BUSINESS NEWS - Vehicle ownership is a good step towards independence, but it is also a huge responsibility. 

A car is an asset that should always be taken good care of, and this can only be possible if you are financially prepared. 

Keep in mind that the cost of owning a car extends beyond the purchase price and includes security and maintenance as well. 

A Car Insurance policy is one of the financial plans that can help ease the financial burden of having to repair or replace your vehicle. 

Likewise, there is another plan called an Extended Motor Warranty which helps cover the repair of your car when mechanical breakdowns occur.

To ensure yourself the peace of mind for your vehicle’s overall well-being, you should understand the importance of both types of coverage and how they differ. Hippo.co.za offers the following comparisons.

Standard Warranty
By default, new vehicles have a basic manufacturer’s warranty attached to the purchase. 

This is basically the promise of the manufacturer that mechanical and electrical parts will be repaired should the need arise. 

There are certain conditions that must be met though: some manufacturers require that vehicles be serviced within the first month or after the mileage reaches a set number of kilometres.

It’s important to remember that a manufacturer’s warranty is not a maintenance policy therefore you cannot claim for parts that wear out, like tires, brakes and batteries.

There are three types of car Insurance policies.

Car Insurance
Car Insurance provides financial protection against physical damage to your or another person’s vehicle. 

It is an agreement between you and the insurance company, in which you accept responsibility to pay the premiums and fulfil the conditions of the policy, and the insurer agrees to pay for vehicle repairs and replacement after an accident or theft, depending on the level of coverage. 

There are three types of Car Insurance policies. 

Third Party coverage is for damages that you caused to another vehicle. While this a more affordable plan, it means that you are responsible for the expenses to fix your damaged vehicle. 

Third Party Fire and Theft Insurance provides cover for accidental damage caused to another person’s vehicle, as well as theft, hijacking or fire. 

Comprehensive cover protects your car against accidents, fire and natural disasters, as well as theft and hijacking. It also pays out for third-party damages.

Extended Motor Warranty
If your car manufacturer’s warranty has expired, you have the option to purchase an Extended Motor Warranty. 

To ensure yourself the peace of mind for your vehicle’s overall well-being, you should understand the importance of both types of coverage and how they differ.

This plan is usually available from Car Insurance providers, and like a Car Insurance policy, you are responsible for contributing monthly payments to the plan.

An Extended Motor Warranty is a service plan that becomes effective after the manufacturer’s bumper-to-bumper warranty has expired. So, for example, you will receive coverage for your vehicle for an extra 4 years or 200 000 kilometres. 

In the event that your car breaks down as a result of mechanical or electrical failure, this warranty will take care of repairing or replacing the parts. 

Components that are usually covered in an Extended Warranty include the engine, gearbox, braking system, turbochargers, cooling system, clutch, and wheel bearings.

There are several more parts that fall under the Extended Warranty, but this also depends on the level of coverage.

Should you have both a Car Insurance and a Motor Warranty?
If you are involved in an accident or if your car is stolen or damaged via natural disasters, a Car Insurance policy will come in handy. But, a Car Insurance policy won’t be of any use if you need repairs 

that are not a result of an accident. If your brakes fail, your first option would be to contact the manufacturer. 

However, if that warranty has elapsed and you don’t have an Extended Warranty, it becomes an out of pocket expense that can leave you with a hole in your wallet.

This article The Difference Between Car Insurance and a Motor Warranty, makes an excellent case for taking up both types of coverage. 

If your brakes fail and you crash into the back of another vehicle, the warranty would cover the brakes and insurance may take care of the damage, provided you have the necessary cover.

This article is provided for informational purposes only and should not be construed as financial advice. Hippo.co.za, the owner of this article, does not accept responsibility for any loss or damages that may occur as a result of this article.

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