Is car repair insurance worth it?
It might be if you can’t afford a big repair bill
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Products like extended warranties and car repair insurance (also called mechanical breakdown insurance or MBI) can offer protection from surprise repair bills. But are they worth the cost?
For some drivers, car repair insurance is a smart way to avoid budget-busting breakdowns. For others, the insurance ends up costing more than it saves. Whether it’s worth it mostly depends on your car’s reliability, your warranty and your ability to handle a surprise repair.
Car repair insurance is generally a lot like an extended warranty but with higher deductibles, less commitment and rates that can rise over time.
Jump to insightRates for car repair insurance generally start around $100 per year but can soar to over $4,000 per year for high-mileage vehicles or ones that aren’t very reliable.
Jump to insightCar repair insurance might make sense if you can’t afford a large repair bill, your factory warranty doesn’t offer enough protection or you’d rather pay a steady premium than risk a major surprise expense.
Jump to insightWhat is car repair insurance?
Simply put, car repair insurance covers the cost of unexpected vehicle repairs arising from normal use.
Imagine your engine fails after 65,000 miles of regular driving — no racing or off-roading. If your factory warranty expired at 60,000 miles, you won’t be covered. Your auto insurance won’t help either since the failure wasn’t caused by an accident.
That leaves you to cover the cost to replace an engine, which can run between $5,000 and $10,000. With car repair insurance, though, you may only have to pay the deductible.
What does car repair insurance cover?
Car repair insurance helps protect you from the cost of expensive repairs you need after essential components fail prematurely. The key word there 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
What does car repair insurance not cover?
Most car repair insurance policies won't cover the following:
A GEICO MBI claims manager told us the company considers all racetrack use to be misuse and will deny claims for any damage that happens on a track — including a blown head gasket.
- 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
- Damageresulting 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. As a rule, if it’s something that would void your warranty, car repair insurance probably won’t cover it.
Is car repair insurance worth it?
Car repair insurance might be worth it if one of these four situations applies to you:
1. If you can’t afford to pay a surprise repair bill
Car repairs can be surprisingly expensive, often ranging from a few hundred dollars to several thousand dollars. We’ve surveyed mechanics nationwide for real-world estimates of major repairs, and the results were often higher than anticipated. Check out the following table to see what we found:
What major car repairs actually cost, according to mechanics
| Component | Average repair costs | Average replacement costs |
|---|---|---|
| Alternator | N/A | $450 to $2,000+ |
| Axle | $200 to $1,300 | $500 to $2,500 |
| Catalytic converter | Varies | $900 to $4,500 |
| Engine | $2,500 to $4,000 (rebuild) | $5,000 to $10,000 |
| Fuel pump | N/A | $500 to $900 |
| Head gasket | N/A | $3,400 to $5,500 |
| Radiator | $200 to $800 | $700 to $1,900 |
| Transfer case | Varies | $2,000 to $8,000 |
| Transmission | $2,000 to $3,500 (rebuild) | $3,000 to $9,000 |
This kind of financial strain isn’t rare. Nearly 60% of drivers don’t have enough savings to cover a $1,000 repair bill, according to a ConsumerAffairs survey. As one reviewer from Illinois put it, “With the cost of repairs as high as they are, it's almost necessary to have car repair insurance.”
Almost 60% of drivers don’t have enough money in the bank to cover a $1,000 repair bill, according to a ConsumerAffairs survey.
2. If 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 coverage options are identical, you can reap many of the benefits of a longer factory warranty with MBI.
Consider your car’s reliability when deciding whether or not coverage is worth it.
For less reliable vehicles, car repair insurance may become prohibitively expensive past 50,000 miles (more on that later). However, coverage during the 36,000- to 50,000-mile window could easily pay for itself.
3. If your car is unreliable and you think car repair insurance will save you money
Even if you have enough savings to handle a major repair, car repair insurance might still be worth it if your car doesn’t rank well for reliability. Essentially, your car repair insurance might pay for itself (and then some) if you encounter enough issues.
Just know that car repair insurance providers are aware of which cars 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.
4. If you drive a reliable vehicle but would still like peace of mind
Buying coverage for an unreliable car can feel like a gamble — either you pay a lot for repairs or you pay more for a policy that may or may not save you money. But it’s a different story if your car is reliable.
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. In 2023, 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.
» RELATED: Is an extended car warranty worth it?
When is car repair insurance not worth it?
While car repair insurance can be a lifesaver in the right situations, it’s not always a smart investment. There are several scenarios where the cost or limitations of the coverage may outweigh the benefits.
Car repair insurance may not be worth it if:
- You already have a comprehensive factory or extended warranty that overlaps with what repair insurance covers
- Your car is very reliable and unlikely to need major repairs
- You are diligent about maintenance and can afford occasional repair costs out of pocket
- The policy’s deductible is so high that it negates the potential savings on repairs
- The premiums are significantly higher due to your vehicle’s age, mileage or reputation for reliability issues
- You’re leasing a vehicle that will be returned before the policy provides much value
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. In 2023, 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.
GEICO requires you to buy mechanical breakdown coverage before your car reaches 15,000 miles. To get a sense of pricing for older vehicles, we turned to Mercury Insurance for quotes on a 2017 Toyota Camry and a 2017 BMW 230i — each with around 50,000 miles.
» READ MORE:Extended car warranty pros and cons
Sample car repair insurance costs for used vehicles in 2023
| Vehicle | Policy term | Cost with $0 deductible | Cost 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 |
Pros and cons of car repair insurance
Pros
- Annual rates as low as $100 for new cars and reliable used cars
- Can be easy to add to your existing auto insurance policy
- Provides peace of mind to drivers of less reliable vehicles
Cons
- 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
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.
Car repair insurance vs. car insurance
Despite their similar-sounding names, car insurance and car repair insurance cover totally different types of damage.
- Car insurance usually includes either collision or comprehensive coverage. Collision covers accidents, like crashing into another car. Comprehensive covers things like theft, vandalism or hitting a deer.
- 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 differs in a few important ways.
Car repair insurance vs. extended warranty at a glance
| Car repair insurance | Extended warranty | |
|---|---|---|
| Average cost | $100 to $500 per year | $1,000 per year of bumper-to-bumper coverage |
| Cost over time | Variable (often rises over time) | Fixed |
| Payment structure | Monthly or yearly payments | Lump sum or monthly payments |
| Deadline to purchase | Available up to 50,000 miles with higher rates after 15,000 | 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 | Often includes roadside assistance, rental car reimbursement and trip interruption coverage |
In general, 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?
FAQ
Is my vehicle eligible for car repair insurance?
Most vehicles under 50,000 miles are eligible 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?
If you already have a factory warranty, then no — you probably don’t need car repair insurance. The coverage would likely be redundant, especially during the early years of ownership. That said, once your warranty starts to expire or only covers limited systems, like the powertrain, a repair insurance policy could help fill in the gaps.
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.
Car repair insurance: When it’s worth it and when it’s not
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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