Nobody wants to be landed with a big repair bill if their car breaks down, but car ownership is rarely plain sailing and the occasional hefty invoice is pretty much guaranteed. After all, cars are complex machines and parts are bound to wear out or break from time to time. When this happens the sudden impact on your finances can be painful.

There is a way of evening out your expenditure though, and that’s to buy an aftermarket car warranty which works in the same way as insurance. Indeed, some providers call it a Mechanical Breakdown Insurance (MBI) policy, but it’s not tied to your car insurance and your occupation, age or where you live won’t affect the premiums.

What will dictate how much you pay for your warranty is what type of car you drive, how old it is and how many miles are on the clock. Some cars are more reliable than others while repair costs can vary enormously too.

By the time you take out an aftermarket warranty the model will usually have been on sale for at least three years because this is when the manufacturer’s guarantee will have expired. By this point the most common faults that affect your car will already be known along with the cost of putting things right.

Knowing this information the warranty supplier can work out what you’re likely to cost them and set the premium accordingly. So if you’re buying an ultra-reliable small hatch your premium should be tiny along with the chances of you having to make a costly claim. But if you’re buying a hideously unreliable premium car, expect to pay a hefty warranty premium.

So if you’re buying a Honda Jazz you can expect your warranty premiums to be seriously affordable. According to the Warranty Direct Reliability Index (www.reliabilityindex.com), the Japanese supermini is the most reliable car on the road. At the other end of the scale is the Audi RS6 which is reckoned to be the least dependable car around, according to the Reliability Index. Buy one of these and your wallet will take a serious bashing because of the size of the instalments.

How does it work?

There’s a range of aftermarket warranty providers in the UK and as you’d expect, each of them offers something slightly different. The basics are the same though, in that you should be able to pay a monthly premium on a policy that typically lasts for a year. Some particularly valuable, rare or specialist models won’t be covered but anything at least vaguely mainstream will be fine.

Before signing up check whether your policy is insured or not; if it is, you’ll be covered in the event of the provider going bust. You’ll also have more rights so you can complain to the Financial Ombudsman Service in the event of a dispute, plus you’ll be able to claim from the Financial Services Compensation Scheme if the warranty provider ceases trading.

In the event of a problem with your car you should be able to file a claim with your warranty provider and they should just cough up – although there will probably be an excess to pay (probably around £50), to discourage people from making trivial claims. But this is where things can start to go wrong. You might find that certain costs are capped, such as the overall bill, the labour rate or the parts.

A decent provider won’t put a cap on any of these things, they’ll allow you to have your car repaired where you want and once everything has been fixed you should get a guarantee on any work done. They should also be happy to fit new, OE (original equipment) parts. Any provider that talks about fitting used or pattern parts is trying to cut corners, so be wary.

Check the small print

Some owners aren’t too hot on keeping their car properly maintained. They see having an aftermarket warranty as a substitute for regular servicing – especially if they’ve got breakdown cover in place as well.

But when you take out an aftermarket warranty you’re entering into a contract with the provider and they’ll expect you to maintain your car according to its maker’s schedule. So if it needs a new cam belt every four years or 60,000 miles and it’s seven years since it was last changed, don’t expect a new engine to be provided if the belt breaks.

Other things that might be in the terms and conditions are betterment and consequential loss. The first of these covers the fact that when a part fails it will have seen some use and you’ll be fitting a brand new replacement which leaves the car in better condition than when you took out the policy. Some warranty providers will expect you to contribute in these circumstances while others won’t.

Consequential loss is when a part fails that isn’t included in the warranty, leading to something being damaged which is covered. Again, some providers will cover you but others won’t.

Each provider will have its own terms and conditions, but the sort of thing that’s likely to be in there is that wear and tear isn’t covered, so expect all of these items to fall outside of the scope of the warranty:

• Clutch
• Brakes
• Tyres
• Battery
• Exhaust
• Paintwork/bodywork damage.

If this seems like rather a long list, the list of items that should still be covered is likely to be at least as long and you can expect it to include:

• Engine
• Gearbox
• Suspension
• Electrics
• Steering
• Cooling system
• Fuel and ignition systems
• Turbocharger

You can buy a warranty for your car through HPI. There are three packages available depending on your car’s age and how many miles it’s covered. The Platinum package covers cars up to five years old and 40,000 miles, Gold is up to seven years and 70,000 miles while Silver takes care of anything up to 10 years old and 100,000 miles.

Richard Dredge
October 2015