Is Car Repair Insurance Worth It?

Protect your car long after its warranty expires

An auto mechanic explains a repair
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Matthias Tunger / Getty Images 

Once your car warranty ends, major car issues that could be expensive might really alarm you. But if you purchase car repair insurance, you won’t have to worry about paying a costly repair bill out of pocket, with or without a warranty.

Car repair insurance, also called mechanical breakdown insurance (MBI), covers breakdown-related repairs when your manufacturer’s warranty does cover them—for example, after it expires. The breakdown must not have been caused by a car accident.

Unless you buy a new car with a defective part, you probably won’t face major repairs during the first few years of ownership. Depending on your annual mileage, MBI coverage could overlap your factory warranty for three years or more, at least on major systems such as the powertrain. Still, if you own a car that’s still fairly new, car repair insurance can be a valuable coverage worth considering.

How Does Car Repair Insurance Work?

Typically, car repair insurance pays labor and parts costs, minus the deductible. The types of repairs a policy will cover can depend on the provider you choose or sometimes, the coverage package you select. Some basic MBI policies just cover major systems, such as:

  • Drive-axle components
  • Engine components
  • Transfer-case components
  • Transmission components
  • Turbocharger/supercharger components

Other car repair insurance policies may cover much more, including:

  • Air conditioning system
  • Brakes
  • Electrical components
  • Fuel delivery system
  • Heating and cooling system
  • Steering system

Some MBI policies provide bumper-to-bumper coverage of all systems and parts.

Research repair costs for your vehicle to get a good idea of how much money you could save by purchasing car repair insurance. For example, according to AAA's online repair estimator, common repair costs for a 2013 Subaru Outback in Annapolis, Maryland, as of 2022, might include:

  • Exhaust-system replacement: $3,312 to $5,648
  • Head-gasket replacement: $1,163 to $1,675
  • Power-steering pump replacement: $428 to $697
  • Radiator-fan motor replacement: $125 to $170

What Isn't Covered by Car Repair Insurance?

Although it does cover a range of repairs, mechanical breakdown insurance doesn’t cover everything. Common policy exclusions include:

  • Routine maintenance such as an oil change, coolant flush, changing air and/or cabin filters, and tune-ups
  • Components that fail due to normal wear and tear, such as brake pads, tires, and windshield-wiper blades
  • Repair costs covered by your collision and comprehensive coverages, such as collision damage or vandalism
  • Vehicle towing
  • Breakdowns caused by negligence, alterations to the vehicle, or failure to follow your manufacturer’s recommendations

Having car repair insurance doesn’t mean you can neglect your car and avoid the expense of related repairs. Many policies require you to maintain your vehicle as the manufacturer outlines in the owner’s manual.

Is My Vehicle Eligible for Car Repair Insurance?

You’ll qualify for car repair insurance if you meet specific vehicle age and mileage requirements. Usually, your car must be fairly new with a low-mileage odometer reading. For example, Geico only extends the coverage to vehicles less than 15 months old with fewer than 15,000 miles. When this policy lapses, you can renew coverage for up to seven years or 100,000 miles, whichever is first.

Providers usually cut off coverage at a specified number of miles, often around 100,000, or for a certain amount of time. Some may offer more generous mileage allowances, such as up to 120,000 miles.

Stephanie Banks, a driver near Birmingham, Alabama, bought Geico’s MBI for her then-new 2013 Subaru Outback and forgot she had it until she needed a new clutch a few years ago. "Since it was a clutch, Geico had to send out an inspector because it could have been something that my driving could have caused,” Banks said. “But they paid for it. I got a brand-new clutch." After the $250 deductible, Geico paid the rest of the labor and parts charges: $1,332.

Where Can You Buy Car Repair Insurance?

You can buy car repair insurance from auto insurance companies, but some providers might not offer it in all states. Other insurers sell this policy as an add-on to an auto insurance policy. For example, Mercury Insurance sells car repair insurance that includes additional benefits such as rental car assistance, roadside assistance, and tire protection.

Some financial institutions allow you to purchase car repair insurance when you take out a car loan. For example, Educational Employees Credit Union offers MBI coverage and allows borrowers to roll the premium into their monthly car payments.

Some companies that sell vehicle service contracts also offer car repair insurance. American Auto Shield sells numerous MBI coverage packages, with most providing protection for up to 120,000 miles.

How Much Does Car Repair Insurance Cost?

The cost of car repair insurance will depend on the make and model of your vehicle. Your age, location, and annual mileage will also impact your MBI rate. Typically, the rate will increase as your car ages, due to the higher risk of you filing a claim.

Many car repair insurance policies come with a default deductible of around $250. However, some providers allow you to adjust your deductibles to $100, $50, or even $0. But keep in mind that lowering your deductible will increase your rate.

The Balance requested a quote from Geico, using the following driver and vehicle profile:

  • Driver: Male, single, age 40
  • Location: San Francisco, California
  • Vehicle: 2020 Toyota Camry
 Coverage  Six-month Premium
Bodily injury liability
($15,000/$30,000)
 $62.30
Property damage liability
($25,000)
 $118.80
Comprehensive ($500 deductible)  $44.50
Collision ($500 deductible/collision deductible waiver)  $422.10
Mechanical breakdown insurance
($250 deductible)
 $32.20

An alternative to buying mechanical breakdown insurance is to budget and save a specific amount each month in a savings account. Perhaps you could save the equivalent of the MBI premium or a bit more to cover future repair costs, which could provide the peace of mind that comes with insurance without the hassle of the claims process.

Is Car Repair Insurance Worth It?

Like all financial products, car repair insurance has pros and cons.

Pros
  • Costs for repairs for mechanical breakdowns after your manufacturer warranty expires will be covered.

  • Coverage may be available as an add-on.

  • You choose where your car should be repaired.

Cons
  • You need a fairly new car to secure coverage.

  • Normal wear and tear, and routine maintenance are common exclusions.

Purchasing MBI when you buy a new car can pay off in the long run. If you drive frequently, you may reach your warranty’s limit faster than you expected. By carrying car repair insurance, you can rest assured that your vehicle is still protected when the warranty ends. However, if you trade-in vehicles every couple of years, you probably don’t need MBI.

When you buy car repair insurance for a new car, the coverage will overlap the protection of the factory warranty.

For instance, Banks’ Subaru factory warranty provided bumper-to-bumper protection for three years, while the Geico MBI policy continued to cover all parts and systems. If Banks’ clutch had worn out within the first 36 months of ownership, the factory warranty likely would have covered the repair. However, with the MBI coverage, she was able to save more than $1,000 on a new clutch six years into ownership.

Banks said she has no regrets about purchasing a car repair insurance policy. "It's one of those things that even if you break even, you've scored, as long as you don't pay for it and never use it,” she said.

Car Repair Insurance vs. Car Warranty

Here’s a look at how the two types of protection compare:

Toyota Warranty   Coverage Limits  Geico MBI  Coverage Limits
Basic warranty (all parts and systems) 36 months/36,000 miles All parts and systems 84 months/100,000 miles
Powertrain 60 months/60,000 miles    
Restraint systems 60 months/60,000 miles    
Corrosion perforation 60 months/60,000 miles    

Typically, a new car comes with a factory warranty that protects the vehicle for a specific length of time or up to a certain number of miles. For example, an automaker may provide a warranty valid for three years or 36,000 miles, whichever comes first.

A factory warranty may provide different coverage terms for specific components. For instance, a 2021 Toyota Camry comes with a 36-month/36,000-mile basic warranty, which provides bumper-to-bumper protection against defects or shoddy workmanship.

If a covered component fails during the warranty period, the manufacturer will pay the repair costs, including labor and parts. When the warranty expires, you must pay out of pocket for all repairs.

If you don’t drive much, or just an average number of annual miles, car repair insurance can protect your automobile long after the factory warranty expires. For example, with Geico’s MBI policies, you can extend coverage for up to seven years or 100,000 miles.

So, with this example, if you maintained average annual mileage with your 2021 Toyota Camry, its basic factory warranty would expire after fewer than three years, while Geico’s MBI coverage would provide protection for a total of seven years.

Frequently Asked Questions (FAQs)

What kind of insurance covers rentals during repairs?

Rental reimbursement insurance is a car insurance add-on that helps cover rental costs when your car is being repaired. This add-on will increase your premium, and some insurance companies only allow this coverage in the event of an accident or theft.

What are my rights when I’m getting an estimate for a car repair from insurance?

You have the right to choose where to get your car repaired after receiving a cost estimate from your insurer. You can choose a mechanic you often work with, or work with your insurer’s network of repair shops.

Do I have to repair my car when insurance pays a claim?

While you can use your claim rebate however you choose, most insurers will require you to repair your car for you to continue your comprehensive or collision coverages.

How does insurance decide whether to total my car or repair it?

Insurance will total your car when the potential repair costs exceed the car’s value. Other reasons are if the damage makes the car irreparably unsafe or state regulations require it for damage severity.

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