Your new car's sticker price — not to mention tax, title and registration fees — unquestionably makes your vehicle a big investment. And, like any reasonable person, you want to protect your investment. Auto insurance covers damage to your car in case of a collision, but if your car needs repairs that turn it into a money pit, your auto insurance isn't going to kick in. What then?

Most car dealers and some car insurance companies offer extended warranties (a.k.a. service contracts) to pay for mechanical and electrical breakdowns of your car. You can purchase extended warranties for between 12,000 and 100,000 miles, and while they might make sense for some, you should scrutinize the contract and your situation because you might not need the extended coverage, the coverage you receive might not be all that extensive, or the warranty's high deductible might make the contract prohibitively expensive.

Extended warranties do not replace auto insurance coverage. If you're in an accident, your auto insurance will cover repairs. In addition, auto insurance provides necessary liability coverage for damage you do to others in an accident. Auto extended warranties are for repairs that have nothing to do with collisions.

The up-front cost

Take a hard look at how much coverage you're getting when considering the purchase of an extended warranty. These service contracts can give you as little as one year or 12,000 miles worth of coverage or as much as seven years or 100,000 miles. Price can vary considerably, but an extended warranty generally costs between $400 and $1,500 up-front, depending on your coverage, your vehicle and your deductible. So, just what are you getting for your money?

Start with what's actually covered by your warranty. Engine, transmission, drive train, steering, antilock brakes, regular brakes, cooling system, air conditioning, electrical system, gaskets, fuel system, turbo, and suspension parts and labor are typical coverages on bumper-to-bumper extended warranties for new cars. Wear-and-tear damages will be covered by the broader warranties, too.

More comprehensive warranties will also give you some "on-the-road" coverage for towing ($50 per tow), roadside assistance, and locksmith service in case you lock yourself out of your car. Make sure you get rental-car reimbursement with your extended warranty. This can come in handy if your vehicle is down for the count for an extended period of time.

Low-end warranties will typically pay for repairs and parts for your engine, transmission and drive train, but you won't get any of the "on-the-road" perks with a bare-bones contract. What's more, some of the less robust warranties will cover you only in case of mechanical breakdown, not wear-and-tear damage.

One other factor to keep in mind is the waiting period imposed by some extended warranties. For example, some extended warranties require you to wait for 30 days or 1,000 miles from the date of purchase before your warranty is in force. In this situation, the coverage won't kick in if, on day 15, your engine blows a head gasket.

Look twice at that deductible

The more coverage you want, the more you're going to pay. But be sure that you're not going to pay hundreds for the warranty and then pay hundreds again at repair time. Most warranties come with a deductible, so find out when that deductible applies. Some warranties charge you a deductible on a "per component" basis, meaning you'll pay your deductible for each of the covered "part groups." One part group would be your engine and its parts, and another part group would be the cooling system, which includes the radiator. Still another part group would be your air conditioning system. So, with a "per component" service contract, you'll end up paying your deductible three times if your car needs a new head gasket, radiator and air-conditioning system work, even if the repairs are performed at the same time.

Some service contracts offer you a "per occurrence" deductible, so no matter how many parts on your car fail, you'll pay the deductible only once each time you bring it to the repair facility. What's more, some extended warranties will waive the deductible on parts that have to be fixed more than once.

By the way, you could choose a warranty with no deductible to avoid any future hassles, but be ready to shell out more cash at purchase time.

New cars can probably wait

Most shiny, brand-new automobiles (including leased vehicles) come with a manufacturer's warranty — three years or 36,000 miles, whichever comes first. That means the auto maker is going to guarantee the performance of certain parts on your car for at least the first 36,000 miles of the life of that car. In addition, under most states' lemon laws, your car's performance is guaranteed for at least one year or 12,000 miles.

So what do these have to do with extended warranties? Well, do you plan on driving your car past the manufacturer's warranty? If not, why buy an extended service contract? And if, for some bizarre reason, your new car doesn't come with a warranty, you're still protected for a limited time under the state's lemon law.

The end of the road

Generally, you'll be shelling out for double coverage if you buy an extended warranty while your car is under the original warranty. However, if you're at the end of the manufacturer's warranty period, you intend to keep the car for more than three years, and you want extra protection, an extended warranty may be worthwhile coverage.

Keep this in mind, too: Extended warranties generally rise in price the longer you wait to purchase them.