If you’re a car owner, the thought of unexpected repair bills can be daunting. Breakdowns happen, and they often come with hefty price tags. Auto repair insurance, also known as mechanical breakdown insurance (MBI), is designed to protect you from these financial shocks. But how much is auto repair insurance for 1 year, and is it a worthwhile investment? This guide from Car Repair Online will break down the costs, coverage, and key considerations to help you decide if this type of insurance is right for you.
Unexpected car repair costs can be a financial burden, making auto repair insurance a consideration for budget-conscious car owners.
What is Auto Repair Insurance?
Auto repair insurance, or mechanical breakdown insurance (MBI), is an optional add-on to your car insurance policy that covers the costs of unexpected mechanical repairs. Think of it as a safety net for when your car experiences major malfunctions that aren’t due to accidents. MBI steps in to cover repairs to crucial systems like your engine, transmission, and drivetrain, providing financial security against unforeseen breakdowns.
Typically, auto repair insurance is offered for newer vehicles with lower mileage. Insurers often set eligibility requirements, such as the car being less than 15 months old and having under 15,000 miles. If you’ve recently purchased a new or nearly new car and haven’t opted for an extended warranty, auto repair insurance might be a valuable option to consider.
It’s important to distinguish auto repair insurance from an extended car warranty. While both offer similar protection, they differ in eligibility, coverage limits, and price. Auto repair insurance generally has a lower annual cost but is typically available only for newer cars and may have slightly less comprehensive coverage compared to some extended warranties.
How Does Car Repair Insurance Operate?
Auto repair insurance functions similarly to other types of car insurance coverages. It’s an added layer of protection that becomes active when you need it, and like many insurance policies, it includes a deductible.
You can usually add auto repair insurance to your existing car insurance policy if your provider offers it. Progressive, for example, is one company that offers mechanical breakdown insurance as a standalone product.
Here’s a simplified example of how car repair insurance works:
- You purchase auto repair insurance and choose a deductible, let’s say $250.
- A year later, your car’s engine malfunctions, and your mechanic estimates the repair cost at $6,000.
- You file a claim with your auto repair insurance, pay your $250 deductible, and your insurer covers the remaining $5,750 to pay for the engine repairs.
Considering that the average cost of auto repair insurance is around $100 per year, the potential savings can be substantial. It can prevent you from having to shoulder significant out-of-pocket expenses for major car repairs, especially if you don’t have a large emergency fund.
Auto Repair Insurance vs. Extended Car Warranty
Auto repair insurance and extended car warranties both aim to protect you from unexpected repair costs, but they have key differences in vehicle eligibility, coverage scope, and price.
| Feature | Auto Repair Insurance (Mechanical Breakdown Insurance) | Extended Car Warranty |
|---|---|---|
| Vehicle Eligibility | Typically for vehicles less than 15 months old and with under 15,000 miles. | Available for older vehicles with higher mileage, sometimes up to 300,000 miles. |
| Coverage Limits | Policy limits can be extensive, such as Geico’s plan offering 7 years/100,000 miles. | Standard warranties from manufacturers often have limits like 6 years/75,000 miles. |
| Cost | Around $100 per year for a seven-year plan (approximately $700 total). | Median cost for a three-year extended car warranty is around $2,458, significantly higher. |
Another distinction lies in where you purchase these protections. Auto repair insurance is primarily offered by car insurance companies, while extended car warranties are commonly sold by car dealerships. Dealerships often promote extended warranties at the time of purchase or near the expiration of the original manufacturer’s warranty. However, extended warranties can often be purchased at any point.
A comparison table highlighting the key differences between auto repair insurance and extended car warranties in terms of vehicle eligibility, coverage limits, and cost.
What Exactly Does Auto Repair Insurance Cover?
Auto repair insurance is designed to cover significant mechanical breakdowns – the kind that can seriously impact your car’s functionality. Coverage generally includes major systems such as:
- Air Conditioning and Heating
- Drive Axle
- Emissions System
- Engine
- Exhaust System
- Steering
- Suspension
- Transmission
It’s crucial to understand that this coverage applies only to mechanical failures that are not the result of accidents or collisions. Damage caused by accidents falls under collision coverage.
What Auto Repair Insurance Typically Excludes
Auto repair insurance is not intended for routine maintenance or wear-and-tear items. It won’t cover services that are part of regular car upkeep, like oil changes, tire rotations, or replacing worn brake pads.
Common exclusions under auto repair insurance policies include:
- Fluid Replacements and Top-offs
- Brake Pad Replacements
- Filter Replacements
- Tire Replacements or Rotations
- Spark Plug Replacements
Furthermore, auto repair insurance usually doesn’t include roadside assistance or towing services. These are typically covered under emergency road service (ERS) coverage, which is often a separate add-on to your standard car insurance policy.
Decoding the Cost: How Much is Auto Repair Insurance for 1 Year?
So, let’s get to the core question: How much is auto repair insurance for 1 year? The good news is that auto repair insurance is generally quite affordable. Policies can range from as low as $30 per year to around $100 annually. For budgeting purposes, you should expect to pay approximately $100 per year, or about $700 for the entire duration of a typical seven-year policy.
The primary factor influencing the annual cost of auto repair insurance is your chosen deductible amount. Most insurance providers offer deductible options ranging from $100 to $500. Opting for a higher deductible will result in a lower annual premium, and vice versa.
Is Auto Repair Insurance a Worthwhile Investment?
Determining whether auto repair insurance is a smart move depends on your individual circumstances, financial situation, the type of vehicle you own, and your risk tolerance. Here are key considerations to help you decide:
Assess Your Financial Situation
First, evaluate your capacity to handle a major car repair bill out of pocket. Could you comfortably afford a $3,000 or $5,000 repair without straining your finances or going into debt? Second, consider if you can manage the small monthly expense of auto repair insurance for the peace of mind it offers. If you can afford the insurance premiums but would struggle with a significant unexpected repair bill, then MBI could be a valuable safety net for you.
Evaluate Your Risk Appetite
The reality is that you might pay for auto repair insurance and never need to use it. Newer cars and brands known for reliability are less prone to major breakdowns, especially in their early years. However, if you prefer the security of knowing you’re protected against unforeseen mechanical issues, even for a relatively small annual cost, then auto repair insurance can be a worthwhile investment in peace of mind.
Consider Your Vehicle’s Reliability
While modern vehicles are generally more reliable than older models, breakdowns can still occur. Certain makes and models are also known to have better reliability records than others. Researching the reliability ratings and common repair issues for your specific vehicle can provide insights into your potential risk.
Vehicle Reliability and Typical Repair Costs
Resources like RepairPal provide reliability ratings and average repair costs for various vehicles. According to their data, the following brands are among the most reliable:
| Brand | Reliability Rating (out of 5) | Average Annual Repair Cost |
|---|---|---|
| Honda | 4 | $428 |
| Acura | 4 | $501 |
| Kia | 4 | $474 |
| Hyundai | 4 | $468 |
| Mazda | 4 | $462 |
| Lexus | 4 | $551 |
| Toyota | 4 | $441 |
| Nissan | 4 | $500 |
A table displaying car brand reliability ratings and average annual repair costs, sourced from RepairPal data, to help assess potential repair expenses.
Auto Repair Insurance: Frequently Asked Questions (FAQ)
Here are some common questions about auto repair insurance:
What is auto repair insurance?
Auto repair insurance, often referred to as mechanical breakdown insurance (MBI), is optional car insurance coverage that helps cover the costs of mechanical repairs to your vehicle. It covers major components like the engine and transmission when they fail due to mechanical issues, not accident damage. Accident-related mechanical repairs are covered by collision insurance.
How much does towing cost without insurance?
The average tow truck cost is around $109, but this can vary based on factors like the time of day, distance towed, and the type of tow truck needed.
What is the average annual cost of auto repair insurance?
Auto repair insurance can range from $30 to $100 per year, with an average annual cost of approximately $100.
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Car Insurance Methodology:
To ensure our rankings of car insurance companies are objective and accurate, we use a comprehensive rating system. We analyze data from numerous auto insurance providers, grading them on a range of factors to determine an overall rating.
Factors Considered in Ratings:
- Coverage (30% of total score): The variety of coverage options offered by a company is a significant factor in meeting diverse consumer needs.
- Cost and Discounts (25% of total score): We analyze auto insurance rate estimates from Quadrant Information Services and consider available discount opportunities.
- Industry Standing (20% of total score): Market share, ratings from industry experts, and years in business are evaluated to assess industry standing.
- Customer Experience (15% of total score): Customer complaint data from the National Association of Insurance Commissioners (NAIC) and customer satisfaction ratings from J.D. Power are key indicators. We also conduct shopper analysis to assess the responsiveness and helpfulness of customer service teams.
- Availability (10% of total score): Companies with broader state availability and fewer eligibility restrictions score higher in this area.
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