Insurance and Warranties: How to Protect Yourself from High Car Costs
Liability insurance, partial coverage, comprehensive coverage, or warranty: It’s not always immediately clear which type of coverage applies in which situation. Our guide explains who is responsible for which types of damage and what to look for when choosing car insurance and a warranty.
Whether we like it or not, the cost of living is getting higher and higher. Car insurance is no exception. According to a recent survey by the comparison website bonus.ch, 69 percent of Swiss drivers have had to accept a premium increase in the past two years. Nevertheless, only 12 percent switched providers. Forty-one percent remain loyal primarily because of the quality of service. It can still be worth shopping around, though. The key factor, however, isn’t just the premium, but also what the insurance company covers in the event of a claim. After all, not all claims are the same. While backing out of a parking spot, a bollard suddenly gets in the way—one that definitely wasn’t there before; a hailstorm dents the car’s body; the automatic transmission breaks down—three scenarios and three different answers to the same question: Who pays?
The Bollard: Liability Insurance or Comprehensive Coverage?
If the bollard is damaged, mandatory liability insurance covers the damage to third-party property. The same applies to a car that is struck. Liability insurance covers bodily injury and property damage caused to others by the insured vehicle. For damage to your own car, however, comprehensive insurance is required: it covers collision damage you cause yourself.
Hail: Partial coverage is sufficient
Hail, storms, and floods are considered natural disasters. Voluntary partial comprehensive coverage already covers this type of damage. Depending on the policy, it may also cover theft, glass breakage, fire, collisions with wildlife, and damage caused by martens. However, depending on the coverage and the plan selected, the deductible can range from zero to 2,000 francs per claim. And the higher the deductible, the lower the premium usually is. Those who have comprehensive coverage are also well protected: It includes partial coverage and additionally covers collision damage caused by the insured driver.
The type of coverage that makes sense depends on the car’s age, value, and usage, as well as your personal financial situation. The TCS generally recommends partial comprehensive coverage through the seventh year of ownership, or possibly longer for vehicles with a new-car value exceeding 75,000 francs. Comprehensive coverage is particularly worthwhile for newer cars and is generally even required for leased vehicles. For older used cars, you should carefully weigh the premium against the car’s current market value. If the annual comprehensive insurance premium is high relative to the car’s current market value, the coverage is hardly worth it financially. However, anyone who could not finance a replacement car out of their own pocket may still have good reasons to keep comprehensive coverage for longer.
The Transmission: This Is Where the Warranty Comes into Play
However, if the automatic transmission fails without any external cause, neither liability insurance nor comprehensive coverage will help. Technical defects are covered by the warranty, provided one exists and the affected part is actually covered. «Motor vehicle insurance protects against the consequences of accidents and external causes. A warranty insurance policy provides coverage, within the agreed scope, for the costs of certain technical defects,» explains Christoph Geissmann, Chief Brand & Product Officer at Quality1, an insurer specializing in vehicle warranties.
When it comes to technical defects, it’s important to distinguish between three concepts: The statutory warranty covers defects that were already present at the time of purchase. The voluntary manufacturer’s warranty varies in duration and scope depending on the brand. Warranty insurance covers certain technical defects during the agreed-upon term and can be particularly beneficial for used cars or after the manufacturer’s warranty has expired. According to Quality1, whether it’s worth it depends on the vehicle’s age, mileage, technical features, vehicle value, and your personal risk tolerance. For those who could hardly afford a repair costing several thousand francs out of their current budget, this provides a great deal of planning security.
Damage to the engine, transmission, turbocharger, fuel injection system, or vehicle electronics can be particularly costly. In the case of electric cars, components such as the inverter, electric motor, and onboard charger are now also included. Even a faulty control module can be expensive these days due to the costs of diagnosis, programming, and installation.
The warranty doesn't cover everything
«A common misconception is that a warranty automatically covers all repair costs,» explains Geissmann. «In fact, the scope of coverage always depends on the product selected and its terms and conditions.» Normal wear and tear, typical wear-and-tear parts such as brake pads, brake rotors, or the clutch, maintenance work, pre-existing defects, as well as accident and body damage are usually excluded. Consequential damages are also not necessarily covered. Just because a component no longer functions properly does not necessarily mean the damage is covered by insurance.
Before signing a policy, it’s therefore worth taking a close look at the scope of coverage. Which vehicle components and causes of damage are covered? Is there a deductible or any compensation limits? Does the coverage include not only replacement parts but also labor, diagnostics, and installation? For modern vehicles, it should also be clear whether electronic components are included. For hybrid and electric cars, this also applies to high-voltage, charging, and drive components.
Equally important is the process in the event of a claim. Often, a defect must be reported and approved before repairs begin. Anyone who simply hires a repair shop and submits the bill afterward risks having their claim reduced or denied. Some insurance companies also insist on using their preferred garage and repair networks. Geissmann therefore advises policyholders not to compare insurance plans based solely on price, but to evaluate the scope of coverage, limits, exclusions, and the claims process as a complete package.
