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We have all seen the TV ads about mechanical breakdown insurance for your personal vehicle. You may be thinking:
- What is Car Repair Insurance?
- Is that the same thing as auto insurance?
- What does car repair insurance cover?
- Is it worth the additional expense above my mandatory auto insurance?
Continue reading below to find out the answers to all your car repair questions and if you really need it.
What is Car Repair Insurance?
Car repair insurance, also known as mechanical breakdown insurance, is a type of auto insurance coverage that pays to fix mechanical malfunctions after a car’s original warranty expires.
Large personal lines insurance carriers like Allstate, Mercury Insurance, and State Farm are now making this type of coverage available to their customers.
How does this type of insurance work?
Car repair insurance works like extended warranties or service contracts that are sold by auto manufacturers and dealers. Its intent is to pay to fix mechanical problems generally after your car’s warranty has expired. Not all policies are the same but most cover major components such as the engine, transmission, power train, and air conditioning.
However, these policies do not cover repairs that might be considered “normal” maintenance or items that require typical replacement – such as tires, filters, coolants, spark plugs, or brake pads.
Traditional Car Insurance vs Car Repair Insurance
Here is a breakdown of the difference between car repair insurance and traditional auto (car) insurance:
Limitations of Coverage
When looking into any type of insurance coverage, you want to make sure you are receiving the coverage you need. Here are some things to consider when it comes to car repair insurance:
- This coverage typically applies to vehicles that are new and have low mileage. For example, Geico will provide coverage if your car has less than 15,000 miles or is less than 15 months old.
- There is usually a deductible of $250 or $500. This means that smaller repairs do not make much sense in filing for reimbursement.
- Typically, when the vehicle hits 100,000 miles or exceeds 7 years in age the insurance carrier drops the coverage.
Is the coverage worth it?
To some yes. The peace of mind in knowing that any big expenses to their vehicle are taken care of by their insurance is a comfort. However, to many, the cost does not make sense.
Since you need to purchase the insurance when your car is new, you will most likely be paying premiums while your car is still covered by the manufacturer’s new car warranty. So, you will likely get no benefit from the additional coverage. Since many vehicles need repair after 100,000 miles, this coverage will not apply.
In lieu of car repair insurance, experts recommend setting up an emergency fund that allows for mechanical breakdown coverage outside of the insurance. Further, the best insurance against mechanical breakdown is to follow the manufacturer’s maintenance schedule to keep a vehicle away from repair shops.
If you have any questions regarding your Corporate Auto insurance, reach out to TSIB for a free insurance review. Let us help you minimize your insurance risks before it’s too late!
TSIB’s Risk Consultants are currently servicing the following locations:
Texas: Austin, San Antonio, Houston, Dallas