What Is Car Repair Insurance?

When you purchase a new or used car, you have to buy insurance for it first. That car insurance covers repairs when accidents, theft, fire, or other mishaps occur. But what about the unexpected repairs that happen along the way? Is there insurance for that? Apparently, there is.

Car repair insurance covers the unexpected

Damaged and destroyed vehicles are parked at the cordoned-off accident site in the residential street.
Damaged and destroyed vehicles are parked at the cordoned-off accident site in the residential street. | (Photo by Jonas Walzberg/picture alliance via Getty Images)

If you just bought a car and are worried about having some unnecessary expenses within the first 100,000 miles of ownership, then car repair insurance is something that you can consider. Car repair insurance is used for when your car has a mechanical failure and needs an expensive repair done. It works a lot like regular car insurance does where you pay a deductible amount first before the rest of the cost is covered by insurance, reports WalletHub.

Typically, car repair insurance is offered as an add-on by your regular car insurance company. For example, Geico has “Mechanical Breakdown Insurance” for its customers, which covers “new or leased cars that are less than 15 months old and with less than 15,000 miles.” This specific coverage can then be renewed for up to 7 years or 100,000 miles, whichever comes first. The reason for the age and mileage cap is that the older the car is, the more likely it will need larger repairs.

What does car repair insurance cover?

 A mechanic does repair work on a car.
A mechanic does repair work on a car. | Getty Images

Car repair insurance typically covers a majority of mechanical breakdowns, although it can vary depending on the insurance company you get it from. According to Forbes, the usual repairs that it covers include:

  • Air conditioning
  • Cooling systems
  • Electrical systems
  • Engine
  • Exhaust
  • Fuel systems
  • Steering components
  • Transmission

You will usually have to pay a deductible between $150 to $250, depending on your insurance company’s policy.

What’s the difference between car repair insurance and an extended warranty?

A mechanic wearing a protective face mask repairs a car
A mechanic wearing a protective face mask repairs a car. | (Photo by Vano SHLAMOV / AFP) (Photo by VANO SHLAMOV/AFP via Getty Images)

Many car buyers choose to purchase an extended warranty when buying a car for some longer-term peace of mind. However, you might be paying for less coverage, Geico says. Most extended car warranties only cover specific parts of the car and they usually cost a lot more money upfront. For example, some extended warranties can cost $1,000 to $4,000 and you typically pay that amount upfront or you can lump it into the car loan.

Car repair insurance, on the other hand, is charged monthly on your regular car insurance bill and it usually costs less than an extended warranty. However, you’ll have to check with your insurance company for an actual quote as the prices can vary between $50 and $1,000 per year, reports Automoblog.

There are several factors, including the type of car you drive, your personal information, your location, the car’s condition, etc., that gets factored in with your car repair insurance quote.

Car repair insurance can work well for high-dollar cars

Audi A4 sedan on display at Brussels Expo on January 9, 2020 in Brussels, Belgium
Audi A4 sedan on display at Brussels Expo. | Sjoerd van der Wal via Getty Images

While car repair insurance can be a good idea in some cases, it’s not necessary in every case. If you drive a new(er) Honda Civic, for example, then you may not need extra repair insurance since most repairs for Japanese cars are relatively inexpensive (less than $1,000).

However, if you just purchase a newer Audi or Mercedes-Benz, then car repair insurance can be a great idea since many repairs for those cars can exceed $1,000. In those cases, paying a $250 deductible would be much better.

While regular car insurance can cover your car when unthinkable accidents occur, car repair insurance is there for you when unexpected repairs happen along the way.  

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