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 your current auto insurance policy to help pay for repairs that aren't accident-related. It covers mechanical breakdowns, such as a blown gasket or electrical system failure, which are not covered by standard car insurance policies. While it can provide peace of mind and protect against unexpected repair costs, car repair insurance might not be necessary for newer cars still under warranty or for those with reliable vehicles and sufficient savings for repairs. It's important to weigh the benefits against the costs, as the value of car repair insurance depends on factors such as your car's age, driving habits, and existing insurance coverage.

Auto repair insurance covers mechanical breakdowns

Mechanical breakdown insurance, also known as car repair insurance, is an optional add-on to your current auto insurance policy that covers the cost of repairs for mechanical breakdowns. This type of insurance is ideal for those whose manufacturer's warranty has expired, or whose vehicle warranty does not cover mechanical failures. It is also a good option for those who want to avoid the high upfront cost of an extended warranty.

Mechanical breakdown insurance covers the cost of repairs to your vehicle's major parts and systems, including the powertrain, electrical systems, and other major components. It is important to note that this type of insurance does not cover routine maintenance and services such as oil changes, tire rotations, and brake pad replacements. Additionally, damage caused by accidents, collisions, or environmental factors is typically excluded from coverage.

When purchasing mechanical breakdown insurance, you will have the option to choose a deductible that fits your budget, usually ranging from $100 to $500. The insurance will then cover the remaining cost of the covered repairs with your service provider. This type of insurance is available for various vehicles, including cars, trucks, and SUVs.

Some insurance companies, like GEICO, offer mechanical breakdown insurance for new or leased cars that are less than 15 months old and have less than 15,000 miles. Once purchased, the policy can be renewed for up to seven years or 100,000 miles, whichever comes first. Other companies, like Olive, offer coverage for vehicles up to 10 model years old with up to 140,000 miles on the odometer.

Mechanical breakdown insurance provides peace of mind and financial protection in the event of unexpected repairs. It is a good option for those with older cars or high mileage, as well as those whose new-car warranty has expired. However, it may not be necessary for new cars that are still under warranty. Ultimately, the decision to purchase mechanical breakdown insurance depends on the age and mileage of your vehicle, your financial situation, and your preference for coverage.

It's also known as mechanical breakdown insurance

Car repair insurance, also known as mechanical breakdown insurance, is an optional add-on to your auto insurance policy. It covers the costs of repairs to your vehicle's mechanical and electrical parts in the event of a breakdown, excluding routine maintenance or wear and tear. This type of insurance is especially useful if your car is no longer under warranty, as it can help you avoid costly repair bills.

Mechanical breakdown insurance is similar to an extended car warranty, but there are some key differences. Mechanical breakdown insurance is offered by insurance companies and can be added to your existing auto insurance policy, whereas extended warranties are typically sold by dealerships or third-party providers and are often paid for upfront in a lump sum. Mechanical breakdown insurance usually has longer coverage terms and is more comprehensive, covering a wider range of mechanical issues.

When considering mechanical breakdown insurance, it's important to shop around and compare different providers' offerings. The eligibility requirements, coverage limits, and costs can vary significantly. For example, some companies may restrict coverage to newer vehicles with low mileage, while others may offer coverage for older, high-mileage cars. Additionally, the insurance may not be available in certain states.

Overall, mechanical breakdown insurance can provide valuable peace of mind and protect you from unexpected repair costs. However, it's important to carefully review the terms and conditions, as well as your own financial situation, to determine if this type of insurance is a good fit for your needs.

It's worth considering for older cars

Car repair insurance, also known as mechanical breakdown insurance, is a good idea for older cars as it can help reduce the overall ownership cost. This is especially true for cars without a warranty, as the insurance covers the cost of expensive repairs such as a faulty transmission or engine.

However, it is worth noting that car repair insurance does not cover routine maintenance or upkeep. It will not cover anything that is considered part of a normal tune-up, like oil changes, tire replacements, or spark plug replacements. It also does not usually cover roadside assistance or towing services.

When deciding if car repair insurance is worth it for an older car, it is important to consider your finances, the type of vehicle, and your appetite for risk. Ask yourself if you can afford to pay for a major car repair without going into debt and if you can afford the extra cost of this insurance. Also, consider the reliability of your vehicle and the likelihood of a breakdown.

Another factor to keep in mind is that car repair insurance is usually only available for newer vehicles with low mileage. Many insurance companies have strict eligibility requirements, such as limiting coverage to vehicles less than 15 months old with fewer than 15,000 miles. However, some companies, like AAA, offer coverage for vehicles up to 12 years old with up to 175,000 miles. Therefore, it is essential to shop around and compare the eligibility requirements and coverage options of different insurance providers before purchasing car repair insurance for an older car.

It's not worth it for new cars

For new cars, extended auto repair insurance might not be the best idea for several reasons. Firstly, most new cars come with a manufacturer's warranty that covers the cost of repairs for a certain period of time or up to a specified mileage. This warranty can provide comprehensive coverage for unexpected repairs, rendering additional insurance redundant and unnecessary. The duration and extent of these warranties can vary by manufacturer, but they typically offer coverage for at least 3 years or 36,000 miles, whichever comes first. Some manufacturers even offer longer warranties, such as a 5-year or 60,000-mile bumper-to-bumper warranty. During this warranty period, any repairs required due to manufacturing defects or unexpected mechanical failures will be covered, ensuring peace of mind for new car owners.

Secondly, new cars are less likely to require major repairs in the initial years of ownership. Modern vehicles are built with improved technology and higher quality standards, resulting in enhanced reliability and reduced frequency of unexpected breakdowns. The likelihood of requiring costly repairs during the early stages of a new car's life is relatively low. Most new cars also come with additional benefits such as roadside assistance programs, which can provide support in the event of a breakdown, offering services like towing, jump-starting, and minor on-site repairs, further reducing the need for separate repair insurance.

Additionally, auto repair insurance might not be cost-effective for new cars. The premiums for such insurance policies can be quite high, and when combined with the overall cost of a new car, it can significantly increase your financial burden. Instead of paying for repair insurance, setting aside the money you would have spent on premiums into a dedicated savings account specifically for car repairs can be a wiser decision. This way, you can earn interest on your savings and have a fund ready for any unexpected repair costs, without the added expense of insurance premiums.

Another factor to consider is that auto repair insurance often comes with restrictions and limitations. Policies may have deductibles, caps on payout amounts, or specific exclusions for certain types of repairs. For instance, regular maintenance services, such as oil changes and tire rotations, are typically not covered by auto repair insurance. Pre-existing conditions or issues caused by modifications made to the vehicle may also be excluded from coverage. Understanding the fine print of any insurance policy is crucial to avoid surprises when making a claim.

Lastly, for new cars, it is important to consider the overall value proposition of auto repair insurance. When purchasing a new vehicle, the initial years of ownership are typically associated with lower repair costs. As the car ages and moves beyond the manufacturer's warranty period, the likelihood of repairs increases, but by then, the vehicle has usually depreciated significantly in value. At this stage, it might make more financial sense to consider upgrading to a newer model or exploring alternative transportation options, rather than investing in extended repair insurance for an aging vehicle.

It's available from major insurance companies

Auto repair insurance, also known as mechanical breakdown insurance, is available from major insurance companies. This type of insurance helps to cover the costs of repairs that aren't related to accidents. It's important to note that not all insurers offer this type of coverage, and eligibility requirements can vary. For example, Geico offers mechanical breakdown insurance for new or leased cars that are less than 15 months old and have fewer than 15,000 miles. On the other hand, AAA provides coverage for vehicles up to 12 years old with up to 175,000 miles on the odometer.

When considering auto repair insurance, it's important to compare the benefits and costs across different insurers. Some companies, like Geico, offer renewals for up to seven years or 100,000 miles, whichever comes first. Additionally, the deductible amount can vary by insurer, with companies like Allstate offering a $50 deductible, while Geico mentions $250, and Progressive allows customers to choose between $100 and $500.

It's also worth noting that auto repair insurance doesn't cover routine maintenance or damage caused by accidents. If you're considering this type of insurance, be sure to review the specific coverage details offered by each insurer to ensure it aligns with your needs.

Frequently asked questions