The manufacturer’s warranty or even dealership warranty gives you peace of mind in knowing that any major mechanical defects will be repaired at no cost to you. For a brand new vehicle, this manufacturer warranty can be anywhere from 3 to 5 years. With pre-owned vehicles without a manufacturer warranty remaining, the dealership may offer the buyer a 1 to 2 year in-house warranty. However, once this period elapses then vehicle owners may be left without any protection or in some cases the opportunity to extend the warranty at a high cost. Fortunately these is an alternative.
What is a motor warranty plan?
A motor warranty plan is insurance cover that pays for damage or defects to major mechanical components in your car. It may also include cover for electrical components. These plans are not with the manufacturer or dealership but with a registered insurer in South Africa. In the even of a claim, the insurer will reimburse you directly for the repairs or estimate or in some cases may reimburse the mechanic directly. It allows older vehicles to be covered when manufacturer or dealer warranties fall away.
Unlike a manufacturer or dealer warranty, you will not be forced to use the in-house mechanics. A motor warranty plan gives you the freedom to choose from a number of reputable mechanics and auto workshops that can repair or replace defective mechanical components. However, not all plans may cover 100% of your repair and replacement cost. These policies have different limits for different components. Any additional cost will have to be settled by you directly with the mechanic.
Cost of Motor Warranty Plans
Like any insurance policy, there are different plans offer varying levels of cover. Higher level plans will cost more than lower cover. Usually these plans cost around R200 per month (2020 rates) depending on the level of cover and other factors. While this is an additional cost in owning a vehicle, the long term savings make motor warranty plans well worth the small monthly cost. Consider the cost of major mechanical components like your vehicle’s engine, gearbox or differential.
For example, your gearbox repairs costs may be in excess of R10,000. Depending on the motor warranty plan, you could be covered for anywhere from R5,000 upwards. This means that 50% to even 100% of the costs will be covered by the policy. Unless you have the financial resources to immediately pay for repairs out of your own pocket, a motor warranty plan can help you get your car back on the road as soon as possible.
However, the cost of a motor warranty plan should be considered in the context of repairs to major vehicle components. An engine can cost tens of thousands of rands to repair. The gearbox, drive shaft and differential may be cheaper to repair compared to an engine, however, it is also expensive yet essential for keeping your vehicle in working order. There are various other mechanical components that may require costly repairs but most motor warranty plans also cover electronic components.
Consider the electric ignition that starts the engine, or the fuel system which is largely computer-controlled these days and regulates the flow of petrol or diesel to your engine. These are not simple components and repair or replacement can be costly. Some electronic systems are such high precision, computer-managed systems that it requires a highly skilled technician to repair or replace. This adds further to the cost of repair.
In the backdrop of these repair costs, a motor warranty plan for a few hundred rands per month is the more financially sensible optin.
Requirements for a Motor Warranty Plan
Although motor warranty providers will accept most vehicles, there are certain criteria that has to be met apart from paying the monthly premium. These requirements may vary among insurers and it is important to confirm with the motor warranty provide of your choice.
- Vehicle must be registered and in road worthy condition.
- Vehicle must be serviced at regular intervals to maintain cover.
- Vehicle mileage must be under a certain limit, such as 200,000 km.
- Vehicle age must be under a certain limit. Usually vehicles older than 10 years may not be accepted.
- Only light passenger vehicles are usually covered which are for private use only.
- Vehicles used for business or carrying passengers may not be covered. This depends on the insurer.
A motor warranty plan is a short term insurance policy and therefore insurers and the cover is carefully regulated in South Africa. It is important to understand the extent and restrictions of the cover to ensure that your claim will not be rejected in the event of a mechanical or electronic breakdown of your vehicle.