Car breakdowns are an unwelcome surprise, often accompanied by hefty repair bills that can strain your finances. When faced with unexpected car trouble, repair costs can quickly escalate into thousands of dollars. This comprehensive guide from the experts at Car Repair Online will delve into the world of auto repair insurance, also known as mechanical breakdown insurance (MBI), to help you understand its coverage, costs, and whether it’s a worthwhile investment for your peace of mind. We aim to provide you with a clear understanding of what auto repair insurance is and, crucially, what the average cost of auto repair insurance is, empowering you to make informed decisions about your vehicle protection.
Understanding the Basics of Auto Repair Insurance
Auto repair insurance, or mechanical breakdown insurance (MBI), is an optional addition to your car insurance policy. It acts as a safety net, designed to cover the costs of significant repairs when your car experiences mechanical failures. Think of it as financial protection against major component breakdowns, such as engine or transmission issues, that are not the result of an accident.
Typically, auto repair insurance is targeted towards owners of newer vehicles that haven’t clocked up excessive mileage. Eligibility often hinges on your car being less than 15 months old and having fewer than 15,000 miles. If you’ve recently purchased a new car and haven’t opted for an extended warranty, exploring auto repair insurance could be a prudent move.
If you already have an extended car warranty, auto repair insurance might be redundant as both serve a similar purpose. The key distinctions lie in eligibility criteria, coverage limits, and price points. Auto repair insurance generally presents a more budget-friendly option than an extended car warranty but is typically reserved for newer cars and may offer slightly less comprehensive coverage.
How Auto Repair Insurance Works
Auto repair insurance operates much like any other form of car insurance coverage – it’s an added layer of protection that becomes active when you need it most. Similar to other insurance types, it usually involves a deductible, which is the amount you pay out-of-pocket before the insurance coverage kicks in.
You can often add car repair insurance to your existing car insurance policy if your current provider offers it. Alternatively, some companies, like Progressive, offer it as a standalone product.
Here’s a step-by-step breakdown of how car repair insurance typically functions:
- You purchase auto repair insurance and choose your deductible amount, for instance, $250.
- Down the line, your car experiences a mechanical failure. Your mechanic diagnoses the issue as a faulty transmission requiring replacement, estimating the repair cost at around $8,000.
- You file a claim with your auto repair insurance provider, pay your $250 deductible, and your insurance covers the remaining $7,750 of the repair expenses.
Considering that the average cost of auto repair insurance is around $100 per year, this coverage can potentially save you a substantial sum of money in the event of a major mechanical breakdown. Unless you have a significant emergency fund readily available, auto repair insurance provides reassurance that you won’t have to incur substantial debt to handle unexpected, costly vehicle repairs.
Auto Repair Insurance vs. Extended Warranty
Auto repair insurance shares similarities with an extended warranty but differs in crucial aspects like vehicle eligibility, coverage limitations, and, importantly, cost.
| | Vehicle Eligibility
