You buy auto insurance to protect your car if you are in an accident, but auto insurance doesn’t cover routine repairs. While insurance doesn’t typically cover you if you have a major parts breakdown, there is a special type of insurance that can protect you from these unexpected repairs.
Car repair insurance, also known as mechanical breakdown insurance, is a separate policy that can help pay to fix your car if you have an unexpected repair after your warranty expires. There are limits to the coverage, however, and it doesn’t cover older vehicles, so how do you know whether or not car repair insurance is right for you?
What is car repair insurance?
Car repair insurance is similar to a service contract or warranty sold by a car manufacturer. It is designed to cover mechanical issues that aren’t caused by a car accident, like if your transmission suddenly refuses to switch gears.
Like most insurance products, car repair insurance usually includes a deductible before your insurance coverage begins to pay. This means that car repair insurance may not be helpful for smaller repairs.
What does car repair insurance cover?
Car repair insurance covers multiple systems in your car, including:
Air conditioning/heater
Cooling systems
Electrical components, including computerized systems
Engine parts and systems
Fuel systems
Steering components
Transmission
Exhaust systems
Car repair insurance is designed for mechanical issues, which means any of the mechanical systems within your vehicle are likely to be covered. Each policy is different, however, so review your benefits carefully before purchasing a policy.
What is not covered by car repair insurance?
Even the best car repair insurance can’t cover everything, which means you may have several situations that aren’t covered by your policy, including:
Routine maintenance, like oil changes
Poor maintenance issues (damage caused by not taking proper care of your vehicle)
Brake pads, tires, and other normal wear and tear issues
Non-mechanical parts of your car, such as seat covers or tires
Anything already covered by your car warranty
Recalled parts
Damage that was already in place before you purchased the policy
Corrosion, rust, and other weather-related damage
Cosmetic damage
Car repair insurance also won’t cover damage caused by a car accident. This damage would be covered by your collision coverage in an at-fault accident or by the other driver’s liability insurance if they are at fault for the accident.
Is my vehicle eligible for car repair insurance?
Not every car is eligible for car repair insurance, unfortunately. Your car may or may not be eligible for coverage depending on:
New vs. used - Car repair insurance companies usually only sell coverage for new vehicles. It might not be possible to find used car auto repair insurance, while those policies that are available for older cars are likely to be much more expensive
Age - Each insurance company has different requirements, but typically coverage is only available for new cars that are a year or two old. For example, GEICO only offers car repair insurance for vehicles that are less than 15 months old
Mileage - Car repair insurance is usually only available for cars up to a certain mileage. For example, National General Insurance offers car repair coverage up to 72,001 miles. GEICO allows you to keep the coverage for up to 100,000 miles or 7 years, whichever comes first
Full Coverage - Some insurance companies only allow you to carry car repair insurance as part of a full coverage policy. For example, National General Insurance only allows you to purchase car repair coverage if you already carry comprehensive insurance
How does car repair insurance work?
Car repair insurance pays to repair some mechanical defects your car may experience. There are limits to the coverage and most plans come with a deductible, so just because you purchase a policy does not guarantee you won’t have to pay out of pocket for some portion of your repair bill.
The cause of the mechanical breakdown in your vehicle also matters. For example, if your air conditioner suddenly starts blowing hot air, it might be that you have a coolant leak. If you are leaking coolant because of faulty rubber hosing, that would be covered under your car repair insurance. If you are leaking coolant because you accidentally sliced through the rubber hosing with a screwdriver while trying to fix something else under the hood, that would not be covered under your car repair insurance.
You may still have a lot of questions. Can you take your car to any repair shop? How do you file a claim with the company? Can you choose how much your deductible will be for the plan? Each policy is unique, so you will need to read the details of your plan carefully to know exactly what is covered.
Where to buy car repair insurance
There are several insurance companies that sell car repair insurance, including:
AAA
Allstate
American Family
GEICO
Liberty Mutual
Mercury
National General
If you have an insurance agent or representative you can ask if they have anyone they recommend for car repair insurance as well.
Many third party companies that sell extended warranties are billing their products as car repair insurance, so be cautious when searching online for car repair insurance.
Is car repair insurance worth it?
Whether or not it is worth purchasing car repair insurance depends on your individual needs.
Since new cars almost always come with a bumper-to-bumper warranty, you are usually covered for any mechanical breakdowns your car may experience in the first few years. Combined with the fact that car repair insurance will expire after so many years/miles, it may not make sense for you to purchase car repair insurance, especially if you intend to put a lot of miles on the car very quickly. In fact, manufacturer warranties are usually transferable, which means you could potentially be covered under a warranty even if you bought a used car.
For example, if your car comes with a three year bumper-to-bumper warranty, purchasing a car repair insurance policy in the first year means you will be paying for duplicate coverage for two years. If you then hit your mileage limit in year five of owning your car, you will have paid for car repair insurance for four years while only being able to use it for the last two. It may make more sense for you to set aside money in a savings account specifically for unexpected car repairs instead of purchasing a separate insurance policy.
However, if you’ve ever found yourself stuck with a car that needs constant repairs (often referred to as a lemon) you know exactly how valuable it can be to have an insurance plan to cover mechanical breakdowns. The cost of the policy would provide much more than just insurance — it would also provide you peace of mind.
Car repair insurance vs. extended warranties
Car repair insurance and extended warranties cover the same issues, so how do you choose which one you need, or whether or not you need both?
There are a few key differences between the two, including:
Insurance is paid for annually, while warranties are paid for up front or included in the cost of your vehicle
Car repair insurance cannot be transferred, while warranties can be transferred to another vehicle
Insurance can be dropped at any point and you won’t be charged going forward, while warranties can usually be cancelled with a prorated refund
There are also many ways car repair insurance and extended warranties are the same, including:
They usually offer bumper-to-bumper coverage with some exclusions
They must both be purchased when a car is relatively new
They only cover mechanical breakdowns, which means damage caused by user error or an auto accident would not be covered by either option
Car repair insurance alternatives
There are several options that you can choose from if car repair insurance isn’t right for you, including:
Extended warranties - Because they are so similar to car repair insurance, some people may choose to purchase just a warranty or just car repair insurance, though it is wise to be wary of extended warranties in general
Savings account - Many people may choose to put aside a small amount of money each month towards mechanical breakdown repairs rather than paying for insurance
Research carefully - Researching car makes and models before purchasing can go a long way towards helping you feel confident that your car likely won’t need these types of repairs
Basic maintenance - Keeping your car well-maintained can help prevent a lot of damage, so make sure to change your oil regularly and keep your vehicle up-to-date with scheduled maintenance
Frequently Asked Questions
Is it better to total a car or fix it?
Drivers usually aren’t given the option to choose, so if your insurance company declares your car totaled there isn’t much you can do about it. You may have the choice to repair the car in some instances, but you may want to talk to your mechanic about whether or not that is a good idea.
Is there car repair insurance for older cars?
There are some companies that offer car repair insurance or extended warranties for older vehicles, but the premium is higher and the limits as to what is covered are usually the same as any other car repair insurance plan. If your car has made it for 7-10 years or gone more than 100,000 miles without any mechanical failure, the odds are good you won’t find any issues that aren’t caused by an auto accident or user error.
How will I know if my car has a factory recall?
Typically, if your car has a recall your car manufacturer will reach out to you directly via mail to let you know about it and tell you how to get the car repaired at no cost to you. If you are concerned there might have been a recall you didn’t hear about, you can check the National Highway Traffic Safety Administration website.
Should I let my insurance company fix my car?
While you may not have to fix your car with a check from your insurance company in an auto accident, that likely isn’t going to be an option with car repair insurance. Unlike a dented bumper, if you have a mechanical breakdown big enough that you’ve noticed it, the odds are good you need to have it repaired so your car works properly. You can usually choose which mechanic will make the repairs, so it is up to you whether you use a trusted mechanic you’ve known for a while or defer to someone recommended by your insurance company.
