Car Repair Insurance: What it is, How it Works, and Why You Need It

If you own a car, you know that maintenance and repair expenses can be a steep cost. Whether it’s routine maintenance like an oil change or more serious repairs like a transmission replacement, these costs can quickly add up. That’s where car repair insurance comes in. In this article, we will explore what car repair insurance is, how it works, and why you might need it.

What is Car Repair Insurance?

Car repair insurance, also known as mechanical breakdown insurance, is a policy that covers the cost of repairs or replacement parts if your car experiences a mechanical breakdown or failure. Unlike traditional car insurance, which covers damages from accidents or theft, car repair insurance is specifically designed to cover the costs of repairing or replacing parts that break down due to normal wear and tear.

Car repair insurance policies typically cover major components of your vehicle, such as the engine, transmission, suspension, and electrical systems. Some policies may also cover additional components like the air conditioning or steering system.

How Does Car Repair Insurance Work?

When you purchase car repair insurance, you will pay a monthly or yearly premium to the insurance company. If your car experiences a mechanical breakdown or failure, you will file a claim with the insurance company. The insurance company will then assess the damage and either pay for the repairs directly or reimburse you for the cost of the repairs.

Depending on the policy, there may be a deductible that you must pay before the insurance company will cover the cost of the repairs. The deductible amount can vary, so it’s important to read the policy carefully to understand your financial responsibility.

Why Do You Need Car Repair Insurance?

Car repair insurance can be a valuable investment for several reasons. First, it can help you avoid unexpected and costly repair bills. If you own an older car or a car with high mileage, the likelihood of needing major repairs increases. Car repair insurance can provide peace of mind and financial protection in the event of a breakdown.

Second, car repair insurance can help you budget for car maintenance and repairs. By paying a monthly or yearly premium, you can spread out the cost of car repairs over time instead of being hit with a large expense all at once.

Finally, car repair insurance may be required if you are financing your car. Some lenders require borrowers to purchase car repair insurance as part of the loan agreement. Even if it’s not required, having car repair insurance can help protect your investment and ensure that you can continue to make payments on your car even if unexpected repairs arise.

Types of Car Repair Insurance Policies

There are several types of car repair insurance policies available. Here are a few of the most common:

Exclusionary Policies

Exclusionary policies are also known as “bumper-to-bumper” coverage. These policies cover nearly all components of your vehicle except for a short list of excluded items. Excluded items may include routine maintenance like oil changes or tire rotations, as well as damage caused by driver error or neglect.

Inclusionary Policies

Inclusionary policies are also known as “stated component” coverage. These policies only cover specific components of your vehicle that are listed in the policy. This type of policy may be a good option if you have a newer car that is still under warranty for some components.

Powertrain Policies

Powertrain policies cover the major components of your engine and transmission. This type of policy may be a good option if you have an older car with high mileage and want to protect against expensive engine or transmission repairs.

FAQ

Is Car Repair Insurance Worth the Cost?

Whether or not car repair insurance is worth the cost depends on several factors, including the age and condition of your car, your driving habits, and your budget. If you own an older car or a car with high mileage, car repair insurance may be a good investment to protect against unexpected and costly repairs.

What Does Car Repair Insurance Cover?

Car repair insurance typically covers major components of your vehicle, such as the engine, transmission, suspension, and electrical systems. Depending on the policy, it may also cover additional components like the air conditioning or steering system.

Does Car Repair Insurance Cover Maintenance?

Car repair insurance does not typically cover routine maintenance like oil changes or tire rotations. It is designed to cover the cost of repairs or replacement parts if your car experiences a mechanical breakdown or failure.

Can I Purchase Car Repair Insurance After a Breakdown Occurs?

Most car repair insurance policies require that you purchase coverage before a breakdown occurs. Once your car has experienced a mechanical failure, you will not be able to purchase a policy to cover the cost of repairs.

What is the Cost of Car Repair Insurance?

The cost of car repair insurance can vary depending on several factors, including the age and condition of your car, the level of coverage you choose, and your driving habits. On average, car repair insurance can cost between $50 and $100 per month.

Conclusion

Car repair insurance can be a valuable investment for car owners who want to protect against unexpected and costly repairs. By understanding the different types of policies available and the level of coverage they offer, you can make an informed decision about whether car repair insurance is right for you.