Dealing with unexpected car repairs can be a significant financial burden. When your vehicle breaks down, the costs to fix it can sometimes reach thousands of dollars, causing stress and impacting your budget. That’s where car repair insurance, also known as mechanical breakdown insurance (MBI), comes into play. This guide from Car Repair Online will delve into everything you need to know about auto repair insurance, specifically focusing on how much is car repair insurance cost, what factors influence the price, what it covers, and ultimately, whether this type of coverage is a worthwhile investment for you.
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Understanding Car Repair Insurance: What is Mechanical Breakdown Insurance (MBI)?
Auto repair insurance, most often referred to as mechanical breakdown insurance (MBI), is an optional add-on to your standard car insurance policy. Think of it as a safety net for your vehicle’s mechanical health. It’s designed to cover the costs associated with unexpected mechanical failures that are not a result of accidents. Unlike collision coverage which handles accident-related damage, MBI focuses specifically on breakdowns of major car components.
This type of insurance offers financial protection against potentially high repair bills for crucial systems in your car. For vehicle owners, especially those with newer cars that may still be under finance, MBI can provide significant peace of mind. It ensures that a sudden engine failure or transmission problem doesn’t derail your finances.
However, it’s important to note that MBI is typically available only for newer vehicles with relatively low mileage. Insurers usually set eligibility criteria, often requiring vehicles to be less than 15 months old and having fewer than 15,000 miles. If your car meets these conditions and doesn’t already have an extended warranty, exploring car repair insurance might be a smart move.
If you already have an extended car warranty, MBI might seem redundant, as both serve similar purposes. While they offer overlapping protection, key differences exist in eligibility, coverage parameters, and, importantly, cost. Generally, mechanical breakdown insurance is less expensive than an extended warranty but is restricted to newer cars and might have slightly less comprehensive coverage in some aspects.
How Car Repair Insurance Works: Deductibles and Claims
Car repair insurance operates similarly to other types of car insurance coverages you might have. It’s an added layer of protection that activates when you need it most. A key feature, like many insurance policies, is the deductible.
You can typically add car repair insurance to your existing car insurance policy if your current insurer offers it. Alternatively, some companies, like Progressive, offer it as a standalone product.
Here’s a breakdown of how car repair insurance works in practice:
- Policy Purchase and Deductible Selection: You purchase car repair insurance and choose a deductible amount. Common deductible options range from $100 to $500.
- Mechanical Breakdown: Imagine, a year after obtaining the policy, your car experiences a major breakdown. Your trusted mechanic diagnoses the issue as a transmission failure requiring replacement, with an estimated cost of $8,000.
- Filing a Claim: You file a claim with your car repair insurance provider.
- Deductible Payment: You pay your chosen deductible, for example, $250.
- Insurance Coverage Activation: Your insurance policy then covers the remaining repair costs. In this scenario, the insurance would cover $7,750 of the $8,000 transmission repair bill.
Because the average car repair insurance cost is relatively low, often around $100 annually, the potential savings can be substantial, especially when facing major mechanical repairs. Unless you have a significant emergency fund readily available for car repairs, MBI can provide crucial financial security, preventing you from incurring debt to handle unexpected vehicle breakdowns.
Car Repair Insurance vs. Extended Warranty: Key Differences
Car repair insurance and extended car warranties are often compared due to their similar aim of protecting against repair costs. However, they differ in several significant aspects, including vehicle eligibility, coverage limits, and cost.
| Feature | Car Repair Insurance (MBI) | Extended Car Warranty |
|---|---|---|
| Vehicle Eligibility | Typically for vehicles less than 15 months old and under 15,000 miles. | Available for older vehicles with higher mileage, sometimes up to 300,000 miles. |
| Coverage Limits | Policy limits are often longer than standard warranties. Example: Geico offers 7 years/100,000 miles. | Manufacturer warranties often have limits like 6 years/75,000 miles. |
| Cost | Generally around $100 per year for a seven-year plan (approximately $700 total). | Median cost for a three-year plan is around $2,458, significantly more expensive. |
Another important distinction lies in where you purchase these protections. Auto insurance companies are the primary providers of car repair insurance. Extended car warranties, on the other hand, are commonly sold by car dealerships, often at the point of purchase or as the original manufacturer’s warranty nears expiration. While dealerships are the typical source, car owners can often purchase extended warranties from dealerships or third-party providers at almost any time.
What’s Covered Under Car Repair Insurance?
Auto repair insurance is designed to cover major mechanical breakdowns, protecting you from substantial repair expenses for critical vehicle systems. The coverage generally includes malfunctions or failures of these primary systems:
- Air Conditioning and Heating
- Drive Axle
- Emissions System
- Engine
- Exhaust System
- Steering
- Suspension
- Transmission
It’s crucial to remember that this coverage is applicable only when the breakdown is not due to an accident or collision. If any of these components are damaged in an accident, your collision coverage would be the relevant policy to file a claim under.
What’s Not Covered by Car Repair Insurance?
Car repair insurance is not a maintenance plan. It does not cover routine maintenance services or wear-and-tear items. Anything considered part of regular vehicle upkeep to maintain optimal performance is typically excluded. This means you cannot use car repair insurance for:
- Fluid Replacements (oil, coolant, etc.)
- Brake Pad Replacements
- Filter Replacements (air filter, oil filter, cabin filter)
- Tire Replacements or Rotations
- Spark Plug Replacements
Furthermore, car repair insurance usually doesn’t include benefits like roadside assistance or towing services. These are typically covered under a separate emergency road service (ERS) add-on to your standard car insurance policy. Therefore, it’s important to understand the specific inclusions and exclusions of your car repair insurance policy to avoid misunderstandings about coverage.
How Much Does Car Repair Insurance Actually Cost?
The cost of car repair insurance policies can vary, generally ranging from around $30 to $100 per year. However, for budgeting purposes, it’s reasonable to expect to pay an average of $100 per year, or approximately $700 for the entire duration of a typical seven-year policy.
The primary factor influencing car repair insurance cost is the deductible you choose. Most insurance providers offer a range of deductible options, usually between $100 and $500. Opting for a higher deductible typically results in a lower annual premium. Conversely, a lower deductible will mean a higher premium but less out-of-pocket expense when you file a claim.
For example, choosing a $500 deductible might lower your annual premium to $30-$50, while a $100 deductible could raise it closer to $100 per year. The best deductible level depends on your financial situation and risk tolerance. If you prefer lower monthly costs and can handle a larger out-of-pocket expense in case of a breakdown, a higher deductible might be suitable. If you prefer more predictable expenses and want to minimize out-of-pocket costs at the time of repair, a lower deductible would be the better choice, albeit with a slightly higher annual car repair insurance cost.
Is Car Repair Insurance a Worthwhile Investment?
Deciding whether car repair insurance is “worth it” is a personal decision that depends on your individual financial situation, the type of vehicle you own, and your personal risk tolerance. Consider these key factors to help you make an informed decision:
Assess Your Financial Situation
First, evaluate your financial capacity to handle a major car repair bill out-of-pocket. Could you comfortably afford a $2,000, $5,000, or even $8,000 repair without going into debt or significantly impacting your savings? Secondly, consider if you can comfortably afford the annual premium for car repair insurance, typically around $100 per year.
If you can manage the small annual cost of MBI but would struggle to pay for a large, unexpected repair, then this insurance could be a valuable safety net. It provides peace of mind knowing you’re protected from potentially crippling repair costs.
Risk Tolerance and Vehicle Reliability
Consider your risk appetite. Are you comfortable with the risk of facing a large, unexpected repair bill? While newer cars are generally less prone to breakdowns, mechanical failures can still occur. Reliable car brands reduce the likelihood, but no vehicle is completely immune to breakdowns.
If you prefer the security of knowing you’re covered for mechanical issues, even if you might not need to use the insurance, then car repair insurance could be “worth every penny” for the peace of mind it provides.
Vehicle Reliability and Potential Repair Costs
Research the reliability of your specific vehicle make and model. Certain vehicles are known to be more reliable than others, and some are prone to specific types of mechanical problems. Resources like RepairPal provide reliability ratings and average repair costs for various vehicles.
Checking your car’s reliability history and typical repair costs can help you gauge the potential risk and determine if the car repair insurance cost is justified for your vehicle.
Car Reliability and Repair Costs Data
Consumer reporting sites like RepairPal offer insights into vehicle reliability and repair expenses. Here’s a snapshot of some of the most reliable car brands based on their data:
| Brand | Reliability Rating (out of 5) | Average Annual Repair Cost |
|---|---|---|
| Honda | 4.0 | $428 |
| Acura | 4.0 | $501 |
| Kia | 4.0 | $474 |
| Hyundai | 4.0 | $468 |
| Mazda | 4.0 | $462 |
| Lexus | 4.0 | $551 |
| Toyota | 4.0 | $441 |
| Nissan | 4.0 | $500 |
This data indicates that while these brands are generally reliable, even owners of these vehicles can face average annual repair costs in the $400-$550 range. Major, unexpected repairs can significantly exceed these averages, making car repair insurance a consideration even for owners of reliable brands.
Auto Repair Insurance: FAQ
Here are some frequently asked questions about car repair insurance:
What exactly does auto repair insurance cover?
Auto repair insurance, or mechanical breakdown insurance (MBI), is optional car insurance coverage that helps pay for vehicle repairs due to mechanical failures. It covers major mechanical components like the engine and transmission if they break down due to wear and tear or malfunction, not accident damage. Accident-related mechanical repairs are covered by collision insurance.
Does car repair insurance cover towing?
Typically, no. Car repair insurance generally does not cover towing or roadside assistance. These services are usually part of emergency road service (ERS) coverage, which is a separate add-on to your car insurance policy.
On average, how much is car repair insurance cost per year?
Car repair insurance cost can range from $30 to $100 per year, with an average annual cost of around $100. The exact cost depends on factors like your deductible and the insurance provider.
Is mechanical breakdown insurance the same as car repair insurance?
Yes, mechanical breakdown insurance (MBI) and car repair insurance are different names for the same type of coverage.
Our Methodology: Car Insurance Methodology
To provide objective and accurate information, Car Repair Online employs a comprehensive rating system for ranking car insurance companies. Our methodology involves collecting data on numerous auto insurance providers and grading them based on a wide array of factors. This results in an overall rating for each provider, with top-scoring insurers leading our rankings.
Key factors in our ratings include:
- Coverage (30% of total score): Insurance companies offering a broad range of coverage options are favored, as they are more likely to meet diverse consumer needs.
- Cost and Discounts (25% of total score): We analyze auto insurance rate estimates from Quadrant Information Services and assess the availability of discount opportunities.
- Industry Standing (20% of total score): Our team considers market share, ratings from industry experts, and the company’s years in business to evaluate industry standing.
- Customer Experience (15% of total score): This is based on complaint data from the National Association of Insurance Commissioners (NAIC), customer satisfaction ratings from J.D. Power, and our own shopper analysis assessing customer service responsiveness and helpfulness.
- Availability (10% of total score): Companies with greater state availability and fewer eligibility restrictions receive higher scores in this category.
Our Credentials:
- 800+ hours of research conducted
- 130+ companies thoroughly reviewed
- 8,500+ consumers surveyed for insights
*Data accurate as of the time of publication.
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