Is car repair insurance worth it?

It might be a smart choice if you can’t afford a big repair bill

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    Even with regular maintenance and zero accidents, your car can still break down and cost you thousands to get back on the road. Your transmission can fail, your air conditioner can stop blowing and your check engine light can illuminate almost on cue after your factory warranty expires.

    Products like car repair insurance (also called mechanical breakdown insurance, or MBI) and extended warranties can offer protection from surprise repair bills, but finding the right coverage can be confusing if you’ve never done it before.

    Keep reading to learn what car repair insurance actually is, how it’s different from other types of repair coverage, what it costs and whether it’s right for you.

    Key insights

    • Car repair insurance can protect you from the cost of major vehicle repairs.
    • Car repair insurance is generally a lot like an extended warranty but with higher deductibles, less commitment and rates that can rise over time.
    • Rates for car repair insurance generally start around $100 per year but can soar to over $4,000 per year for less reliable high-mileage vehicles.
    • Car repair insurance might make sense if you can’t afford to pay $1,500 for a repair bill or simply value the peace of mind having coverage provides.

    What is car repair insurance?

    Car repair insurance is an insurance product that covers the cost of unexpected vehicle repairs arising from normal use.

    Imagine that your transmission fails after 65,000 miles of normal driving (i.e., no racing or off-roading). Your factory warranty won’t cover the repair cost because it expired when you hit 60,000 miles. Your auto insurance policy won’t cover it, either, since your transmission failed on its own and not due to an accident.

    That leaves you to cover the cost of a new transmission (roughly $4,000 to $7,000 for a stock replacement) by yourself. With car repair insurance, though, you may only have to pay a $250 deductible. That’s because car repair insurance helps protect you from the cost of expensive repairs you need after essential components fail prematurely.

    The key word here is “essential.” Most car repair insurance policies typically only cover parts that keep your car running, such as your:

    • Engine
    • Transmission
    • Fuel system
    • Exhaust
    • Electrical components
    • Steering components
    • Cooling systems

    Most car repair insurance policies will not cover:

    • Cosmetic elements, like your exterior trim and leather seats
    • Regular maintenance, like oil changes, alignments and tire rotations
    • Normal wear-and-tear items, like brake pads, rotors and tires
    • Repairs needed as a result of neglect, like your engine failing because you didn’t change the oil
    • Damage resulting from an accident, modification, abuse or misuse
    • Parts already covered by a factory warranty or manufacturer recall

    Precise coverage lists and definitions of neglect, abuse and misuse vary by insurance provider. For example, an MBI claims manager with GEICO told us that the company considers all racetrack use to be misuse and will not accept a claim if you blow a head gasket there.

    As a general rule of thumb, if it’s something that would void your car warranty, car repair insurance probably won’t cover it.

    Car repair insurance vs. car insurance

    Despite their similar-sounding names, car insurance and car repair insurance cover totally different scenarios.

    • Car insurance, like collision or comprehensive insurance, covers repairs resulting from accidents, theft, vandalism and other perils. For example, if your exhaust system gets stolen or you hit a deer and damage your car, your auto insurance would help to cover the cost of replacements or repairs.
    • Car repair insurance, on the other hand, covers breakdowns and part failures that come from normal use. For example, if your exhaust simply falls off the car or stops working properly, fixing it would likely be covered by car repair insurance.

    The main similarity between these kinds of policies is that they’re often available from the same types of companies. For example, you can potentially have both your car insurance and your car repair insurance through GEICO.

    » MORE: Car warranty vs. car insurance

    Car repair insurance vs. extended warranties

    Car repair insurance is a lot like extended warranty coverage, but it’s sold by an insurance provider and has a few other key differences, which are outlined below.

    Car repair insuranceExtended warranty
    Average cost $100 to $500 per year Between $1,000 and $3,000 for two to seven years of coverage
    Cost over time Variable (often rises over time) Fixed
    Payment structure Monthly or yearly payments Lump sum or monthly payments
    Deadline to purchase 50,000 miles; more expensive after first 15,000 miles None
    Flexibility Cancel at any time Depends on contract
    Average deductible $250 to $500 $0 to $250
    Additional features Roadside assistance and rental car reimbursement available at extra cost Roadside assistance, rental car reimbursement and trip interruption coverage often included

    As a rule of thumb, car repair insurance is often cheaper and more flexible than an extended warranty, but extended warranties have fixed costs and lower deductibles.

    » LEARN: What is a vehicle service contract?

    How much does car repair insurance cost?

    Annual premiums for car repair insurance generally vary from $100 to $500 per year for newer cars, but they can go well into the thousands for higher-mileage cars. It all depends on your vehicle’s age, mileage, reliability and the cost of parts and labor.

    Car repair insurance generally costs $100 to $500 per year for newer cars, but annual premiums can be thousands for higher-mileage cars.

    Naturally, car repair insurance is cheap for newer vehicles that aren’t likely to break down as often. GEICO quoted us just $130 per year for a 2022 Acura TLX with fewer than 15,000 miles.

    However, as vehicles age and the likelihood of a breakdown rises, the cost of car repair insurance goes up. To find out how much, we got quotes for high-mileage vehicles with varying reputations for reliability.

    Because GEICO requires you to purchase a policy before your car hits 15,000 miles, we called Mercury Insurance for quotes on a 2017 Toyota Camry, a 2017 BMW 230i and a 2017 Alfa Romeo Giulia, each with 50,000 miles.

    VehiclePolicy termCost with $0 deductibleCost with $100 deductible
    Toyota Camry 51,000 miles or 61 months $1,193 total or $234.69 per year $1,126 total or $221.51 per year
    BMW 230i 21,000 miles or 25 months $9,305 total or $4,466.40 per year $8,648 total or $4,141.04 per year
    *Based on car repair insurance rates from Mercury Insurance collected Feb. 9, 2023

    There are no results in the table above for the Alfa Romeo because Mercury Insurance would not cover it. (The Giulia fell into the Mercury’s unsupported luxury/exotic category.)

    As for the Camry and the BMW, it’s clear that owners of vehicles with high repair costs can expect to pay significantly more for car repair insurance.

    Pros and cons of car repair insurance

    The fundamental risk of car repair insurance is that you may end up spending more on coverage than you would have on repairs without it. It’s possible nothing will go wrong with your vehicle while you’re covered, and you might even be unlucky enough to get stuck with a repair that’s outside your coverage. In these cases, your car repair insurance will provide little other than a dent in your wallet.

    If you’re committed to getting protection from repair bills, though, the biggest advantage of car repair insurance over an extended warranty is flexibility. Rather than being on the hook for a large bill with an extended warranty, you can pay $200 per year for car repair insurance and cancel whenever you like.

    The drawback to that flexibility is that your car repair insurance rates can — and likely will — rise over time. Unlike with an extended warranty, you’re not guaranteed a certain level of protection at a fixed price.


    • Annual rates as low as $100 for new cars and reliable used cars
    • You can potentially pay month to month and cancel at any time
    • Easy to add to your existing auto insurance policy
    • Provides peace of mind for drivers of less reliable vehicles


    • Doesn’t cover wear-and-tear items, cosmetics or track use
    • Claims can be denied if you fall behind on regular maintenance
    • Rates generally rise over time and can soar for less reliable vehicles
    • Higher deductibles than extended warranties

    Is it worth it?

    All things considered, there's no universal answer to whether car repair insurance is worth it. However, we’ve identified three scenarios in which purchasing a policy could be a smart move.

    1. You can’t afford to pay a surprise $1,500 repair bill

    Car repairs can be surprisingly expensive, often ranging from a few hundred dollars to several thousand dollars. As part of another investigation, we surveyed mechanics nationwide for real-world estimates of major repairs, and the results were often higher than anticipated. Check out the table below to see what we found.

    RepairAverage parts and labor cost*
    Alternator replacement $500+
    Fuel pump replacement $380 to $790
    Radiator replacement $725 to $1,825
    Axle replacement $2,325
    Catalytic converter replacement $933 to $4,414
    Transmission replacement $3,900 to $7,200
    Transfer case replacement $2,000 to $8,000
    Engine replacement $4,000 to $10,000
    *For our sample vehicles

    Basically, if you don’t have the savings to cover a surprise bill for a major repair, car repair insurance could be a wise choice.

    2. Your vehicle has a short or inadequate warranty

    If your car’s factory warranty is set to expire sooner than you’d like, purchasing a car repair insurance policy might be the right move. While no two coverages are identical, you can reap many of the benefits of a longer factory warranty with mechanical breakdown insurance.

    Consider your car’s reliability when deciding whether or not coverage is worth it.

    Just plan ahead and think about when you want coverage. For less reliable vehicles, car repair insurance may become prohibitively expensive past 50,000 miles (as was the case with the BMW above). However, coverage during the 36,000- to 50,000-mile window could easily pay for itself.

    3. You drive a reliable vehicle but would still like peace of mind

    While insuring a notoriously unreliable vehicle can be a risky gamble where you have to choose between expensive repairs and expensive coverage, it’s a different story if you have a more reliable vehicle.

    Coverage for reliable vehicles with low repair costs is often so affordable that buying coverage is a much less serious risk. For example, a 2017 Toyota Camry is completely out of factory warranty coverage at the time of publishing. Mercury Insurance quoted us just $1,126 to protect that car for another 51,000 miles or 61 months with a $100 deductible. Even if you never need it, $221.51 per year for peace of mind could be worth it.


    Is my vehicle eligible for car repair insurance?

    Most vehicles under 50,000 miles will qualify for car repair insurance, but you may have to deal with limited options and higher costs if your vehicle has more than 15,000 miles. Also, classic cars, exotics and certain high-end luxury cars may not qualify due to the high cost of parts and repairs.

    Do I need car repair insurance if I already have a car warranty?

    Having both car repair insurance and a factory warranty might be redundant, but there are reasons you might consider doubling up. In some cases, a car repair insurance policy will cover more than a factory warranty. For example, your warranty may only cover your powertrain past a certain mileage, while car repair insurance will cover your electrical systems and other key components.

    Do I have to purchase car repair insurance by a certain date or mileage?

    While some insurance providers require you to purchase car repair insurance before your vehicle reaches 15,000 miles (like GEICO), others allow you to purchase a policy at any point in the vehicle's life (like Allstate, olive and Mercury Insurance). However, car repair insurance rates tend to rise quickly as a vehicle ages.

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      Bottom line

      Car repair insurance might be worth it if you’re financially vulnerable and you can get a good deal, but that largely depends on what you drive. Most car repair insurance policies let you pay month to month and cancel at any time. However, your rates can (and likely will) rise as your vehicle ages, so we recommend gathering quotes for all your options and comparing the results before you decide.

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