It never fails: As soon as your car’s warranty ends, the engine light glows red or the transmission starts clanking. But if you purchase car repair insurance, you won’t have to worry about paying a costly repair bill with your own money. Often called Mechanical Breakdown Insurance (MBI), car repair insurance can provide the same type of protection as a factory warranty—often more—and can protect your vehicle long after the warranty expires.
Granted, 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.
Nonetheless, 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 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 cover much more, including:
- Air conditioning system
- Electrical components
- Fuel delivery system
- Heating and cooling system
- Steering system
Some MBI policies provide bumper-to-bumper coverage of all systems and parts. However, car repair insurance doesn’t cover components that fail due to normal wear and tear, like brake pads, tires, and windshield wiper blades. Policies also won't pay for an oil change or tune up. MBI won’t cover repair costs covered by your collision and comprehensive coverages, such as collision damage or vandalism.
Usually, you can only purchase MBI when your car is fairly new, with low mileage. Geico only extends the coverage to vehicles less than 15 months old with fewer than 15,000 miles.
Providers usually cut off coverage at a specified number of miles, often around 100,000. American Auto Shield offers more generous mileage allowances, up to 120,000 miles.
Stephanie Banks, a driver in the Birmingham, Alabama, area, 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,” she 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.
Research repair costs for your vehicle and you’ll 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 Banks’s 2013 Subaru Outback might include:
- Exhaust system replacement: $4,209-$6,357
- Head gasket replacement: $1,390-$1,824
- Power steering pump replacement: $529-$767
- Radiator fan motor replacement: $623-$919
Where Can You Buy Car Repair Insurance?
Some auto insurance companies sell car repair insurance, but some providers might not offer it in all states. Where available, Geico includes MBI as a default coverage in its online quotes. Mercury Insurance also sells car repair insurance, which includes additional benefits such as rental car assistance, roadside assistance, and tire protection.
Credit union members can often purchase car repair insurance when they take out a car loan. Educational Employees Credit Union, which serves California’s Central Valley, 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, most providing protection for up to 120,000 miles.
How Is Car Repair Insurance Different Than a Car Warranty?
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 three-year, 36,000-mile warranty, whichever comes first.
A factory warranty may provide different coverage terms for specific components. For instance, a 2020 Toyota Camry comes with a 36-month/36,000-mile basic warranty, which provides bumper-to-bumper protection against defects or shoddy workmanship. It also provides 60-month/60,000-mile protection for the powertrain and seatbelts.
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’re on your own and 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 instance, with Geico’s MBI policies, you can extend coverage for up to seven years or 100,000 miles. According to 2018 data from the Federal Highway Administration, the average American motorist drives 13,476 miles per year. If you maintained average annual mileage with your 2020 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.
Here’s a look at how the two types of protection break down:
|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|
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.
We 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
|Bodily injury liability
|Property damage liability
|Comprehensive ($500 deductible)||$44.50|
|Collision ($500 deductible/collision deductible waiver)||$422.10|
|Mechanical breakdown insurance
The Geico MBI premium for Banks, the Alabama motorist, has increased over the years and today, she pays $71 every six months.
Is Car Repair Insurance Worth It?
Purchasing MBI when you buy a new car can pay off in the long run. If you live behind the wheel, chances are you’ll reach your warranty’s limit faster than you imagine. 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 its factory warranty. For instance, Banks’s Subaru factory warranty provided bumper-to-bumper protection for three years, while her Geico MBI policy still covers all parts and systems. If her clutch had worn out within the first 36 months of ownership, the factory warranty likely would have covered the repair. But with the MBI coverage, she was able to save more than $1,000 on a new clutch six years into ownership.
Banks has no regrets about purchasing her 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. “Considering I have a 7-year-old car, I haven't spent much money on repairs. It’s working for me.”