Is Car Repair Insurance Worth It?

What is car repair insurance?

Car repair insurance or mechanical breakdown insurance covers the cost of unexpected vehicle repairs arising from normal use. It’s regulated as an insurance product and sold by licensed insurers.

For example, say your engine fails after 65,000 miles of regular driving. If your factory warranty expired at 60,000 miles, you won’t have coverage for an engine repair or replacement. That means you’ll need to cover the cost of an engine replacement, which can cost between $2,000 and $10,000. However, if you have car repair insurance when your engine fails, you may only have to pay a deductible.

What car repair insurance covers

Car repair insurance typically only covers essential parts that keep your car running, such as the:

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

What car repair insurance doesn’t cover

Car repair insurance typically won't 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
• Preexisting damage or issues noted before the policy start date

How much does car repair insurance cost?

Car repair insurance typically costs around $100 to $500 per year for newer cars or up to $4,000 per year for high-mileage vehicles. Generally, how much you’ll pay for car repair insurance depends on your vehicle’s age, mileage, reliability and the cost of parts and labor. As vehicles age and the likelihood of a mechanical breakdown rises, the cost of car repair insurance goes up.

Example: Car repair insurance costs

We collected car repair insurance quotes for different types of vehicles. For example, for a 2022 Acura TLX with fewer than 15,000 miles, Geico quoted us $130 per year for mechanical breakdown coverage.

To get a sense of car repair insurance costs for older vehicles, we collected quotes from Mercury Insurance for a 2017 Toyota Camry and a 2017 BMW 230i.

Pros and cons of car repair insurance

The main 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, or you may need a repair that’s not covered. However, it can be a relatively low-cost way to gain peace of mind as your vehicle ages.

Compare the pros and cons of car repair insurance before purchasing a policy:

Who is car repair insurance best for?

Car repair insurance is typically best for people who can’t afford to pay a surprise repair bill, have an unreliable or expensive vehicle or want peace of mind.

You can’t afford to pay a surprise repair bill

Car repairs can be expensive, typically ranging from a few hundred dollars to several thousand dollars, depending on the car and type of repair. If you don’t have any emergency savings, car repair insurance may help you pay for an unexpected and expensive repair.

As Steven, a reviewer from Illinois said: “[With] the cost of repairs [as] high as they are, it's almost necessary to have [...] car repair insurance.”

Your car is unreliable or more expensive to repair

Car repair insurance might be worth it if your car doesn’t rank well for reliability or is expensive to repair. Sites like J.D. Power and RepairPal can help you determine your vehicle’s expected reliability and typical repair costs.

However, car repair insurance providers are aware of which cars tend to have bad reputations, so they try to price coverage accordingly. When you're shopping, you’ll want to make sure the cost of the policy makes sense for your make and model’s risk and the repairs you're most likely to face.

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

Even if you drive a vehicle that’s known for reliability or low repair costs, buying a car repair insurance policy may be worth it if it provides you with peace of mind. Plus, policies are typically more affordable for newer or more reliable vehicles.

When is car repair insurance not worth it?

Car repair insurance may not be worth it if:

• You already have a comprehensive factory warranty or extended warranty that overlaps with what repair insurance covers.
• Your car is reliable and unlikely to need major repairs.
• You stay on top of maintenance and can afford most repair costs out of pocket.
• The policy’s deductible is so high that it would negate the potential repair savings.
• The premiums are significantly higher due to your vehicle’s age, mileage or reputation.
• You’re leasing a vehicle that will be returned before the policy provides much value.

How to file a car repair insurance claim

Follow these steps to file a car repair insurance claim when a covered component fails.

1. Document the damage with photos and be prepared to provide any necessary documentation, such as receipts for routine maintenance.
2. Open a claim with your insurer either by phone, through an online portal or mobile app before any work begins.
3. Once the claim is logged, the company will assign a claims adjuster who will inspect the vehicle (often at a repair shop) and prepare an initial estimate.
4. Get your car repaired.

What to do if your claim is denied

Car repair insurance claims are often denied because of deferred maintenance, preexisting conditions, vehicle misuse or misinterpretation of your contract. If your claim is denied, be sure to first review your contract carefully, then gather supporting documentation that can provide stronger evidence for your claim and finally submit a formal appeal. In your appeal, outline why you disagree with the denial and include all supporting documentation.

Compare the best car repair insurance companies

Compare our picks for the best car repair insurance companies:

Car repair insurance vs. extended warranties

Car repair insurance is similar to an extended auto warranty, but it’s sold by an insurance provider. It also generally comes with higher deductibles and rates that can rise over time.

FAQ

Bottom line

Car repair insurance may be worth it for drivers who don’t have any emergency savings for major repairs or for drivers who have luxury vehicles with expensive parts, though it can also be worth it for peace of mind alone. It’s generally not worth it if you have a newer car still under its manufacturer’s warranty, you drive a reliable model with low repair costs or you have enough emergency savings.

Before purchasing a car repair insurance policy, compare quotes from at least three providers and calculate whether the annual premium costs less than your potential out-of-pocket repair expenses. Most policies allow you to cancel without penalty, but premiums typically increase as your vehicle ages. It can help to consider your car's current value, repair history and your financial cushion to make the best decision for your situation.