parts, or used parts from a junkyard. If you have the car repaired at a dealer, they would most likely use OE parts. But many times the warranty company will only approve the use of a cheaper aftermarket part. You pick up the difference in price out of your pocket. Or, they’ll insist on the shop using a used part from a local junkyard. Is that what you expected when you bought the warranty? Read the fine print on that aftermarket car warranty to find out what you’re getting.
8) Denied Claims and Slow Payouts
Then comes the denial. I’ve seen customers get a proper diagnosis and wait a week or more for the inspector to arrive, only to hear they denied the claim. At that point you have no choice but to appeal the denial, which requires escalating the claim to the next higher level. This stalling tactic is designed to make you give up, leaving you stuck with a massive repair bill.
Even if they approve your claim, the process can be painfully slow. OE warranties, however, operate differently. Because the vehicle manufacturer backs them, they process claims efficiently and ensure the work gets done right. Instead of haggling with a third-party company, your repair shop works directly with the automaker’s service network, streamlining the process.
9) They’re An Illusion of Savings
Many people opt for an aftermarket extended car warranty because they believe it will save them money. The truth is, most people never get their money’s worth. The restrictions, claim denials, and exclusions mean you’re often better off setting aside money for unexpected repairs rather than paying into a policy you may never benefit from.
OE warranties, while sometimes more expensive upfront, offer real value because they actually deliver on their promises. You won’t be left wondering if a claim will be denied or if you’ll be forced to fight for coverage.
My Final Thoughts: Choose an OE Extended Car Warranty
If you’re serious about protecting your investment, I recommend buying an OE extended car warranty over an aftermarket one*. The manufacturer’s warranty ensures you get quality repairs, fair claim handling, and long-term vehicle reliability. Don’t fall for the slick marketing tactics of third-party providers—stick with the real deal and enjoy true peace of mind on the road.
I’ve seen firsthand the frustration and financial losses that come with aftermarket warranties. Save yourself the headache and go with the option that works. If an extended car warranty is worth having, it’s worth getting the right one—straight from the manufacturer.
* This assumes you want or need an extended warranty at all. That’s a separate discussion, and there are pros and cons that you should consider. For example, if you’re buying a vehicle that has a reputation for quality and reliability, why do you even need an extended warranty? Isn’t that why you paid more for the vehicle upfront?
Find Tom Lambert at Shadetree Automotive, 757 UT-193, Layton, UT 84041
Find Tom’s other videos on Youtube
Find Sherwood Cooke Jr., at Royalty Auto Service, 319 Charlie Smith Sr. Hwy,
St Marys, GA 31558. Find Sherwood’s other videos on Youtube
©, 2025 Rick Muscoplat
Posted on by Rick Muscoplat