Vehicle Insurance vs Vehicle Service Contract Coverage

Auto insurance is a great way to protect your vehicle and yourself in the event of a collision or accident, but you might wonder how it compares to vehicle service contract coverage. Auto insurance and vehicle service contracts cover incredibly different things related to your vehicle.  Understanding the difference between the two helps consumers to make more educated purchasing decisions and realize that both types of protection are likely necessary.

Vehicle Insurance Vehicle Service Contract
Damages & Injuries Due to an Accident ✓
Collisions ✓
Non-Collision Events ✓
Medical Expenses ✓
Uninsured/Underinsured Motorists ✓
Roadside Assistance ✓ ✓
Mechanical Repairs ✓
Dealership Repair Facilities ✓
Travel Interruption Protection ✓

What Does Vehicle Insurance Cover?

Automotive insurance offers protection in the event of an accident, theft, or other unforeseen incident. Different auto policies and add-ons cover a wide range of situations. Without insurance, consumers are responsible for paying for these expenses out-of-pocket.

  • Damage & Injuries You Cause

    Most states require a minimum of liability coverage. Liability coverage pays for injuries and damages drivers cause to people and property in an accident. It does not cover your injuries or vehicle.

  • Collisions

    Collisions coverage will bear the costs of repairing and replacing a vehicle if it is damaged in a collision. One benefit of collision coverage is that it can pay for collisions with objects, like fences, poles, trees, and signs, that don’t involve another insured driver.

  • Non-Collision Events

    Comprehensive coverage may cover damages to vehicles caused by events like theft, vandalism, animal-related collisions, and even natural disasters. While drivers aren’t required to have comprehensive coverage, it is worth consideration.

  • Medical Expenses

    Personal injury protection (PIP) pays for medical expenses for drivers and passengers following an accident. Many injuries may be covered even if the driver is at fault for the accident.

  • Uninsured & Underinsured Motorists

    While most state may require that drivers carry liability coverage, the truth is that many people will get behind the wheel without any insurance at all. Uninsured and underinsured motorist coverage ensures that drivers are covered, even if the other driver has insufficient insurance to cover damages.

  • Roadside Assistance

    Roadside assistance is a great opportunity for many drivers. If you break down along the side of the road, roadside assistance will assist with vehicle towing. Roadside assistance will also help drivers with a dead car battery or an empty fuel tank.

Vehicle Service Contract Coverage

A vehicle service contract, or VSC, covers repairs and part replacements on a vehicle once the original manufacturer’s warranty expires. Consumers have a wide range of options for plans to select that may fit their driving habits and vehicle needs.

  • Mechanical Repairs

    Vehicle service contracts cover most repairs associated with your engine, transmission, front wheel drive, rear wheel drive, basic hybrid/electric vehicle components, steering, front suspension, brakes, electrical, air conditioning, and much more. Some VSC’s also cover electronics, and tire and wheel repairs. Additionally, VSC’s often cover the costs of parts and labor to replace or repair the damaged components. VSC’s do not cover cosmetic damages, like dents and chipped paint. They also do not cover anything related to accidents or collisions.

  • Dealership Repair Facilities

    While an insurance policy may require that drivers use a specific shop, most VSC’s give consumers the ability to have their vehicle repaired at their purchasing or local dealership, where the parts and service team are specifically trained on repairing the vehicle needed.

  • Roadside Assistance

    Similar to automotive insurance, many VSC’s cover towing and roadside assistance service for drivers.

  • Travel Interruption Protection

    A VSC may cover travel interruption, ensuring that drivers don’t lose money spent on travel because their vehicle has broken down.

vehicle service contract coverage

The Difference Between Insurance & Vehicle Service Contract Coverage

While auto insurance protects against accidents, theft, and other unpredictable events, vehicle service contracts cover mechanical repairs and replacements after a warranty expires. VSC’s cover specific parts, whereas insurance covers specific events.

Additionally, auto insurance is required in most states, whereas VSC’s are completely optional. When drivers are familiar with both forms of protection, they can determine which types of coverage are most suitable for protecting their vehicle and avoiding unplanned expenses.

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