Vehicle InsuranceWarranty

Car Warranty vs Car Insurance – Which is Better?

Did you know that both car warranty and car insurance are equally important? When you purchase a car, you get both – a warranty paper and an insurance certificate. Whether you buy a new car or a used one, both of these are required for the total protection of the car.

In this blog, we will talk about:

  • What is the difference between warranty & insurance?
  • Types of car warranty and car insurance
  • What is usually covered in a car warranty and insurance?
  • What is not covered in car warranty and insurance?
  • Car warranty vs insurance: Which one should you buy?

Car warranty vs insurance: What is it?

A car warranty is given by the manufacturer from whom you decide to purchase the car. Through this warranty, the manufacturer guarantees to replace or repair your vehicle in case of any unforeseen damages. Moreover, car warranty packages are designed not only to cover the financial cost associated with accidents, but also for the vehicle parts which require regular maintenance.

Car Warranty vs Car Insurance

Car Insurance, on the other hand, is given by the insurance company. It is basically an agreement between the vehicle owner and the insurance company that gives you protection against any accident or theft. It is basically compensation that is paid to the victim by an insurer.

Types of car warranty and car insurance

Check here the types of car warranty and car insurance here:

What are the types of warranty?

Now as per your requirements, you can easily choose the type of car warranty. It is further divided into two broad categories:

  1. Extended Warranty:

An extended warranty comes into play when the new warranty period expires. This type of warranty is optional. However, if you opt for it, then it will make sure that you are not left in the lurch to search for financial help to replace the faulty vehicle parts. Furthermore, there are two types of extended auto warranty packages in the market.

  • Engine Warranty: The engine warranty is responsible for the maintenance and repair cost of an engine part. This package covers engine components like piston & rings, oil pump, manual gearbox/automatic gearbox, and crankshaft.
  • Comprehensive Warranty: This type of warranty covers a wide range of vehicle components like the engine, gearbox, steering, fuel system, diesel injection system, braking system, air conditioning, and electrical system.

2. New Warranty:

A new warranty is basically a manufacturer’s promise to the vehicle owner to pay for the replacement parts or covered repairs during the specified warranty period. This type of warranty is usually included in the initial cost of the vehicle. Just like an extended warranty, a new warranty also comes in two types of packages – Engine warranty package and Comprehensive warranty package

What are the different car insurances?

Are you confused which car insurance you should purchase? Then here we have listed the five types of car insurance:

  1. Third-party liability coverage: This type of insurance covers the cost of repairs of the damaged vehicle of the third party, death of the third party due to accident, and cost of treatment of the third party.
  2. Own damage coverage: This car insurance policy covers the cost of repairs to your car that has been damaged.
  3. Personal Accident Cover: This is going to cover the medical expenses that arise in case you meet with an accident.
  4. Zero depreciation insurance policy: This policy is offered as an add-on to the vehicle insurance policies in the country. Here if your vehicle is damaged and you need to replace the parts then the insurer will be considering the depreciated value of the parts for the claim settlement.
  5. Comprehensive car insurance policy: This type of insurance coverage offers the highest level of protection. Having said that, it covers the third-party liabilities, non-collision damages, and personal accident cover.

What is usually covered in a car warranty and insurance?

A car warranty covers the mechanical and electrical failure that happens to the new vehicle within a specified period. It also covers the faulty parts and gets them replaced.

Car insurance, on the other hand, covers damages to the insured car, vehicle theft, fire/explosion, accidental damages that are beyond repair, and third-party injury or death or damages to their property. In this case, you will have to purchase a personal accident cover separately.

What is not covered in car warranty and insurance?

A car warranty does not cover third-party liabilities, accidental damages to the insured vehicle, damage to the vehicle beyond repair, regular wear & tear, natural or man-made calamities, and fire/explosion. It also does not come with an option of personal accident cover.

Car insurance does not cover regular wear & tear, mechanical or electrical failure, and natural or man-made calamities. It further does not cover or pay for defective parts.

Car warranty vs insurance: Which one should you buy?

Although car warranty and car insurance both provide financial protection against unforeseen liabilities. However, they are quite different from each other. A car warranty and car insurance both are important for a vehicle owner as they provide protection for different types of liabilities. While a car warranty provides financial protection against faulty parts, car insurance provides financial protection against accidental damages. In order to be on the safer side, it is wise to have both. This way you will also be at peace knowing that you are financially protected against damages to your vehicle along with repairs of faulty parts.


Confused about where to buy a car warranty and insurance? Worry no more! Droom is a one-stop platform that brings an extensive range of car warranty and insurance packages tailored to fit the requirements of the vehicle owners. Having said that, you can easily avail of the top benefits with these PAN India services. Furthermore, Droom offers a sophisticated web interface that makes it easy for users to find the best warranty and insurance packages as per their requirements.

Droom is an automobile e-commerce platform offering a 21st-century automotive buying experience online with its four value pillars including trust, selection, low price, and convenience second to none. It offers 250k+ vehicles online in 1,100 cities — both used and new. Droom deals in buying and selling cars, 2-wheelers, and other vehicles too. It is an AI and data science-driven platform designed with the best ecosystem tools. Here, we have a team of auto-experts and auto enthusiasts who are dedicated to covering every sphere of the auto industry by simplifying the procedure of buying and selling with Unified Droom Experience. To know more, click here.

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