Reader’s Question:

I live here in Maine, and I am just so curious to know the difference between auto warranty and auto insurance since some of the coverages seem to be similar. Does anyone here know the answer?

Gage

Portland, ME

A lot of people get really confused with these two types of services, especially because a lot of coverages that are offered in warranties may also be offered in auto insurance policies. And to add to the confusion, some auto insurance companies even provide auto warranty services.

So, now, I am here to enlighten you.

A vehicle service contract, which is more popularly known as auto warranty, is technically totally different from an auto insurance policy. You may notice that auto warranties and auto insurance policies may have the same coverages, but their difference from each other lies in terms of legal construction.

An auto insurance policy is a direct agreement between an auto insurance provider and a client seeking their services. On the other hand, an auto warranty or a vehicle service contract is the contract that governs the deal between the client purchasing the car and the party selling the vehicle, such as dealers and administrators.

But although this is the case, a lot of times, auto insurance and vehicle service contract come hand in hand.

For example, a reliable auto warranty is almost all the time supported by a competitive auto insurance policy. The logic of this is to empower the consumer by giving him or her direct access to the auto insurance company in the event that a claim is not paid.

If you check out the auto insurance companies there in Maine, you would discover that when they do back up a vehicle service contract, the name of the company would appear on the contract itself.

 

Tags: auto insurance, auto warranty