Extended- & Pre-Owned Car Warranties: What they cover
If you have ever wondered: “What is car warranty insurance?” and “What would such a warranty cover?” this article, brought to you by Budget Insurance, will help you familiarise yourself with the “other” kind of vehicle insurance you can opt for.
When most consumers think of car insurance, they associate it with policies that offer them financial cover in the event they suffer damage to, or loss of, their vehicle because of an incident, such as a traffic collision, an impact with a person, animal or object, adverse weather conditions, hijacking, theft and fire.

Budget Insurance has various car insurance products that provide cover for those risks, but it also offers extended- and pre-owned car warranties. These warranties are also types of car insurance, but whereas conventional policies cover incidents, “bolt-on” warranties make provision for mechanical breakdowns.
Pre-owned Car Warranty: What does it cover?
The coverage offered by a car warranty can differ from insurer to insurer. Suppose you are wondering what is covered under car warranty insurance for used vehicles. In that case, it’s always a good idea to find out how your insurance provider of choice defines different forms of vehicle warranty coverage.

When you buy a new car from a franchised car dealership, you’ll drive off with a complete warranty on a predefined list of parts. These parts are usually determined by the car’s manufacturer and require you to undertake any replacement or repair work (using original manufacturer parts) at authorised workshops.
If you buy a pre-owned car, however, its manufacturer warranty (limited by years and mileage) could be partially – or entirely – expired. Many people completely forget about this when they buy a pre-owned car, especially if the car is in excellent condition and has no history of major repairs or replacements.
It means that should some — or any — of the vehicle’s mechanical components break down, they could find themselves at the receiving end of a hefty repair bill, with no means to get around until they pay it.

This is where a pre-owned car warranty comes in. It’s a warranty for several of your car’s mechanical components and the exact coverage you’ll get depends on its age, condition, make, model and mileage.
Budget Insurance‘s Auto Drive warranty, for example, is available for a vehicle out of its manufacturer’s warranty that is under 7 years old and has clocked up less than 250 000 km since it was registered.
Auto Drive covers 35 components, including disassembly and reassembly (of the affected area) if required, no cover limit, access to Breakdown Assist and a once-off additional component cover for any part that does not form part of your covered components (based on info available in February 2025).

The Auto Drive Train warranty, in turn, is available for cars older than 7 years (but younger than 14 years) with mileages of under 250 000 km. It includes the other Auto Drive benefits and covers 15 components.
Extended car warranty: What does it cover?
So, what does an extended warranty cover on a car? It helps to understand the core difference between this product and the ones listed above. Simply put, an extended car warranty is an insurance policy you can take out that automatically kicks in once your vehicle’s existing manufacturer warranty runs out.

Like a pre-owned car warranty, the exact coverage you’ll get with an extended car warranty will depend on your car’s make, model and mileage. However, an extended car warranty has much higher cover limits than a pre-owned car warranty – it applies to more car components, some of which have no cover limit.
Budget Insurance‘s Auto Plan extended car warranty, for example, covers 45 components. It’s available for cars younger than 3 years that are still under warranty and have travelled less than 120 000 km.

Exclusions of Extended- & Pre-owned Car Warranties
To get the most value from an extended or pre-owned car warranty, you’ll need to know exactly what each type of warranty includes and excludes. You’ll find that, in many ways, it’s similar to renting a house.
When you enter into a rental agreement and take occupancy of a house, you expect it to be in the same condition as when you saw it. From this point, you and the property owner have certain responsibilities.

The property owner will expect that you will refrain from making any major alterations to the property, maintain a state of cleanliness and take reasonable steps to keep the house in good condition. You will also be expected to make reasonable replacements, such as fitting light bulbs when the old ones fail.
However, should it be deemed that any of the home’s fixtures (such as the plumbing, built-in stove or irrigation system) stopped working because of abuse, neglect, or improper maintenance on your part, the property owner would be unlikely to pay for the repairs. You, the tenant, would be held responsible.

Car warranties work similarly. If any mechanical components stipulated in your policy malfunction or fail, they will be covered (as long as they stop functioning for reasons beyond your control). However, you’ll be expected to repair and replace items that wear out quickly or often, such as tyres and brake pads,
What’s more, you’ll also be expected to keep your vehicle in reasonably good condition by parking it in a cool, dry space and paying immediate attention to any mechanical issue that arises.

Your warranty won’t cover any alterations or modifications you have made to the vehicle. It will not cover you for vandalism-related issues, normal wear and tear or accident damage and repair.
Your primary car insurance can cover these, which is why it’s best to think of warranty coverage as a helpful extra and not as your primary form of protection.
My service plan is expiring – could I extend it?
Whereas a car warranty makes provision for mechanical breakdown claims, a service plan covers the replacement of certain service parts, such as sparkplugs, fuel and oil filters, and sometimes cambelts.

If you’ve bought a new or a recent-model-year used car, you will know most car brands offer a warranty and service plan with their models – those expire after a certain number of years or kilometres driven.
As service plans can range between 1 and 7 years, your new or pre-owned car could still be within its service plan. But if you’d like to keep your vehicle for longer than the duration of its service plan, you can complement this by procuring a car service plan to cover your vehicle when its existing one runs out.

Extended car service plans include services at set intervals, where your car will be thoroughly inspected, minor repairs/replacements will be covered and you’ll be notified if there are issues that need attention.
It can be an invaluable benefit to you as the owner, because it allows you to minimise the risk of major issues developing or to detect them before they become very costly to fix. And, if you sell your car in the future, you’ll be able to show its prospective new owner that you have looked after the car diligently.

Get a car warranty cover from Budget Insurance
You took the first step of responsible car ownership by taking out vehicle insurance when you bought or financed your vehicle. Now, to extend your car’s lifespan and prevent unexpected costs from depleting your funds, consider an extended or pre-owned car warranty and a service plan that suits your budget.
Budget Insurance‘s team is always ready to assist. Contact them on 086 1600 120 or leave your details and they’ll call you back at no expense to you! You can also request an online quote.
The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.
Related content:
It’s a new year – time to review your insurance policy
The difference between Comprehensive & 3rd-Party Car Insurance
Car Insurance: Claims & Repair process explained
Car Warranties: Everything you need to know
Cheap car insurance: Be wary of the risks
4 Lesser-known Car Insurance Inclusions
How to review your insurance policy
Does car insurance cover items stored in your car?
How technology is changing car insurance
5 Ways to Lower Your Car Insurance Premium
How to File an Insurance Claim if Your Car is Stolen