By Sujeet Nair
Many Indian consumers find it challenging to distinguish between auto insurance, auto warranties, and auto repair packages when it comes to buying a car. There are numerous false beliefs, such as the idea that service packages cover the same territory as warranties or that having auto insurance negates the need for a warranty. Owners may be subject to unanticipated repair expenses and interruptions in their driving experience as a result of this uncertainty. Let us dispel these myths and make clear the unique and vital roles that warranty, insurance, and service plans all play in ensuring complete protection.
Myth 1: Car warranty and insurance are the same
The idea that if insurance is in operation, a car warranty is not necessary is among the most common misunderstandings. A lot of car owners believe that since insurance covers damage to their car, it will also cover inside issues like electrical or mechanical issues. This, however, is not at all the case.
- Only in the case of an external incident, such as an accident, collision, or theft, does auto insurance become essential. For damages brought on by these occurrences, it serves as a financial safety net.
- On the other hand, auto warranties are not influenced by collisions. Even in the absence of an accident or external damage, they cover internal component malfunctions including engine problems, electrical difficulties, or air conditioning breakdowns.
Example: For instance, if you’re on a long family trip, and suddenly the air conditioner stops working. Insurance won’t help here, since it’s not an accident-related issue. However, an active warranty will cover the repair, ensuring you don’t have to pay out of pocket.
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Myth 2: A warranty is unnecessary if you have insurance
- Another common misunderstanding is that having auto insurance does not negate the need for a warranty. In actuality, warranties and insurance work in tandem to provide various forms of coverage.
- Only external dangers, such as theft or accidents, are covered by insurance. Your insurance won't pay if the cause is internal, such as a gearbox failure.
- A warranty guarantees that problems brought on by electrical or mechanical failures are resolved without attributing them to other circumstances.
When combined, insurance and warranties offer complete protection, shielding against both internal and external threats. Since neither can cover every situation on its own, luxury car owners may rest well knowing they have both.
Myth 3: Service packages and warranties are the same
Many owners mistakenly believe that regular maintenance contracts would cover part repairs, confusing service packages with warranties. The expense of fixing or replacing malfunctioning parts is not covered by service packages, which are restricted to standard maintenance duties.
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Service Packages And Warranties Differ In The Following Ways:
Routine maintenance, including tire rotations, inspections, and oil changes, is covered by service packages. Although they don't cover catastrophic repairs or part failures, they guarantee that your car remains in good condition.
Warranties provide protection for electrical and mechanical parts against malfunctions or failures, which ensures that replacements and repairs are done at no extra expense.
Simply put, warranties shield you from unforeseen repair expenses, while service packages guarantee your car is kept in good condition.
Why A Warranty And Insurance Are Necessary For Total Protection
Understanding that insurance and warranties are not interchangeable—rather, they complement one another to provide comprehensive coverage—is crucial to properly protecting your car.
Accidents, collisions, theft, and other outside dangers are covered by insurance.
Internal mechanical and electrical issues are covered under warranty, even if there was no accident.
Routine maintenance is covered by service packages, but malfunctions or part failures are not.
Both insurance and warranty are essential for owners of luxury vehicles, particularly those who drive vehicles like Mercedes-Benz, BMW, Audi, or Land Rover. Each has a specific function and guarantees the protection of all facets of car ownership.
(The writer is the CEO and Founder of Edel Assurance.)
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