Car repair insurance, also known as mechanical breakdown insurance, is a type of insurance that covers the cost to fix any maintenance issues with your vehicle after the expiration of your car’s initial warranty. Car warranties expire faster than you might think, and the older your car gets, the more serious the maintenance services it’ll likely need. That often comes with much larger price tags. With mechanical breakdown insurance, you can save on the costs you would otherwise have to pay for such massive repairs.
Learn everything you need to know about car repair insurance costs and discover how it can help you keep your car in shape.
What Car Repair Insurance Covers
When you opt for car repair insurance, you’ll need to know what it covers and what it does not cover. Quite a few aspects are included in basic levels of coverage, but you’ll likely run into repairs that fall outside of the insurance policy. Any repairs that have to do with the engine, transmission, brakes, exhaust, or power system are typically included. Additionally, some policies go so far as to cover the steering and air conditioning, along with the fuel system.
Car repair insurance does not cover maintenance items such as filters, spark plugs, or tires. While some components of the brake system can be covered with insurance, wear items like the brake pads and shoes won’t be. Any fluid replacements you need, such as wiper fluid, oil, or coolant, are also not covered. It’s important to remember that any major repair that can be categorized as normal maintenance may not be covered by insurance.
How Car Repair Insurance Works
Functionally, car repair insurance works just like a warranty in that it covers maintenance you might need. It’s just a matter of what qualifies and what doesn’t. What’s important to remember is that car repair insurance policies typically have several limitations you’ll have to deal with before you can take advantage of any benefits.
The most obvious limitation is that you can’t wait until your car is already old. Some insurance providers require your car to still be relatively new when you sign up, with certain mileage limitations. Geico specifically has a limitation that the car must be less than 15 months old with less than 15,000 miles.
Other insurance providers may frame this in terms of the vehicle’s original warranty. For example, they may put a limitation that you must sign up for this insurance within 30 days of your warranty’s expiration. The closer you get to any of these limitations, the more expensive your policy is likely to be.
Additionally, the coverage won’t last forever. As your car ages, it may no longer qualify for this insurance. For example, an insurer may limit coverage to cars with less than 100,000 miles, at which point they’ll no longer qualify. Qualifications also come with a deductible, typically around $100 to $250, which is more than some minor maintenance services cost altogether.
Differences From Extended Warranties
Because the main purpose of car repair insurance is to cover maintenance costs after the expiration of your warranty, it’s similar to an extended warranty, but there are important differences to be aware of. Extended warranties are sold alongside cars typically from dealerships and other auto companies, while car repair insurance is sold by insurance companies. Additionally, extended car warranties are typically paid for in a lump sum or included with car loan payments, while car repair insurance is often included with your car insurance bill.
In terms of cost, the important difference to remember is how each type is paid. Car insurance is typically paid monthly, semi-annually, or annually, and car repair insurance works the same way. An extended warranty, however, may have to be paid off all at once in a big lump sum at the time of purchase, though there are instances in which it becomes part of the car loan payment. Consider these differences if you’re not trying to pay it all off at once.
Is the Car Repair Insurance Cost Worth It?
Whether the actual car repair insurance cost is worth it depends on a variety of factors. The cost of repairs can vary quite a bit based on the model of car you have. AAA suggests that drivers set aside $50 every month to be dedicated to maintenance, but that may not be enough in some circumstances. More luxurious vehicles tend to be more costly to fix, so it’s almost always a good idea to get car repair insurance to cover the cost of maintenance, as the typical deductible is often a fraction of the total cost.
With some cars and repairs, the overall cost of the repair may not even meet the deductible’s limitations. Fixing an air conditioner, for example, can be as cheap as $100 depending on what the problem is. Transmission problems, however, can run you $1,500 at a minimum, with more comprehensive replacement services costing upward of $5,000 in some scenarios.
If you have a repair shop you like, you may want to find an alternative to car repair insurance. Some policies necessitate that you take your car to specific repair shops instead of any shop with a license. Even so, some policies come with extra benefits like roadside assistance and rental reimbursement coverage, which could be handy benefits that extended warranties don’t offer. It’s also important to determine whether the coverage is transferable to new owners if you decide to sell or gift your car.
The car insurance repair cost can be severe depending on your budget, and there are alternatives available. You can simply save and dedicate a bit of money to an emergency fund every month. If you do research on your vehicle and discover that it doesn’t have a maintenance history with extensive repairs, you’re likely not to encounter any serious problems. That isn’t a certainty, however, so getting insurance is how you play it safe.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.