What is a vehicle service plan?

Vehicle service plans have many names — extended car warranty, vehicle service contract, auto repair plan — but no matter what you call it, vehicle service plans are designed to cover breakdowns that manufacturer warranties typically do not cover. Vehicle service plans are optional subscriptions or contracts that cover events that may arise where your vehicle needs costly repairs that might not be covered by a manufacturer’s warranty. After paying a typically small deductible, a vehicle service plan would have you covered.

This type of subscription is very popular with people who may have relatively older vehicles out of warranty and who want the peace of mind that comes with controlling the cost of vehicle repairs.

What do vehicle service plans cover?

Vehicle service plans are designed to pick up where normal vehicle warranties leave off. When you purchase an extended warranty for your new car, the intent is to protect your wallet during a covered breakdown event.

Extended warranties may also cover some more routine maintenance items not typically covered by a manufacturer warranty. These can be things like wearables — parts of the car that are more easily worn out due to regular use. Some wearables include:

• Brake pads
• Batteries
• Headlamps
• Belts and hoses
• Wiper blades
• Wheel alignments
• Electrical components such as fuses, headlamps and light bulbs

If you're going to eventually purchase wiper blades and headlamps, consider picking up vehicle service plan coverage for about the same price so you get more coverage.

What’s the difference between a warranty and a service plan?

Simply put, vehicle service plans can offer a more comprehensive repair plan for your vehicle than typical manufacturer warranties. Let’s compare:

Warranty

• Manufacturer warranties are specific — they may cover specific parts of your car for a specified amount of time or mileage.
• Warranties are part of the price of a vehicle — when you’re making a purchase, you’re buying the guarantee that essential components of your vehicle will operate in tip-top shape — at least, until the warranty expires.
• Warranties only cover new vehicles — if you buy a used car with a few years or miles on it, you may not qualify for the manufacturer warranty.

Vehicle service plan

• Vehicle service plans offer a more broad, customizable range of component coverage.
• Service plans offer options for used vehicles either driven beyond the manufacturer warranty or out of date for manufacturer coverage.
• Some could think of vehicle service plans like auto repair insurance — if you have a covered breakdown, you pay a deductible to get your vehicle fixed and back on the road.

Both manufacturer warranty and vehicle service plans may offer financial protection for your vehicle. The main difference is typical manufacturer warranties limit coverage to specific auto parts for a limited time. They also call the shots on labor and how repairs are scheduled and made. All these things make warranties less than comprehensive for vehicle repairs over the life of the vehicle. Vehicle service plans, however, give you peace of mind for a variety of circumstances.

Is a vehicle service plan worth it?

Vehicle service plans pick up where a traditional warranty falls short or falls off completely. Both aim to protect you and your vehicle, but a vehicle service plan pulls ahead if you’re looking for additional repair coverage for protections outside of a standard manufacturer’s warranty. While fees for vehicle service plans vary, the basic premise is that the optional plan with an extra cost may provide you with a more comprehensive repair coverage guarantee.

Some questions you may ask yourself before buying a vehicle service plan may be:

• Does the auto repair plan duplicate or extend my existing warranty?
• How much does it cost?
• What’s the deductible?
• What does this plan cover?
• Who will perform my repairs?
• How long does the plan last?

Whether a vehicle service contract works for you depends on your circumstances. It’s a good idea to consider your unique situation and ask questions related to your specific vehicle. 

Travel with confidence

On any stretch of road, whether it’s the highway or just cruising around town, make sure you have the coverage to help protect what matters most. At American Family Insurance, your safe journey is our mission. Contact an American Family Insurance agent to ensure your coverage meets all your adventuring needs.

This article is for informational purposes only and based on information that is widely available. This information does not, and is not intended to, constitute legal or financial advice. You should contact a professional for advice specific to your situation. We do not make any guarantees or promise any results based on this information.

*Customers who bundle home and auto insurance policies may save up to 23% on both policies together (as of December 2023). Discounts may vary by state, property, policy form and company underwriting the home and/or auto policy. Discounts may not apply to all coverages on a home or auto policy.