Auto Maintenance Insurance: Is It Worth The Cost?

Car repair insurance, also known as mechanical breakdown insurance, is an optional add-on to your standard car insurance policy. It covers the cost of repairs to your vehicle in the event of a mechanical breakdown, such as a blown gasket or electrical system failure. This type of insurance is particularly useful if your car is no longer under warranty, as standard insurance policies typically do not cover mechanical breakdowns. The cost of car repair insurance varies depending on the insurer, but it is generally affordable, with an average annual cost of around $100. When deciding whether to purchase car repair insurance, it is important to consider factors such as your financial situation, the age and reliability of your vehicle, and your risk appetite.

What does auto maintenance insurance cover?

Auto maintenance insurance, also known as car repair insurance or mechanical breakdown insurance (MBI), is an optional add-on to your standard auto insurance policy. It covers repairs to your vehicle in the event of a mechanical breakdown, including parts and labour. This can include repairs to the air conditioning, heating systems, electrical systems, safety technology, and convenience technology.

MBI is different from standard auto insurance, which covers damage to your car as a result of an accident, theft, fire, or other unforeseen events. It's also different from extended warranties, which are typically purchased from car dealerships or third-party companies and cover mechanical defects for a specified period.

It's important to note that MBI does not cover routine maintenance or wear and tear. This includes oil changes, tire rotations, brake pad replacements, and other general engine or mechanical problems. Additionally, MBI does not cover damages related to accidents, collisions, or environmental factors.

When considering MBI, it's essential to review the specific coverage offered by the insurance company, as the inclusions and exclusions may vary. Eligibility for MBI also depends on the age and mileage of your vehicle, with most companies offering coverage for newer vehicles with lower mileage.

What doesn't auto maintenance insurance cover?

Auto maintenance insurance, also known as mechanical breakdown insurance (MBI), is an optional coverage that can be added to car insurance to pay for repairs if a car breaks down. It is similar to an extended car warranty but is usually only available for newer cars with fewer miles. MBI covers the cost of repairing major mechanical issues or malfunctions of a car's primary systems, such as the engine and transmission.

MBI does not cover routine maintenance or upkeep, such as oil changes, tire rotations, or brake pad replacements. It also does not cover any maintenance or repairs resulting from accidents, collisions, or environmental factors. Additionally, wear and tear on parts such as belts, hoses, and brakes are generally excluded from coverage.

• Damage caused by poor maintenance, such as infrequent oil changes or using the wrong type of fuel
• Damage caused in a car accident
• Non-mechanical items, like vehicle trim and moulding
• Normal wear and tear, like worn brake pads and tires
• Parts or items covered by a recall, voluntary manufacturer repair program, or car warranty
• Pre-existing damage before purchasing the insurance
• Routine maintenance, such as engine tune-ups, suspension alignment, tire rotation, and wheel balancing
• Towing services or emergency roadside assistance (although this can often be added to your insurance policy separately)

How much does auto maintenance insurance cost?

The cost of auto maintenance insurance, also known as mechanical breakdown insurance (MBI), varies depending on the insurance company and the specifics of your vehicle. This type of insurance is typically available for newer vehicles with low mileage.

Cost of Auto Maintenance Insurance

The cost of auto maintenance insurance can range from as little as $30 to as much as $100 per year. The average cost is around $100 per year, or $700 for the life of the policy. The main factor influencing the policy cost is the deductible amount, which is typically between $100 and $500. The higher the deductible, the lower the monthly payment.

Factors Affecting Cost

Insurance companies have different eligibility requirements for auto maintenance insurance. For example, Geico offers coverage for new or leased cars less than 15 months old and with fewer than 15,000 miles. AAA provides coverage for vehicles up to 12 years old and with up to 175,000 miles, while Olive covers vehicles up to 10 model years old and with up to 140,000 miles.

Auto maintenance insurance covers major repairs to your vehicle, such as engine or transmission issues. It does not cover routine maintenance, wear and tear, or damage caused by accidents. Covered repairs typically include:

• Air conditioning and heating
• Cooling and heating systems
• Electrical systems
• Safety technology
• Drivetrain, engine, and transmission problems

Whether auto maintenance insurance is worth it depends on your financial situation, the type of vehicle, and your risk appetite. Consider the following:

• Finances: Evaluate if you can afford to pay for a major car repair without going into debt and if the additional cost of auto maintenance insurance is feasible.
• Risk: Newer and more reliable vehicles are less likely to require repairs, but if you value the peace of mind that comes with insurance, it may be worth the cost.
• Vehicle Reliability: Research the reliability of your specific vehicle make and model to assess the likelihood of breakdowns and mechanical issues.

Is auto maintenance insurance worth the money?

Auto maintenance insurance, also known as car repair insurance or mechanical breakdown insurance, is an optional add-on to your standard car insurance policy. It covers the cost of repairs to your vehicle's major parts, such as the engine and transmission, in the event of a mechanical breakdown. This type of insurance is particularly useful if you don't already have an extended warranty on your vehicle, as it can save you from unexpected and costly repair bills. However, it's important to note that auto maintenance insurance does not cover routine maintenance, wear and tear, or accident-related damages.

When considering whether auto maintenance insurance is worth the money, there are several factors to take into account:

Cost

Auto maintenance insurance is relatively inexpensive, typically costing between $30 to $100 per year. However, it's important to consider the deductible, which is the amount you will have to pay out of pocket before the insurance coverage kicks in. The deductible for auto maintenance insurance usually ranges from $100 to $300.

Vehicle Age and Mileage

Auto maintenance insurance is usually only available for newer vehicles with low mileage. Most insurance companies offering this type of insurance have strict eligibility requirements, such as vehicles being less than 15 months old and having less than 15,000 miles on the odometer. It's important to check the specific requirements of the insurance provider before purchasing a policy.

Existing Coverage

If you already have an extended warranty or a manufacturer's warranty on your vehicle, auto maintenance insurance may not be necessary. These warranties often cover similar repairs to those covered by auto maintenance insurance. However, it's important to review the terms of your existing coverage, as there may be gaps that auto maintenance insurance could fill.

Peace of Mind

One of the biggest benefits of auto maintenance insurance is the peace of mind it provides. Knowing that you are financially protected in the event of a major repair can be valuable, especially if you cannot afford to pay for unexpected repairs out of pocket.

Reliability of Your Vehicle

The reliability of your vehicle is also an important consideration. Modern vehicles are generally more reliable and less prone to major mechanical failures. Additionally, certain vehicle brands and models may be known for having common mechanical issues. Researching the reliability of your vehicle and understanding the likelihood of needing major repairs can help you decide if auto maintenance insurance is worth the cost.

Alternatives

There are alternatives to auto maintenance insurance that can provide similar financial protection. One option is to start building an emergency fund specifically for unexpected vehicle repairs. Another option is to purchase an extended warranty, which can provide additional coverage after your manufacturer's warranty expires. However, it's important to carefully review the terms and conditions of any extended warranty, as they may have limitations and exclusions.

In conclusion, auto maintenance insurance can be worth the money if you want the peace of mind of knowing that you are protected from unexpected repair costs. However, it may not be necessary if you already have adequate coverage through a warranty or if your vehicle is reliable and the likelihood of major repairs is low. Ultimately, the decision to purchase auto maintenance insurance depends on your individual circumstances, including your vehicle's age and mileage, your existing coverage, and your financial situation.

What are the alternatives to auto maintenance insurance?

There are several alternatives to auto maintenance insurance. Here are some options to consider:

Extended Warranty

Purchasing an extended warranty can be a good alternative to auto maintenance insurance. An extended warranty can be bought from an auto dealership or a third-party company, and it covers the cost of certain repairs that are not included in the standard warranty. However, it is important to note that extended warranties do not include routine maintenance, such as oil changes and tire replacements.

Emergency Fund

Building an emergency fund is another option to cover unexpected car repairs. This involves setting aside a portion of your income regularly to create a cash reserve that can be used for unexpected expenses. This approach provides flexibility and ensures that you have control over your finances.

Research and Maintenance

Conducting thorough research before purchasing a car can help identify makes, models, and years that are known for their reliability. This can reduce the likelihood of unexpected repairs. Additionally, adhering to the car manufacturer's recommended maintenance schedule can help prevent major issues and extend the life of your vehicle.

Reliable Mechanic

Finding a reliable mechanic can also be beneficial. Look for a mechanic who specializes in your type of car, has good customer reviews, and is certified by the National Institute for Automotive Excellence. A good mechanic can provide quality repairs and help you avoid further complications.

Self-Insurance

In some states, such as Ohio, Tennessee, Texas, and Washington, there are alternative methods to show proof of financial responsibility instead of carrying auto insurance. These methods may include a surety bond, cash or securities, or self-insurance. However, it is important to note that these alternatives may require a significant amount of money readily available and may not be as easily obtainable as auto insurance.

Frequently asked questions