If your car breaks down unexpectedly, it’s sometimes expensive to repair. In some cases, the fix costs thousands of dollars. In this article, we at the MarketWatch Guides team explain everything you need to know about auto repair insurance, from what it covers, what it costs to whether it’s worth the investment. We’ll also recommend the best car insurance companies for drivers looking for auto repair insurance.
Key Takeaways
Auto repair insurance, known as mechanical breakdown insurance, covers the major repairs needed for a car, such as drivetrain, engine, and transmission problems. Auto repair insurance covers the same repairs as an extended car warranty but is usually only available for newer cars with fewer miles. This optional coverage on your car insurance policy usually costs an average of $100 per year.
What Is Auto Repair Insurance?
Auto repair insurance, also called mechanical breakdown insurance (MBI), is optional coverage you can add to car insurance to pay for repairs if your car breaks down. Auto repair insurance provides peace of mind because you’re financially protected if you ever need to repair or replace something major, such as an engine or transmission.
Auto repair insurance is usually available only for newer vehicles that have yet to accumulate too many miles. Eligibility usually means cars are less than 15 months old with fewer than 15,000 miles on them. So, if you recently purchased your vehicle and don’t have an extended warranty, then auto repair insurance could be worth considering.
If you have an extended car warranty already in place, however, then you don’t need auto repair insurance because the two protection plans function similarly. The biggest difference between them is eligibility, coverage limits, and price. Auto repair insurance, or mechanical breakdown insurance, usually costs less than an extended car warranty but is available only for newer vehicles and covers a bit less, as well.
How Does Car Repair Insurance Work?
Similar to any other car insurance coverage you might purchase, car repair insurance is added protection that kicks in when you need it. Like many other types of insurance coverage, it carries a deductible.
If your current car insurance company offers it, you can choose to add car repair insurance to an existing policy. You can also choose to purchase it as a stand-alone product from companies like Progressive.
Here’s how car repair insurance works:
- You purchase car repair insurance and set your deductible, say, at $250.
- A year later, your car breaks down and your mechanic tells you that you’ll have to replace the transmission, which will cost roughly $8,000.
- You file a claim on your car repair insurance, pay your $250 deductible, and your insurance covers the remaining $7,750 to cover the repairs.
Because car repair insurance is generally so affordable — costing about $100 per year, on average — it has the potential to save you a considerable amount of money. Unless you have several thousand dollars set aside, auto repair insurance assures that you won’t have to worry about going into debt to cover expensive vehicle repairs.
Car Repair Insurance vs. Extended Warranty
Car repair insurance is similar to having an extended warranty on your vehicle but differs somewhat when it comes to eligibility, coverage limits, and cost.
- Vehicle Eligibility: Car repair insurance is usually only available for vehicles that are less than 15 months old and have fewer than 15,000 miles. You can buy extended car warranties for older vehicles with significantly more miles, sometimes as many as 300,000.
- Coverage Limits: The policy limits on car repair insurance are typically longer than those included with standard warranties. Geico’s car repair insurance plan, for example, offers coverage for 7 years/100,000 miles. On the flip side, extended car warranties from car manufacturers usually have limits like 6 years/75,000 miles.
- Cost: As with all types of insurance, the cost will depend on a number of factors, but with a seven-year plan, you can expect to pay roughly $100 per year or $700 overall for car repair insurance. Based on our research, the median extended car warranty cost is $2,458 for a three-year plan.
Another key difference between car repair insurance and extended car warranties is where you buy them. Auto insurance companies are usually the only businesses offering car repair insurance. Car dealers usually sell extended car warranties, sometimes at the time of purchase and when a car’s original warranty is about to expire. However, car owners can contact a car dealer to buy an extended warranty at almost any time.
What Does Auto Repair Insurance Cover?
Auto repair insurance covers major breakdowns that sometimes affect vehicles. Coverage includes protection for major mechanical issues or malfunctions of a car’s primary systems, including:
- Air conditioning and heating
- Drive axle
- Emissions
- Engine
- Exhaust
- Steering
- Suspension
- Transmission
This coverage only applies outside of an accident or collision. If any of these parts get damaged in an accident, you must file a claim for collision coverage.
What Does Car Repair Insurance Not Cover?
Car repair insurance doesn’t cover routine maintenance or upkeep. It won’t cover anything that’s considered part of a normal tuneup to keep the vehicle running smoothly, like oil changes or tire replacements.
Car repair insurance does not cover any of the following:
- Adding fluids
- Replacing brake pads
- Replacing filters
- Replacing or rotating tires
- Replacing spark plugs
In addition, car repair insurance doesn’t usually cover roadside assistance or towing. Those typically fall under emergency road service (ERS) on your car insurance policy.
How Much Does Auto Repair Insurance Cost?
Auto repair insurance policies can cost as little as $30 to as much as $100 per year. But if budgeting for this type of insurance, you should expect to pay an average of $100 per year or $700 for the life of the policy.
The main factor affecting policy cost is the size of your deductible. Most insurers let you select a deductible amount, usually between $100 and $500. The higher your deductible is, the lower your monthly payment will be.
Is Auto Repair Insurance Worth It?
Deciding if auto repair insurance is worth it boils down to your finances, the type of vehicle, and appetite for risk. When making this decision, here are a few key things to consider:
- Look at Your Finances: First, can you afford to pay for a major car repair without going into debt? Second, can you afford to pay a little extra each month for this peace-of-mind protection? If you can afford to pay for auto repair insurance but can’t easily afford the cost of a major repair, then this policy might be worth it for you.
- Think About the Risk: The hard truth is, there’s always the chance that you’ll never have the need for auto repair insurance. Newer vehicles and reliable car brands are less likely to break down until they get older. But if you’d prefer to trade in a few extra bucks a month for the peace of mind of knowing that you’re covered for any mechanical anomalies or unexpected breakdowns, then auto repair insurance could be worth every penny to you.
- Check Your Vehicle’s Reliability: Most modern vehicles are less prone to major mechanical failures than they used to be. But that’s not to say that they’re immune to the occasional breakdown. Some vehicles are also more prone to breakdowns and certain types of mechanical failures. Doing a little research to find out if there are known mechanical issues with your specific vehicle could help you decide if this coverage is worth it.
Car Repair Insurance: The Bottom Line
Car repair insurance (also known as mechanical breakdown insurance) could be worth the investment if you own a new car with only a few miles and you don’t already have an extended warranty or manufacturer’s warranty. It offers protection for major mechanical failures and covers the cost of repairing major breakdowns.
When deciding if car repair insurance is right for you, it’s important to weigh premiums against peace of mind. If you’re willing to pay a little extra each month to know that your insurance will cover any major mechanical issues, then car repair insurance could be perfect for you.
Best Auto Repair Insurance Companies
If you’re shopping for car repair insurance, the MarketWatch Guides team recommends the following reputable insurance carriers for quality coverage at affordable prices.
Geico: Best for Budget-Conscious Drivers
Geico offers auto repair insurance for vehicles less than 15 months old or with fewer than 15,000 miles. When looking for this coverage from Geico, look for mechanical breakdown insurance (MBI). If you’re already a customer, you can add it to your policy in just minutes online.
Additionally, Geico is known for having some of the most affordable rates on car insurance. In fact, based on our rate averages, it is 24% cheaper than the national average. It also earns consistently good customer reviews, meaning drivers don’t have to sacrifice service for price.
Progressive: Low Rates for High-Risk Drivers
If your car insurance carrier doesn’t offer auto repair insurance, you can buy it from Progressive as a stand-alone product (meaning you don’t have to be a customer to get it). You can get a quote on auto repair insurance in just minutes on Progressive’s website. Just answer a few quick questions about your vehicle to see the options available to you. You can then buy the policy online and choose your start date.
In addition to its wide range of insurance options, Progressive also has some of the lowest car insurance rates for high-risk drivers. If you have a less-than-stellar driving record but still want to save money on car insurance, Progressive could be the most affordable option for coverage.
Auto Repair Insurance: FAQ
Below are frequently asked questions about auto repair insurance:
-
What type of insurance will pay for the repair of your vehicle?
Auto repair insurance, most commonly known as mechanical breakdown insurance (MBI), is an optional car insurance coverage that will help pay for repairs to your vehicle. MBI covers the cost of repairing major mechanical components — like the engine and transmission — if they aren’t damaged in an accident. If you need mechanical repairs because of an accident, collision insurance will cover them. -
What is the cost of a tow truck?
The average cost of a tow truck is about $109, but costs depend on things like time of day, miles towed, and the type of tow truck used. - What is the average cost of auto repair insurance?
Auto repair insurance can cost anywhere from $30 to $100 per year. The average annual cost is typically right around $100.
Our Methodology
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The result was an overall rating for each provider, with the insurers that scored the most points topping the list.
Here are the factors our ratings take into account:
- Cost: Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
- Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
- Reputation and experience: Our research team considered market share, ratings from industry experts, and years in business when giving this score.
- Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
- Customer experience: This score is based on the volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness, and helpfulness of each insurance company’s customer service team based on our own shopper analysis.
Our credentials:
- 800 hours researched
- 45 companies reviewed
- 8,500+ consumers surveyed
*Data accurate at the time of publication.
In conclusion, auto repair insurance can provide peace of mind and financial protection in case of unexpected breakdowns for newer vehicles. By understanding what it covers, how much it costs, and whether it’s worth the investment, you can make an informed decision about whether auto repair insurance is right for you.