Full Coverage Auto Insurance: Friend Or Foe For Mechanical Repairs?

Full coverage auto insurance is an unofficial term that refers to a combination of insurance coverages that protect a driver financially for damages to their vehicle, the occupants of their vehicle, and other vehicles and passengers in an accident. It does not cover mechanical issues unless they are related to a covered peril, such as a car accident or collision with an animal. If you want coverage for mechanical breakdowns, you will need to purchase a separate mechanical breakdown insurance policy.

Mechanical breakdown insurance

MBI is similar to an extended warranty for your vehicle, but there are some key differences. MBI has a deductible, whereas extended warranties typically do not. Extended warranties may also be more expensive, and often require a large lump-sum payment upfront. In contrast, MBI can be paid in installments, making it a more affordable option for some. Additionally, MBI covers a broader range of mechanical issues, whereas extended warranties usually only cover repairs due to defective materials or improper manufacturing.

MBI is available for various vehicles, including cars, trucks, SUVs, and RVs. It covers repairs to most original mechanical parts, excluding maintenance and wear and tear. It is important to note that MBI does not cover towing or damage resulting from accidents, collisions, or environmental factors.

The cost of MBI varies depending on the company and the type of vehicle, with more expensive vehicles to repair typically resulting in higher coverage costs. When purchasing MBI, you can choose your deductible, usually ranging from $100 to $500.

Overall, MBI can provide valuable protection against unexpected repair costs, especially for older or less reliable vehicles. However, whether it is worth purchasing depends on individual circumstances, as the cost of coverage and deductible may outweigh the potential savings on repairs.

Comprehensive coverage

Comprehensive insurance will cover mechanical repairs if the engine is damaged by an event outside of your control, such as a tree falling on your car. It will also cover mechanical repairs if the damage is caused by a collision or accident. However, comprehensive insurance will not cover mechanical repairs if the engine suffers a mechanical failure or breaks down due to normal wear and tear.

If you want to be covered for mechanical failures, you will need to purchase mechanical breakdown insurance (MBI) separately. This type of insurance covers all types of mechanical problems, including breakdowns, engine failures, and malfunctions of the engine, steering, air conditioning, fuel system, power system, exhaust, brakes, transmission, and drive train. Some insurers offer MBI, which may cover engine repairs not covered by your warranty.

Collision coverage

Collision insurance covers the cost of repairing or replacing a vehicle damaged in a collision. This includes accidents where the car flips over or hits a guardrail, fence, light post, or another vehicle. It is particularly recommended for vehicles that are leased or financed, newer and more expensive cars, and older vehicles that still hold significant value.

The benefits of collision coverage include peace of mind while driving, as it ensures that your car is covered in case of an accident. It helps you avoid paying out-of-pocket expenses for repairs, which can be costly. Collision coverage also provides protection if your vehicle is deemed a total loss, reimbursing you for the value of your car minus the deductible.

When choosing collision coverage, it's important to consider the cost of repairs relative to the deductible. A higher deductible can lower your monthly premium, but it also means you'll cover a larger portion of the repair costs. On the other hand, a lower deductible results in a higher monthly premium but provides greater financial protection in the event of an accident.

Liability coverage

The amount of liability coverage you need depends on various factors and can be customized to fit your specific needs. Most states have minimum requirements for liability coverage, with California, for example, mandating a minimum of $15,000 for injury/death to one person, $30,000 for injury/death to more than one person, and $5,000 for property damage. It's important to note that liability coverage does not extend to damages to your own property or injuries you sustain; separate coverages, such as personal injury protection and uninsured/underinsured motorist coverages, are available for those scenarios.

While liability coverage is a crucial aspect of auto insurance, it's important to remember that it does not cover mechanical issues or breakdowns unless they are a direct result of a covered peril, such as an accident. In such cases, comprehensive and collision coverage come into play, providing financial protection for mechanical repairs. However, if mechanical problems occur due to regular wear and tear or unrelated breakdowns, separate mechanical breakdown insurance can be purchased to cover these incidents.

Car warranty

A car warranty is a guarantee that you will be covered when big repair bills come your way. Engines, transmissions, and other mechanical parts can be very expensive to repair or replace, so it makes sense to have a plan to protect yourself from the high cost of parts and labour.

Most vehicle warranties last 3-6 years, and some have different coverage periods for different parts. It's important to review your warranty to ensure whether or not it covers the particular mechanical damage. Your warranty will not pay for the damage if you customise your car, fail to maintain your car, or damage its parts. If you modify your vehicle, the entire warranty will usually be voided.

An extended auto warranty is similar to mechanical breakdown insurance (MBI) in that both of them pay for unexpected repairs that fall under the coverage agreement. The main difference is that while an extended warranty is offered by a manufacturer or third-party coverage provider, MBI policies are offered by car insurance companies.

There are a few key differences between an extended warranty and a service contract. An extended warranty is often sold by the car manufacturer and covers only repairs and replacements due to defects in materials or workmanship. A service contract, on the other hand, is typically sold by a third-party company and can cover a wider range of repairs and replacements, including those due to normal wear and tear.

When considering an extended auto warranty, it's important to remember that there are often a lot of exceptions and limitations. For example, there may be a 1,000-mile period during which warranty companies exempt themselves to check for any pre-existing problems. They also typically limit where repairs are authorised and may not provide a tow truck, roadside assistance, or a rental as part of their coverage.

Frequently asked questions