According to Bankrate, a vehicle extended warranty covers the costs for certain issues or repairs after a vehicle's factory warranty expires. Extended warranties are sold separately from the vehicle and provide peace of mind for owners who want to cover all their bases.
Edmunds.com explains that some extended warranties require that repair work be done at the dealership where the extended warranty was bought. Other extended warranties are more flexible, which may be more important for people who travel extensively. Some extended warranties cover parts that have worn down in the normal course of use, while others only cover parts that have failed because of defects. Many warranties do not cover overheating.