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.

Key Takeaways

  • Car repair insurance is a separate policy that covers you apart from standard liability and collision coverage.
  • Getting car repair insurance is similar to getting an extended warranty on your vehicle.
  • Car repair insurance may be limited in terms of which repairs it covers and when your coverage kicks in.
  • Not all vehicles are eligible to be covered by a car repair insurance policy.

What Is Car Repair Insurance?

Car repair insurance is a type of insurance policy that covers your vehicle for certain repairs. Also known as “mechanical breakdown insurance,” it pays for repairs associated with mechanical or electrical problems with your vehicle.

You can purchase car repair insurance from an insurance company. This is separate from the policy you purchase to get liability and collision coverage on your vehicle. It’s completely optional to buy this kind of insurance, unlike liability coverage, which you’re required to have in almost every state. If you enroll in car repair insurance coverage, you’d pay a monthly premium just like you would with your regular car insurance.

Car repair insurance is similar to an extended warranty in terms of what it covers, but the difference is that you get it from an insurance company. There can also be differences in coverage options and costs between the two, as well as your options for choosing a mechanic to complete repairs.

If you’re purchasing an extended warranty for your vehicle, take time to compare pricing and don’t be afraid to ask for a better deal. Also, pay attention to when the warranty runs out to make sure you’ll be covered for as long as you plan to own the vehicle.

What Car Repair Insurance Covers

Car repair insurance coverage can vary from insurer to insurer. Generally, it covers repairs associated with these parts of the vehicle:

  • Electrical systems
  • Air conditioning and heater
  • Cooling systems
  • Engine
  • Steering system
  • Exhaust system
  • Fuel systems
  • Transmission

That should cover most major repair scenarios. If your car breaks down and you have car repair insurance, you’ll need to file a claim with your insurance company to get the vehicle fixed. This is the same as if you get in an accident and filed a claim with your regular car insurance. Typically, these policies let you choose which mechanic will complete the repairs once your claim is processed and approved.

Once you take the car to the mechanic, you may have to pay a deductible before your coverage kicks in. Again, this is similar to regular car insurance policies that require a deductible if you have to file a claim. Still, once the deductible is paid, you don’t have to pay anything else out of pocket for covered repairs.

Car Repair Insurance Exclusions

While car repair insurance can cover a wide range of vehicle repairs, there are some things it doesn’t extend to. It’s important to know what’s excluded, so you know what to expect if your car breaks down. Depending on your policy, you may not be able to get coverage for any or all of the following:

  • Routine maintenance and upkeep, such as oil changes, tune-ups, and tire rotations
  • Damages related to an accident
  • Damages related to improper maintenance
  • Everyday wear and tear
  • Cosmetic wear and tear
  • Damages incurred before you purchased the vehicle
  • Rust or corrosion

Your policy can also exclude repairs that are covered by an extended warranty if you purchased one. If your vehicle is subject to a recall, any necessary repairs may also be excluded from your policy, as those would be paid for by the manufacturer. It’s important to review the details of a car repair insurance policy carefully, so there are no surprises if and when your car needs to be fixed.  

If you’re considering buying car repair insurance, look for a bumper-to-bumper policy, which covers what’s under the hood as well as the vehicle’s exterior and interior, including things such as lights and windows.

Who Can Get Car Repair Insurance?

One thing to point out about car repair insurance is that not every vehicle is covered. And if you want to get it, you’ll need to pay attention to the timing.

Generally, insurance companies that offer car repair insurance only do so for vehicles that meet certain guidelines with regard to age and/or mileage. For instance, you may only be able to get car repair insurance if you’re buying a brand-new car with fewer than 20,000 miles on it versus a five-year-old used car with 70,000 miles.

It’s also important to note that once you get car repair insurance, you may not be able to keep it indefinitely. Your insurance company may drop the policy once your car reaches a certain age or hits a certain mileage threshold.

Is Car Repair Insurance Worth the Money?

On the one hand, car repair insurance could save you money, as you’d only be responsible for the deductible if your claim is approved. Car repair insurance can also offer more flexibility than an extended warranty when it comes to choosing a mechanic, as an extended warranty program may require you to choose from a list of approved mechanics.

On the other hand, if your vehicle stays in good shape, then you may end up paying for car repair insurance coverage and never using it. If you plan to keep your car for the long term, your coverage may expire before you can put it to use if you have no major repair issues along the way.

When weighing car repair insurance, consider things such as:

  • How long you plan to keep the car
  • Whether you already have a new car warranty or extended warranty in place
  • How much you’ll pay for premiums and deductibles
  • What the policy covers (and what it doesn’t)
  • Your options for choosing a mechanic
  • How simple (or complicated) the claims filing process is

Also, weigh the alternatives to car repair insurance in the balance. For example, if you have an older vehicle, you may find that an extended warranty is a better fit. If you don’t drive very often, it may be enough just to follow a routine of regular maintenance to avoid needing repairs.

You could also work on building an emergency savings fund dedicated to car maintenance, so that if a repair is needed, you can pay with cash versus charging it to a credit card or taking out a loan. Depending on the repairs required, that cash might amount to less than the premiums you would have paid on car repair insurance over the long haul.