Is Car Repair Insurance Worth It?

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If your car has a mechanical breakdown—such as a blown gasket or an electrical system on the fritz—your car insurance policy won’t cover the cost of repairs. A standard auto insurance policy covers only car accidents that you cause and, if you have collision and comprehensive insurance, other specific problems such as a car fire or vehicle theft.

If you want coverage for mechanical problems, consider car repair insurance, commonly known as “mechanical breakdown insurance.” This pays for repairs if your car has mechanical or electrical problems. Car repair insurance is similar to an extended car warranty, but the key difference is that you buy it from an insurance company.

What Does Car Repair Insurance Cover?

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

Air conditioning
Brake system
Convenience technology (such as convertible top, keyless entry and sunroof)
Cooling and heating systems
Drive axle
Electrical systems (including the car’s computer)
Engine
Exhaust
Fuel systems
Safety technology (like blind sport awareness system and camera)
Steering components
Suspension systems
Transmission

Generally, there’s a car insurance deductible if you make a claim under mechanical breakdown insurance. A deductible is what the amount subtracted from a claim payment. For example, if you have a $250 deductible and your car repair insurance claim is $1,000, your car repair insurance company’s claims check will be $750.

The deductible amount can vary by insurer. For instance, Allstate has a $50 deductible, Geico mentions $250 and Progressive says you can choose one between $100 and $500.

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:

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

Is My Vehicle Eligible For Car Repair Insurance?

Eligibility to buy mechanical breakdown insurance generally depends on vehicle age and mileage and the guidelines of an insurance company.

For example, with Geico you can buy mechanical breakdown insurance for new or leased cars that are less than 15 months old and have less than 15,000 miles. Once you have the coverage you can renew it for up to seven years or 100,000 miles—whichever comes first.

A car repair insurance policy with National General Insurance is stricter in its rules. A policy we looked at 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.

Some insurers that offer car repair insurance include:

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Car Repair Insurance vs. Extended Warranties

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 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: Typically is 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: 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, depending on the policy.
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 failure, you can file a car insurance claim with your insurer. 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 will 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 the repair will be covered. For instance, Progressive may require an inspection to verify the damage before repairs start.

Car repair insurance might be worth it for you depending on the cost of what breaks, as it can protect you from an unexpected repair bill.

Fixing a car’s air conditioner can cost anywhere from $100 to $1,500. And transmission replacement can range from $1,500 to over $6,000.

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

Car Repair Insurance Alternatives

If car repair insurance is not for you, you’ll still want to be prepared for unexpected vehicle expenses. Here are ways to try to prevent surprise repair bills:

Research make, model and year. Before you buy a car, research the car’s reliability. For example, you might want to start with Consumer Reports’ reliability guide.
Maintenance. Keep your vehicle well-maintained based on the car manufacturer’s recommended maintenance schedule.
Save money toward repairs. Common vehicle repair costs are between $500 and $600, but can go much higher, according to AAA. AAA recommends you set aside at least $50 per month to cover routine maintenance and unexpected repair bills.
Find a reliable mechanic. If your car needs repair, you’ll want a good mechanic. A good start is finding a shop that specializes in your type of car, reading customer reviews and getting recommendations from friends and family. Ask your mechanic if they have a certification from the National Institute for Automotive Excellence and what type of warranties they give on repair work.
Warranty. If your car is already under warranty, you likely don’t need car repair insurance. Car warranties and car repair insurance are similar, so you don’t need to pay for an overlap in coverage.

Car Repair Insurance At-a-Glance

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 the NHTSA 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.

Carfax Car Care is a free service that monitors cars for open recalls after owners enter their license plates and VINs. The service will notify you if a recall has been issued. Some Department of Motor Vehicles are providing supplemental recall notifications to car owners during registration, renewal and inspection.

Car Repair Insurance Frequently Asked Questions

Do I need car repair insurance if I already have a car warranty?

If you already have a new car warranty or an extended warranty, you most likely don’t need to buy car repair insurance. While the specifics of what’s covered will depend on your warranty or car repair insurance policy, they generally cover the same items.

How do I know if my car is under warranty?

If you bought a new car, it’s likely to have a new car warranty.

Car warranties typically transfer to new owners, so even if you buy a used car, it might still be under warranty. If you’re not sure if your vehicle is under a warranty, there may be warranty information in the owner’s manual. Or you can contact the dealership where you purchased the car. If you bought the car in a private sale, contact the car manufacturer. You’lll need your vehicle identification number (VIN), which you can find etched on the driver’s side dashboard, on the driver’s side door jamb or on documents from the car sale.

If your car is not under a manufacturer warranty and no warranty documentation was provided in the sale, it will be more difficult to find out if your car already has an extended warranty through a third-party company. A CarFax report might have information on extended warranty companies as well as the repair/maintenance history.

Does car repair insurance or a car warranty cover car accidents?

Car repair insurance and car warranties do not cover damage from car accidents. Adding collision and comprehensive insurance to your auto insurance policy will cover damage from problems such as car accidents, vandalism, fire, flood, hail, falling objects and collisions with animals. Comprehensive coverage also covers car theft.

If someone else is responsible for a car accident, you can make a claim against their liability insurance, sue them or use your own collision insurance.