Auto Repair Insurance: Is It Worth The Cost?

Car repair insurance, also known as mechanical breakdown insurance, is an optional coverage that can be added to car insurance to pay for repairs if your car breaks down. It covers major repairs needed for a car, such as drivetrain, engine and transmission problems. It does not cover routine maintenance or upkeep, such as oil changes or tire replacements.

The cost of car repair insurance depends on several factors, including the model and age of the car, the chosen insurer, the specific policy and its benefits, and the size of the deductible. The deductible, or the amount paid out of pocket for repairs, typically ranges from $100 to $500. The insurance itself can cost as little as $30 to as much as $100 per year, with an average of $100 per year.

What does auto repair insurance cover?

Auto repair insurance, also known as mechanical breakdown insurance (MBI), is an optional add-on to your standard car insurance policy. It covers the cost of repairs to your vehicle's mechanical and electrical systems in the event of a breakdown, excluding damage caused by an accident. This includes repairs to the engine, transmission, electrical systems, cooling and heating systems, safety technology, and convenience technology.

MBI does not cover routine maintenance or repairs resulting from normal wear and tear, such as oil changes, tyre replacements, or brake pad replacements. It also does not cover damage caused by poor maintenance, accidents, or pre-existing damage.

The cost of auto repair insurance varies depending on the insurer and the specifics of your vehicle, but it typically ranges from $30 to $100 per year, with an average of $100 per year. When purchasing auto repair insurance, you will usually need to select a deductible amount, which is the portion of the repair cost that you will be responsible for. Deductibles typically range from $100 to $500.

What doesn't auto repair insurance cover?

Auto repair insurance, also known as mechanical breakdown insurance (MBI), is an optional add-on to your car insurance policy. It covers the cost of repairs to your vehicle's mechanical and electrical systems in the event of a mechanical breakdown. However, it's important to note that auto repair insurance does not cover all types of repairs. Here are some things that are typically not covered by auto repair insurance:

• Damage caused by poor maintenance: Auto repair insurance does not cover issues arising from a lack of proper maintenance, such as infrequent oil changes, using the wrong type of fuel, or neglecting routine tune-ups.
• Damage caused in a car accident: MBI is not meant to replace collision insurance. It will not cover repairs needed due to collision-related damage.
• Non-mechanical items: Auto repair insurance typically covers mechanical and electrical systems. It does not cover non-mechanical items like vehicle trim, moulding, or cosmetic damage such as scratches or dents.
• Normal wear and tear: Wear and tear on items like brake pads, tires, and spark plugs are generally not covered. This includes routine maintenance and replacement of items due to age or use.
• Parts or items covered by a recall or warranty: Auto repair insurance does not cover items that are already covered by a manufacturer's recall or warranty. This includes voluntary manufacturer repair programs.
• Pre-existing damage: Any damage that existed before purchasing the insurance policy is not covered.

It's important to carefully review the specific inclusions and exclusions of any auto repair insurance policy, as the exact coverage may vary between insurance providers. Additionally, eligibility for auto repair insurance is often dependent on the vehicle's age and mileage, with newer cars generally being eligible for more comprehensive coverage.

Limitations of auto repair insurance

Auto repair insurance, also known as mechanical breakdown insurance, is a type of insurance that covers the cost of repairs to your vehicle's major mechanical components after the car's original warranty expires. While this type of insurance can provide peace of mind and protect you from high out-of-pocket repair costs, it has several limitations that potential customers should be aware of.

Partial Coverage

Auto repair insurance is customizable, meaning you can choose to insure specific parts of your car, such as the transmission or engine. However, this can be a limitation as it is difficult to predict which parts of your car will need repairs, and insuring multiple parts can become expensive. Additionally, auto repair insurance does not cover routine maintenance or upkeep, such as oil changes or tire replacements, and usually does not include roadside assistance or towing services.

Insurance Burden

On top of standard car insurance, auto repair insurance adds an additional financial burden for drivers. Comprehensive insurance, which covers repairs from accidents, is often already an additional cost for drivers on top of basic liability insurance. Auto repair insurance is another optional extra that not all drivers will be able to afford.

Claims Handling

Insurance companies are often hesitant to pay out claims, and auto repair insurance is no exception. Fine print and specific clauses in the policy can sometimes be used to avoid paying, leaving customers frustrated and out of pocket. Additionally, insurance payouts can take months to process, causing financial strain for customers in the meantime.

Waiting Game

Even if an insurance company approves a claim, the payment may take months to reach the customer. This can create a financial burden for drivers who need to balance their checkbooks and cover the cost of repairs in the short term. As a result, many drivers choose to keep money on hand for unexpected repairs rather than rely on insurance.

Existing Mechanic Relationship

Drivers who already have a trusted mechanic they can rely on for repairs may not see the benefit of auto repair insurance. They may prefer to negotiate directly with their mechanic and use their knowledge to leverage better prices rather than deal with the potential hassle of insurance claims.

Is your car eligible for auto repair insurance?

Eligibility for auto repair insurance depends on the insurance company's guidelines and your vehicle's age and mileage. For instance, GEICO offers mechanical breakdown insurance (MBI) for leased or new cars that are less than 15 months old and have less than 15,000 miles on the odometer. On the other hand, AAA provides coverage for vehicles up to 12 years old with up to 175,000 miles, and Olive covers vehicles up to 10 model years old with up to 140,000 miles.

Some insurance companies have additional eligibility requirements. For example, National General Insurance requires you to have comprehensive car coverage to be eligible for car repair coverage. Certain types of cars may also be excluded from mechanical breakdown insurance, so it is important to check with your insurance company to see if your vehicle is eligible.

Is auto repair insurance worth the money?

Auto repair insurance, also known as mechanical breakdown insurance, is an optional coverage that you can add to your car insurance to pay for repairs if your car breaks down. It covers major repairs needed for a car, such as drivetrain, engine, and transmission problems. It is usually available only for newer vehicles that have yet to accumulate too many miles.

Auto repair insurance might be worth it for you depending on the cost of what breaks, as it can protect you from an unexpected repair bill. Fixing a car's air conditioner can cost anywhere from $100 to $1,500. Transmission replacement can range from $1,500 to over $6,000. If you cannot afford to pay for a major car repair out of pocket, auto repair insurance might be worth it for you if your vehicle is no longer under warranty.

Auto repair insurance is not worth it if you can afford to pay for a major car repair without going into debt and you can afford to pay a little extra each month for this peace-of-mind protection. Newer vehicles and reliable car brands are less likely to break down until they get older. If you can afford to pay for auto repairs, it might be more cost-effective to save your money and invest it elsewhere.

Alternatives to auto repair insurance

If auto repair insurance is not for you, you can still protect yourself from the cost of unexpected repairs in other ways. One way is to get an extended warranty, also known as a vehicle service contract, which covers the cost of certain repairs. You can purchase it to supplement the coverage provided by your car's existing manufacturer's warranty if it's still in effect. If the manufacturer's warranty has expired, you can use an extended warranty to get wide-ranging protection. Another alternative is to build an emergency fund by consistently saving money from your paycheck or using one-time opportunities such as a tax refund.

Frequently asked questions