Car Warranty And Car Insurance: Are They One And The Same?

Prospective car owners must learn plenty of new information in their pursuit of owning a personal vehicle, such as learning how to drive their automobile, applying for licenses and registration, and understanding related services like car warranties and car insurance. The former two are easy enough to understand, but the latter is something that not everyone is all too familiar with. Although they help protect car owners and their vehicle, their requirements and coverage are fundamentally different. To help new car owners become more knowledgeable and responsible for their cars, we shall delve into car warranties and car insurance and how they differ from each other.

Car Warranty

Scope

A car warranty essentially covers potential issues that car owners may encounter with their purchased vehicle due to mechanical breakdowns and failures because of normal wear and tear or factory defects. Simply put, it is best to think of car warranties as only affecting the vehicle and not the user. Although opting for a car warranty is entirely optional, having it helps owners offset any additional costs needed for replacement parts or repairs.

It is important to note that car warranties do not apply to anything beyond the aforementioned scope. This means things like oil changes, routine maintenance, and replaceable parts, such as brake pads and tyres, are not covered by a car warranty. Moreover, car owners cannot use them if their negligence causes a breakdown. For instance, if a driver ignores the indicators of an overheating engine and keeps on going, a car warranty will not cover any damages sustained by the engine.

Types of car warranties

Car warranties typically come in two types － new and used. The former is usually issued by the car’s original manufacturer, while the latter can be purchased from third-party entities like workshops. New car warranty plans generally cover new vehicles for 3, 5, or 10 years after purchase or up to a certain mileage, whichever comes first. A used car warranty may cover second-hand vehicles with say, 260,000km in mileage up to a certain mileage or are up to say, 15 years old, whichever comes first. Requirements and standards for these warranties will depend on the provider, with some requiring car pre-inspections and may even have a limit on mileage coverage.

Is a car warranty transferable and refundable?

Car warranties may be transferable from one person to another, depending on the insurer’s policy. Thus, if a car owner decides to sell their car with its stake still active, the new owner might enjoy the same benefits they did, increasing the vehicle’s value. However, once an owner decides to get a warranty for their car, they can generally no longer cancel and refund it.

Car Insurance

Scope

Unlike car warranties, car insurance is a legal and mandatory requirement for all vehicle owners in Singapore. The primary purpose of car insurance is to protect car owners and other drivers travelling along the city-state’s roads. Its scope does not cover anything beyond those caused by accidents, theft, and other disasters. Essentially, car insurance mainly protects the car owner and everyone else first before the vehicle. So if a policyholder switches cars in the future, they will still enjoy the same coverage as always. Car insurances come in three types: Third-Party Only (TPO), Third-Party, Fire, and Theft (TPFT), and Comprehensive.

Types of car insurance

Car insurance comes in different price ranges and coverage, from top-tier to affordable motor vehicle insurance in Singapore. Starting from the most basic is TPO, which only covers costs associated with a car owner damaging another driver’s vehicle and whatever medical expenses they incur. This insurance plan is exceptionally preferred among drivers looking for the cheapest and bare-bones type of car insurance available.

Second is TPFT, the middle-tier insurance plan whose scope is extended to include losses from theft and accidental fires on top of what TPO covers. And lastly is the comprehensive insurance plan, the all-encompassing car insurance that covers everything situation possible, such as expenses from accidental damage and medical costs between the policyholder and other parties (subject to exclusions). Moreover, this plan also covers damages caused by floods and other such disasters. One thing to keep in mind about comprehensive car insurance is that it is the only available plan for vehicles still being financed. This restriction protects the finance company if the car becomes a total loss during an accident.

Is car insurance transferable and refundable?

Car insurance plans are non-transferable. However, their holder can cancel and refund depending on the insurance issuer’s policies.

A Breakdown Of The Main Differences

Car warranty

• Not legally required
• Covers only breakdowns and failures not caused by negligence
• Damage claims extend to car parts included in the warranty, subject to Terms and Conditions depending on the type of coverage
• Entitled to warranty claims. Pre-owned cars must stake their claim within a certain mileage, say, 75,000 kilometres or a fixed period, say, 36 months, whichever comes first
• Can be included in the vehicle’s purchase price
• Possibility of transfer of policy once upon purchase or selling of the vehicle (depends on insurer’s policy)
• Coverage is for new cars and pre-owned cars (eg, up to 260,000km or 15 years old, whichever comes first)
• Compulsory repairs at authorised workshops
• Some aftermarket parts are not covered and may void the warranty unless declared beforehand
• Wear and tear is excluded

Car insurance

• Legally required
• Covers mostly expense from accidents, theft, fires, and other disasters but may include breakdowns as an optional extra
• Damage claims apply only to car parts affected by accident and will depend on the severity of the damage sustained
• Warranty claims will depend on the insurance type availed and the claim amount
• Not included in the purchase of the vehicle
• Non-transferable
• Compulsory repairs at authorised workshops unless the insurance states “any workshop” or it is from a third-party claim
• Aftermarket parts like car accessories and body kits are claimable

Conclusion

Purchasing a personal vehicle is a significant and worthwhile investment. As such, it only makes sense to protect this asset and especially yourself, with a car warranty and car insurance.

If you are about to become a proud owner of a new car in Singapore, India International Insurance can help you with your car insurance needs. We provide all types of car insurance plans available in Singapore online at affordable and reasonable prices. Learn more about our insurance plans today by sending us an enquiry.