Is Car Repair Insurance Worth It?

Written by Jason Metz and published on

Car repairs can take a toll on your wallet, and if you don’t have an emergency fund, you may find yourself taking on debt to pay for them. Purchasing a car repair insurance policy may seem like a good investment for managing vehicle maintenance and repair costs. But is this coverage something you need? Let’s look at the advantages and disadvantages of car repair insurance to help you decide if buying a policy makes sense for you.

Is Car Repair Insurance Worth It?

If you’re a car owner or planning to buy one, chances are you already know you need car insurance, which covers a wide range of problems like car accidents, auto theft, fires, floods and injuries. But if you want insurance in case your car’s computer system goes haywire or you end up with a defective engine, you would need a special coverage type within your auto insurance policy

That’s where car repair insurance comes in. Commonly known as “mechanical breakdown insurance” pays for repair if your car has mechanical or electrical problems. Mechanical breakdown insurance is similar to an extended car warranty, but the main difference is that you purchase it from a car insurance company.

Is car repair insurance worth it? Do you already have coverage through your car warranty? Are you better off paying for repairs on your own? We’ll answer that and more.

What Does Car Repair Insurance Cover?

The items covered by mechanical breakdown insurance depend on your car insurance company but typically include:

  • Air conditioning
  • Cooling systems
  • Electrical systems (including the car’s computer)
  • Engine
  • Exhaust
  • Fuel systems
  • Steering components
  • Transmission

Generally, you’ll have to pay a deductible if you make a claim under mechanical breakdown insurance. For example, if you have a $250 deductible and your car repair insurance claim is $1,000, your car insurance company will pay $750.

What Is Not Covered By Car Repair Insurance?

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

  • Damage caused in a car accident
  • Routine maintenance, like engine tune-ups, oil changes, suspension alignment, tire rotation and wheel balancing
  • Damage caused by poor maintenance, like infrequent oil changes or using the wrong type of fuel
  • Normal wear and tear, like worn brake pads and tires
  • Non-mechanical items, like vehicle trim and molding
  • Parts or items covered by your car warranty
  • Parts or items covered by a recall
  • Parts or items covered by a voluntary manufacturer repair program
  • Pre-existing damage before you bought the insurance
  • Corrosion and rust

Is My Vehicle Eligible For Car Repair Insurance?

Eligibility to buy mechanical breakdown insurance generally depends on vehicle.age and mileage.

For example, we looked at a National General Insurance policy that offered mechanical breakdown insurance for cars in the current model year and seven years prior with an odometer reading less than 72,001 miles. But there was a catch: When it’s time to renew the policy, if your car is over 72,001 miles or projected to be over that mileage amount, mechanical breakdown insurance will be removed from the policy.

The National General Insurance policy has another interesting mileage rule: If your odometer reading exceeds 90,000 miles during the policy term, you won’t be covered for any subsequent losses and mechanical breakdown insurance will be removed from the policy. For example, if you purchase mechanical breakdown insurance for a car with 65,000 miles and rack up another 25,000 miles during the policy term, you’ll lose car repair coverage when you surpass 90,000 miles.

Your car insurance company might have some other eligibility requirements. For example, the National General Insurance policy we reviewed requires you to have comprehensive car coverage to be eligible for car repair coverage.

Certain types of cars may be excluded from mechanical breakdown insurance. Your car insurance company will have a list of vehicles that are eligible or excluded from coverage.

Here are some insurers that offer car repair insurance:

  • 21 Century Auto Mechanical Breakdown Insurance
  • Allstate Vehicle Service Contract
  • Geico Mechanical Breakdown Insurance
  • Mercury Mechanical Protection

What’s the Difference Between Car Repair Insurance and an Auto Warranty?

You don’t necessarily need special auto insurance in order to get reimbursement for mechanical and electrical repairs. Car warranties are similar. Warranties and car repair insurance both cover mechanical defects in the engine, transmission and electronics, including a car’s computer. The exact specifics of what’s covered will vary depending on the warranty or car repair insurance policy.

Warranties can generally be broken down as:

  • New car warranty, which is typically included when you buy a new car. This type of warranty usually covers a range of years or miles, like a three-year or 36,000 mile warranty. A new car warranty usually expires when you hit one of those milestones, whichever comes first.
  • Extended car warranty, which extends the length of a new car warranty or can be purchased to cover a used car. You can typically buy an extended car warranty from an auto dealership or a third-party company.

Here are some key differences between car repair insurance and car warranties:

  • Car repair insurance is purchased through a car insurance company.
  • Extended car warranties are usually sold through car dealerships, auto clubs and other companies.
  • Car repair insurance is typically added to your car insurance bill, which you can pay in monthly, semi-annual or annual installments.
  • Extended car warranties are typically paid as a lump sum or rolled into your car loan payments.

How Does Car Repair Insurance Work?

If your car has a problem, like a mechanical defect, you can file a claim with your car repair insurance company. A claims representative will determine if the problem is eligible for coverage. For example, if your car’s electrical system goes haywire because of a defect, you would most likely be covered. If your car’s electrical system goes haywire because you cut the wrong wire while trying to install an aftermarket radio, chances are you won’t be covered.

If your car’s problem is covered by your car repair insurance, you can take it to a shop for repair. Some car repair insurance policies might restrict which shops you can use for repair. Check with your car repair insurance company before you take it to the shop to make sure repair will be covered.

Is Car Repair Insurance Worth It?

Car repair insurance could protect you from an unexpected expense, like paying for a busted air conditioning unit. The potential value might be worth it for you, depending on the cost of what breaks.

For example, fixing a car’s air conditioner could cost anywhere from $100 to $1,000. But other items can be more expensive. A transmission replacement could range from $1,500 to $5,000.

Could you afford to pay out-of-pocket if your car had a major mechanical defect? If not, car repair insurance might be worth it for you if your vehicle is no longer under warranty. Keep in mind, you will have a deductible if you make a claim.

You’ll also want to consider these factors before purchasing a car repair insurance policy:

  • Can you choose your own repair shop? Car insurance companies typically require you to take the car to a licensed repair shop, but some companies may restrict which shops you can choose from. It’s a good idea to ask where you can get your car repaired before you buy a policy.
  • Does the car repair insurance policy come with any added benefits? Some policies might include extras like roadside assistance, trip interruption coverage and rental reimbursement coverage.
  • Can you transfer the coverage to a new owner? If you sell or give your car to someone else, some car repair insurance policies allow you to transfer coverage to the new owner.
  • Do you already have coverage? You may already have coverage through a new car warranty or an extended warranty. If so, buying car repair insurance would be an unnecessary overlap in coverage.

Car Repair Insurance At-a-Glance

Item Covered by car repair insurance?
Air conditioning defects
Engine defects
Electronic system defects
Exhaust system defects
Fuel system defects
Transmission defects
Fuel systems defects
Non-mechanical items, like vehicle trim and molding No
Damage from a car accident No
Routine maintenance, like oil changes and tire rotation No
Damage caused by poor maintenance No
Pre-existing damages No
Normal wear and tear, like worn brake pads No
Parts covered by a factory recall No
Parts covered by car warranty No

How Will I Know If My Car Has a Factory Recall?

A recall is issued when a car manufacturer or the National Highway Traffic Safety Administration (NHTSA) determines that a car, car seat, equipment or tire creates a safety risk or fails to meet minimum safety standards.

If your car has an open recall, your car manufacturer will notify you via mail. Make sure you keep your vehicle registration up to date, including your mailing address.

While car repair insurance won’t cover factory recalls, federal law requires the auto manufacturer to fix the problem free of charge. If your dealer or manufacturer refuses to fix the problem, you can file a complaint with NHTSA.

If you didn’t receive a recall notification from your car manufacturer or you want to check if there’s an open recall, check the car manufacturer’s website or and search by the car’s vehicle identification number (VIN). Your VIN is a 17-digit number that’s etched on the car’s driver-side windshield. It’s also on your vehicle registration or insurance card.

It’s a good idea to occasionally check for open recalls. There were more than 55.7 million recalled vehicles on the road in 2020, according to a recent Carfax report. That was a 5% increase from 2019. The states with the highest percentage of recalled vehicles were Texas (26.8%), Mississippi (26.1%) and Louisiana (25.7%).


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