Understanding Auto Insurance: Covered Repairs And Their Limits

Whether your auto insurance covers repairs depends on the type of coverage you have and the cause of the damage. Standard policies only cover specific types of repairs, such as damage caused by accidents, acts of vandalism, or severe weather. Auto insurance does not typically cover routine maintenance or repairs resulting from mechanical breakdowns and wear and tear. However, some insurers offer optional add-ons, such as mechanical breakdown insurance (MBI) or comprehensive coverage, which can cover a wider range of repairs.

Comprehensive coverage

It's important to note that comprehensive coverage will not cover regular wear and tear or mechanical breakdowns. For that, you would need mechanical breakdown insurance (MBI), which is a separate type of policy.

Collision coverage

It is important to note that collision coverage does not include damage caused by animals. Instead, this is covered under comprehensive insurance, which also includes events like fire, theft, hail, or fallen tree branches. Collision coverage specifically focuses on accidents involving a collision with another vehicle or object, regardless of who is at fault.

By having collision coverage, you can have peace of mind knowing that your car is covered in the event of an accident. It helps you avoid paying out-of-pocket expenses for repairs, beyond the cost of your deductible. This coverage can be especially beneficial if your vehicle is deemed a total loss or if you combine it with additional coverage options, potentially reducing your repair costs to zero.

Mechanical breakdown insurance

MBI is typically purchased for new or leased cars with less than 15,000 miles on the odometer and less than 15 months old. The customer must also be the first owner of the vehicle. Once purchased, MBI can be renewed for up to seven years or 100,000 miles, whichever comes first. After paying a deductible, typically between $250 to $500, MBI will cover the remaining cost of covered repairs.

It is important to note that MBI does not cover routine maintenance, such as oil changes, tire rotations, or brake pad replacements. Wear and tear on parts such as belts, hoses, and brakes are also generally excluded from coverage. Additionally, MBI does not provide coverage for towing or damage resulting from accidents, collisions, or environmental factors.

MBI offers several advantages over an extended warranty. It often provides broader coverage, including mechanical issues not related to defective materials or improper manufacturing. MBI also allows for flexible payment options, such as pay-as-you-go monthly or annual payments, instead of a large lump-sum payment upfront. Furthermore, MBI allows you to choose any licensed repair shop, whereas extended warranties may require repairs to be done at specific dealerships.

When considering MBI, it is essential to review the policy thoroughly and understand any limitations or exclusions. It is also worth comparing costs and coverage between different providers to find the best option for your needs.

Extended warranties

There are two primary types of extended warranties: those offered by the carmakers (OEMs) and aftermarket warranties offered by third-party vendors. An OEM would be a carmaker such as Chevrolet, Ford, or Toyota. A third party would be an insurance or warranty company that isn't directly affiliated with a car brand.

Warranties offered by the OEM come in two varieties when a vehicle is new: powertrain and "bumper to bumper". A powertrain warranty covers your engine and transmission against defects in workmanship, while a bumper-to-bumper warranty covers most other items in the vehicle, including major components under the hood, navigation systems, power seats, onboard computers, and various other electronics. An extended warranty from an OEM will usually mimic what it offered when the vehicle was new, extending the length of the coverage and the allotted mileage. Some will throw in extra benefits such as roadside assistance.

When it comes to deciding whether to purchase an extended warranty, it's important to consider the following:

• Are you already under warranty? If your vehicle is still under the manufacturer's warranty, you may not need an extended warranty. However, if your warranty is close to expiring or has expired, an extended warranty may be a good idea.
• How long will you actually be covered? It's important to know exactly what you're paying for. Make sure you understand when the coverage begins and ends, and whether there are any limitations or exclusions.
• Can you cancel the warranty later? In some states, you may be able to cancel a warranty after purchase and receive a prorated refund.
• Do you have a separate budget for maintenance? Extended warranties typically do not cover scheduled maintenance or routine repairs, so it's important to budget for these expenses separately.

When purchasing an extended warranty, it's important to buy from a reputable company. Many car dealerships offer extended warranties, or you can purchase one from a third-party provider. It's also important to read the fine print and understand the coverage, limitations, and exclusions before purchasing.

Liability coverage

The minimum liability limits vary depending on the state, and drivers can choose to purchase additional coverage to meet their specific needs. It's important to note that liability coverage does not cover the costs of repairing your own vehicle or your own medical expenses in the event of an accident. To protect your own vehicle, you will need to add comprehensive and collision coverage to your policy.

Frequently asked questions