Difference between auto warranty and auto insurance

Some people don’t know the difference between auto warranty and auto insurance: well, here we are explaining exactly that.

Most people are well aware of what auto insurance is: an insurance contract between you and an insurance company, such contract states that in case of a car accident of which you are responsible, the insurance company will pay for any damages to third parties up to a specified amount of money. So in case you hit another parked or moving car or even a shop window, the insurance company is going to pay for the damage up to the limit stated in the policy. You will have to pay the damage to your own car on your own, unless you have a specific clause in the contract which reads that also the damages to your own vehicle are covered.

An auto warranty contract is a totally different thing, and the two types of coverage must not be confused: an auto warranty contract is another kind of insurance, it covers replacement parts and labour costs; often additional expenses like roadside assistance, forced hotel nights and travel expenses are included in these policies. Note that an auto warranty covers such expenses only in case the parts break down, not if they need to be replaced as a consequence of a car accident.