- Automobile warranty policies are underwritten by insurance companies, the same way health policies are underwritten.
- Underwriting companies are rated on the same alphabetical scale as life and casualty insurance. An A+ ranking is the highest level and is considered the gold standard.
- Auto warranty policies differ greatly in coverage. Bumper-to-bumper policies cover everything, while specialized policies are written for isolated parts of the car, such as the transmission or engine.
- The more items covered under the auto warranty, the more expensive the policy. The policy for older cars is more expensive since there is a greater chance that the insurer may be required to pay for repairs. When a car reaches a certain age (and accumulates a certain amount of mileage), the cost-benefit advantage of purchasing an auto warranty must be examined.
- New cars are sold with a standard warranty. This is usually measured for each part and system by a set number of months or accumulated mileage. Many auto dealers offer the auto buyer opportunities to extend the expired warranty for an additional fee, determined by the type of car, age and the odometer reading.
- Auto warranty policies (also called vehicle service contracts) may be purchased for older cars with expired warranties or vehicles that never were covered by extended warranties. These policies are called "after-market" policies. Each auto warranty company sets rules for vehicle coverage. The AWSCA, formed in 2007, is developing industry-wide standards for self-regulation.
