Levels of coverage will vary depending on the extended auto warranty provider you are researching. Companies will create catchy names but there are a few basic warranty plans that are offered. First, companies will usually offer some sort of power train warranty. (Stay with me on this one.) Aftermarket auto warranty providers will try to sell you on the fact that your manufacturer power train warranty is "very limited" but then they offer their own "power train warranty" which is most definitely "very limited" as well. Stay away from "power train" type warranties, they are usually very limited, and still quite costly. These warranties are the profit makers for these companies.

     The next type of coverage will probably be more comprehensive and offered in a few different contracts and make up the remaining offered contracts. Remember do not fall for a warranty contract that is played off as being "bumper to bumper". Warranty companies will try to sell the customer on the "perks" that come with the contract. They will not emphasize on what is or is not covered but rather on their towing, rental car, travel insurance, etc. These are the things you should be least concerned with when shopping for your warranty. Make sure to review the actual contract, not the literature advertising the product. The catchy names that warranty companies use will be used along side catchy phrases, one example being "unlimited repairs". While it is absolutely true that you are entitled to "unlimited repairs", you need to understand that this means you can put in an unlimited amount of claims, but not receive an unlimited amount of money. Most contracts outline a limit of liability which means that at a certain predetermined dollar amount the companies coverage liability ends. You can have one repair or one hundred repairs, but you cannot exceed the limit of liability. We will get more in depth on limits of liability later on.

     In recent years, cars have become so advanced that warranty companies are offering coverage for items such as DVD players and navigation systems. Obviously, you pay a premium for a policy that covers such items. Be careful not to purchase a warranty contract that covers these items if you car is not equipped with them. You may be better off with a lower level coverage depending on how advanced your vehicle happens to be.

     The prices of coverage will increase as the coverage does, and usually the prices follow a pattern. The price of coverage will usually become more cost effective as you increase the time of the term. Each additional year on a warranty contract costs less to add. You should always opt for the most cost effective policy, the longest term offered. You need to research the specific companies prior to purchasing. Beware of unlimited mileage contracts, very long terms, etc. If it sounds to good to be true, it probably is.