Auto Repair Insurance: What You Need To Know

Auto 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 to your vehicle, such as engine or transmission issues, but not routine maintenance or wear and tear. Auto repair insurance is typically available only for newer vehicles that have yet to accumulate too many miles. It is similar to an extended warranty but is usually more affordable and offered by insurance companies. The cost of auto repair insurance policies can range from $30 to $100 per year, with an average of $100 per year. When deciding if auto repair insurance is worth it, it's important to consider your finances, vehicle reliability, and risk appetite.

What does auto repair insurance cover?

Auto repair insurance, also known as mechanical breakdown insurance (MBI), covers the cost of repairs to your vehicle's major mechanical components after the car's original warranty expires. It is an optional coverage that you can add to your current auto insurance policy to help pay for repairs that aren't accident-related. It covers mechanical malfunctions for your car's major systems, such as the engine and transmission.

• Steering, air conditioning, and the car's fuel system (some policies)
• Adding fluids (coolant, oil, wiper fluid, etc.)
• Convenience technology (such as convertible top, keyless entry, and sunroof)
• Cooling and heating systems
• Electrical systems (including the car's computer)
• Safety technology (like blind-spot awareness system and camera)

It's important to note that auto repair insurance doesn't cover routine service and maintenance or damage caused by accidents. It also doesn't cover the replacement of wear-and-tear items like brake pads, spark plugs, filters, or tires. Additionally, there may be limitations on when you can purchase this coverage, as some insurers require the vehicle to be relatively new.

What doesn't auto repair insurance cover?

Auto repair insurance, also known as mechanical breakdown insurance (MBI), is a type of optional insurance coverage that pays to fix mechanical malfunctions after a car's original warranty expires. While MBI can save you from paying thousands of dollars for major mechanical failures, it does not cover everything.

The list of items and damages not covered by MBI will vary by car insurance company, but it generally does not cover:

• 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, such as worn brake pads and tires.
• Parts or items covered by a recall, a voluntary manufacturer repair program, or your car warranty.
• Pre-existing damage before you bought the insurance.
• Routine maintenance, such as engine tune-ups, oil changes, suspension alignment, tire rotation, and wheel balancing.

In addition, MBI has some limitations. For example, repairs are typically done at an approved auto repair shop, and you will need to pay a deductible before the insurer covers the remainder of the cost. MBI also does not include maintenance and may have exclusions for common repairs like replacing the coolant, rebalancing the wheels, and changing the tires.

How does auto repair insurance work?

Auto repair insurance, also known as mechanical breakdown insurance (MBI), is an optional coverage that pays for repairs to a car's major systems, such as the engine and transmission, after the original warranty expires. It is available from major insurance companies and typically has a deductible ranging from $100 to $300.

When your car needs a major repair, you will first need to contact your insurance company to file a claim and get pre-authorization. You can then take your car to any authorized repair shop, and your insurance company will handle the payment of any costs over your deductible.

It is important to note that auto repair insurance does not cover routine maintenance or wear and tear. Additionally, not all insurance companies offer this type of coverage, and when they do, there are often limitations. For example, you may need to begin your coverage when the car is fairly new, and the coverage will usually end as the car ages.

Overall, auto repair insurance can provide peace of mind and protection from unexpected repair bills. However, it may not be necessary for reliable, newer cars that are less likely to need repairs.

Auto repair insurance vs extended warranty

Auto repair insurance, also known as mechanical breakdown insurance (MBI), is a form of auto insurance coverage that protects a vehicle against mechanical failures. It is separate from other insurance contracts such as liability, collision, and comprehensive insurance. Auto repair insurance is typically provided by major car insurance companies and must be purchased separately. It also has restrictions and is only available in certain states. Additionally, auto repair insurance only covers repairs for major components and does not include routine maintenance. It is also usually restricted to newer cars or late-model vehicles with low mileage.

On the other hand, an extended warranty, also known as a vehicle service contract (VSC), is a contract between you and a company, often your car's dealer or manufacturer, that covers repairs within a specific period or mileage. Extended warranties can be purchased from the manufacturer or a third-party provider. They typically offer three types of coverage plans: powertrain, inclusionary, and exclusionary. Powertrain warranties cover essential components and are considered the most affordable option. Inclusionary warranties cover specific components listed in the contract, while exclusionary warranties offer maximum protection with only a short list of exclusions. Extended warranties do not usually cover theft, damage caused by natural disasters, or vandalism.

When deciding between auto repair insurance and an extended warranty, it is important to consider the level of coverage needed, the cost, and the restrictions of each option. Auto repair insurance may be more limited in terms of coverage and availability, while extended warranties offer more comprehensive protection but may be more expensive. It is also worth noting that auto repair insurance is typically provided by major insurance companies, while extended warranties can be purchased from the manufacturer or a third-party provider. Ultimately, the decision between auto repair insurance and an extended warranty depends on individual needs and preferences.

Is auto repair insurance worth it?

Car repair insurance, also known as mechanical breakdown insurance, is an optional add-on to your current auto insurance policy. It covers the cost of repairing mechanical breakdowns that your regular car insurance doesn't cover, such as engine or transmission issues, problems with steering or electrical systems, and various other mechanical breakdowns. It is available from major insurance companies such as Geico, Allstate, and Mercury.

The value of car repair insurance depends on several factors, including your car's age, your driving habits, and your existing car insurance policy. Here are some points to consider when deciding if car repair insurance is worth it:

Cost of Repairs

Car repair insurance might be worth it depending on the cost of repairs. 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 these repairs out of pocket, car repair insurance may be a good option.

Vehicle Age and Mileage

Car repair insurance is typically available for newer vehicles with low mileage. For example, Geico offers mechanical breakdown insurance for new or leased cars less than 15 months old and with less than 15,000 miles. As the vehicle ages and accumulates more miles, the eligibility for car repair insurance may decrease.

Existing Coverage

If your vehicle is still under the manufacturer's warranty or an extended warranty, car repair insurance may not be necessary as there could be an overlap in coverage. It is important to review the terms of your existing coverage to understand what repairs are already included.

Financial Situation

Consider your financial situation and ability to pay for unexpected repairs. Building an emergency fund or setting aside a specific amount each month for potential repairs could be an alternative to purchasing car repair insurance.

Reliability of the Vehicle

Research the reliability of your vehicle make and model. If the vehicle has a good track record of minimal mechanical issues, the need for car repair insurance may be lower.

In conclusion, car repair insurance can provide peace of mind and protection against unexpected repair costs. However, it is important to weigh the benefits against the cost of the insurance, the likelihood of needing the coverage, and any existing warranties or alternatives.

Frequently asked questions