These days, we depend on our cars more than ever, so it’s important to have reliable transportation to get us where we need to go. If your car has a mechanical breakdown, a standard insurance policy, which typically covers accidents and incidents like fire and theft, likely won’t cover the repairs. This is where auto repair insurance can come in handy.

For mechanical problems, there is a coverage available called auto repair insurance, more commonly known as “mechanical breakdown insurance” (MBI), that is used to pay for repairs if your car has mechanical or electrical problems. Auto repair insurance provides financial protection against unexpected vehicle repairs and is like an extended car warranty but is purchased separately and directly from a carrier.

What is car repair insurance?

Essentially, this coverage is a type of insurance that specifically covers your car’s mechanical and electrical issues. It sometimes pays to repair or replace certain systems after the cars’ initial warranty ends. Only some car insurance companies offer car repair insurance.  And when they do offer it, they will set specific eligibility requirements for coverage options.

Definition and purpose of car repair insurance

Car repair insurance, also known as mechanical breakdown insurance, is a specialized type of coverage designed to help you manage the high costs associated with major mechanical issues in your vehicle. Unlike regular car insurance, which covers accidents and other incidents, mechanical breakdown insurance focuses on the internal components of your car. Its primary purpose is to provide financial protection against the expensive repair or replacement of essential parts like the engine, transmission, and electronics. This type of insurance ensures that you won’t be left with a hefty bill if your car experiences a mechanical breakdown.

Types of car repair insurance

When it comes to car repair insurance, there are several options available to suit different needs and preferences:

  1. Mechanical breakdown insurance (MBI): This type of insurance covers mechanical defects in major components such as the engine, transmission, and electronics. It’s ideal for those who want comprehensive protection against mechanical failures.
  2. Extended warranty: Often offered by car manufacturers or third-party providers, an extended warranty covers repairs due to defective materials or improper manufacturing. It’s a good option if you want to extend the coverage provided by your original manufacturer’s warranty.

By understanding the different types of car repair insurance, you can choose the one that best fits your needs and ensures your vehicle is well-protected.

How does car repair insurance work?

Car repair insurance works by providing coverage for mechanical breakdowns and repairs, helping you manage unexpected repair costs. Here’s a step-by-step explanation of the process:

Deductible

The deductible is the amount you pay out-of-pocket before your insurance kicks in. The deductible amount varies depending on the insurance company and the type of coverage you choose. It’s important to understand your deductible as it affects your overall repair costs.

Claim process

Filing a claim for car repair insurance is straightforward. Here’s what you need to do:

  1. Contact your insurance company: Report the breakdown or repair to your insurance company as soon as possible.
  2. Provide documentation: Submit necessary documentation, such as repair estimates and receipts, to support your claim.
  3. Review and approval: Wait for the insurance company to review and approve your claim.
  4. Pay the deductible: Once your claim is approved, pay the deductible amount.
  5. Insurance coverage: The insurance company will cover the remaining cost of the repair, ensuring you’re not left with a hefty bill.

Coverage activation

Coverage activation occurs when you purchase a car repair insurance policy. The policy will outline the terms and conditions of the coverage, including the deductible amount, coverage limits, and exclusions. Once you’ve purchased the policy, you’ll be protected against mechanical breakdowns and repairs, giving you peace of mind on the road.

By understanding how car repair insurance works, you can make informed decisions and ensure your vehicle is protected against unexpected mechanical issues.

What does it cover?

This coverage covers the internal systems and components of your vehicle. If there is a malfunction of an electrical system, this coverage will pay to replace it. Car repair insurance covers various vehicle repairs, including those related to mechanical and electrical systems, to provide a comprehensive understanding of the coverage. It’s important to note that it doesn’t cover everything. While specific coverages are different for each carrier, here are the most covered systems:

  • Heating and air conditioning
  • Electrical systems, including internal computers and GPS
  • Engine
  • Transmission
  • Exhaust
  • Fuel systems
  • Steering systems

What does car repair insurance not cover?

As this coverage is not meant to replace your auto insurance policy, but only to offer additional protection, there are several items and damages that are typically not covered under car repair insurance. Car repair insurance serves as a financial safety net for unexpected car repairs that are not covered by standard car insurance policies.

  • Damage caused by an accident
  • Routine maintenance
  • Poor maintenance (infrequent oil changes, using the wrong type of fuel, etc.)
  • Normal wear and tear
  • Non-mechanical items (trim, paint, rims, etc.)
  • Parts or items covered under the vehicle warranty
  • Parts or items covered by recall
  • Pre-existing damage
  • Corrosion and rust.
  • Repairs covered under your vehicles’ warranty

Car repair insurance vs vehicle warranty

Before considering car repair insurance, it’s important to know about factory and extended warranties. Once the manufacturer’s warranty expires, vehicles are more susceptible to mechanical issues, which can lead to significant repair costs. Auto repair insurance can serve as a safeguard, covering critical repairs that are not included under standard auto insurance.

Factory warranties and extended warranties

All car manufacturers offer consumers a factory warranty on their new vehicles. This warranty usually includes a new vehicle limited warranty but may also include a powertrain warranty.

A factory or manufacturer’s warranty is the promise an automaker makes to stand by its product and cover certain problems with your vehicle that occur within a certain period or miles and are not related to general wear and tear.

A powertrain warranty most often lasts for up to 5 years or 60,000 miles (whichever comes first) and typically includes the engine, transmission, and drive components.

Check your auto manual which can tell you what is not covered under your car’s warranty.

Differences between car repair insurance and mechanical breakdown insurance

Vehicle warranties are typically sold through car dealerships, auto clubs and other companies, where car repair insurance is sold through the insurer directly. Auto repair insurance provides coverage for mechanical breakdowns and unexpected vehicle repairs, which are not typically covered by standard warranties. You must file a claim to repair damages using car repair insurance, but you do not need to file a claim for repairs under a warranty. Repairs using car repair insurance require a deductible, unlike repairs under warranty which do not require an out-of-pocket payment. Car repair insurance is usually only available for new cars, whereas warranties can be purchased for used or older cars.

Is car repair insurance worth it?

For some drivers, it may be worth it. However, most of the covered repairs on a new vehicle will already be covered under the manufacturer’s warranty, and therefore excluded from the car repair insurance policy.

If your vehicle is not covered under a manufacturers or extended warranty, car repair insurance could protect you from unexpected expenses. The cost of replacing a transmission can range from $1,500 to $5,000. If you can’t afford to pay out of pocket for a major mechanical defect, car repair insurance might be your best bet, especially if your vehicle is no longer under warranty. Just remember that you are responsible for the deductible if you make a claim. Considering factors like vehicle reliability and potential repair costs can help determine if auto repair insurance is worth the investment.

If you are thinking of purchasing car repair insurance, here are some factors to consider when shopping:

  • Can you choose your own repair facility? Some companies may restrict the shops you are able to choose from. It might be a good idea to ask if there are shop restrictions before you purchase your policy.
  • Are there added benefits, such as roadside assistance or rental coverage?
  • Is the coverage transferable? If you sell or gift your vehicle, would the policy allow you to transfer coverage to the new owner?

Alternatives to car repair insurance

Car repair insurance may not be for every vehicle, but there are ways you can prevent surprise repair costs.

  • Do your research. When shopping for a new vehicle, keep “reliability” at the top of your “must haves” list.
  • Keep up with routine maintenance. Not only does routine maintenance help prevent unexpected trips to the mechanic, but it also saves you by helping improve fuel efficiency!
  • Check your warranty. If your vehicle is already under warranty, you most likely don’t need car repair insurance.
  • Find a trusted mechanic. If you don’t already have one, ask someone you trust for a recommendation, so you have someone you can count on when repairs and maintenance are needed.

Another way to save money on maintaining your car? Getting affordable car insurance that will protect you when you need it. Get a quote with Elephant today to see how we can help you save on your premiums.

 

Article last updated on January 16th, 2025 at 3:33 pm