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Car repair insurance: Is it worth it?

Fact-checked with HomeInsurance.com

When shopping for a new car, it’s recommended to consider a make and model that is reliable. But even the most reliable cars have problems from time-to-time. The air conditioner can break, the electrical system can malfunction, and the engine can give out. Not only can car repairs be inconvenient, but they can also be very expensive

Usually, you’re on the hook financially for making mechanical fixes that aren’t related to an accident. However, car repair insurance can help pay for the cost of certain car repairs. It won’t replace your auto insurance policy, but it does offer extra protection for common car issues. In this article, we’ll explain what car repair insurance covers, what it doesn’t cover, and if you really need it.

What is car repair insurance?

Car repair insurance is a type of insurance that specifically covers your car’s mechanical and electrical issues. It’s sold by some major insurance companies and is often called mechanical breakdown coverage. Car repair insurance is similar to an extended car warranty, because it pays to repair or replace certain systems after the car’s initial warranty ends.

Car repair coverage also fills gaps in your car insurance coverage. Most of the time, vehicle repairs are unrelated to accidents altogether. Auto insurance will not usually cover vehicle repairs unless there has been a collision, so car repair insurance can fill the gap. 

What does car repair insurance cover?

Car maintenance insurance covers your car’s internal systems and components. If an electrical system malfunctions or breaks, this type of coverage will pay to repair or replace it. However, car repair insurance doesn’t cover everything. The specific coverages included are different for every insurance company, but here are the systems most commonly covered:

  • Heat and air conditioning: If your heating or air conditioning system breaks, it’s covered by car maintenance insurance.
  • Electrical systems: Any electrical system, including internal computers and GPS systems, is typically covered.
  • Engine: If your car’s engine gets damaged or breaks completely, insurance will cover the cost of a new one.
  • Transmission: If your transmission gives out, car maintenance coverage will pay to replace it.
  • Exhaust: Exhaust system damage is covered by this type of insurance.
  • Fuel systems: If your fuel system gets damaged, car repair coverage will cover the cost of repairs.
  • Steering system: Car maintenance coverage will pay for a new steering system and steering components.

What does car repair insurance not cover?

There are a lot of things that car repair insurance doesn’t cover however, including: 

  • Damage from an accident
  • General maintenance
  • Damage caused by neglect
  • Wear and tear
  • Corrosion or rust
  • Anything not mechanical or electrical, like paint, trim, or rims
  • Systems covered by your car’s warranty
  • Parts that are recalled
  • Pre-existing damage
Mechanical issues (A/C, exhaust, steering)Yes
Engine damageYes
Accident damageNo
Electrical systems (GPS, internal computer)Yes
Maintenance (oil changes, tire rotation)No
Recalled partsNo
Transmission issuesYes

Car repair insurance vs auto warranty

Car repair insurance is very similar to a standard auto warranty, and they both cover the same things. However, there are a few key differences.

A car warranty is something you get from the dealership when you purchase a new car. The warranty expires once you’ve driven the car a certain number of miles, or after a certain number of years. Many dealerships also sell extended warranty coverage for used cars, which is added to your loan payments.

On the other hand, car repair insurance is purchased through an insurance company, rather than a dealership. The cost is added to your car insurance premium, which you pay monthly or annually. If something breaks, you’ll file a claim with the insurance company and pay a deductible before you can get the reimbursement. Typically, you can choose your own auto body shop for repairs, or have one recommended by the insurance company

Additionally, car repair insurance is typically only available for newer cars. There’s usually a cutoff (number of miles or age) when your car becomes ineligible for car repair insurance. In comparison, you can usually buy an extended auto warranty at any point, as long as the car’s initial warranty is expired.

Car repair insuranceAuto warranty
Sold through insurance companiesSold through dealerships
Must file a claim if something breaks Don’t need to file a claim
Cost is added to your car insurance premiumCost gets added to loan payments 
Only available for newer carsAvailable for used or older cars
Requires a deductibleDoesn’t require a deductible

Is car repair insurance worth it?

So, is car repair insurance worth it? It depends; if your car is still under warranty, or you have an extended warranty, you don’t need car repair insurance. You would simply be paying for duplicate coverage. 

However, if you can’t afford to make major car repairs out-of-pocket, having car maintenance coverage is beneficial. It can save you a lot of money if something breaks unexpectedly. That being said, smaller repairs that cost a few hundred dollars may not be covered depending on your deductible, so it’s generally most helpful with expensive repairs.

Some car repair insurance policies come with added perks, like roadside assistance and rental car reimbursement coverage. But again, those coverages might be included with your car insurance policy. Before you decide to buy car repair insurance, make sure you’re not doubling up on coverage you already have.

Alternatives to car repair insurance

If you’re on the fence about car repair coverage, there are some alternative options you can consider first.

  • Buy a reliable car: For starters, it helps to drive a reliable car that is less likely to experience issues in the first place. When you’re shopping for a new car, check out the reliability scores of different makes and models using J.D. Power’s dependability ratings or the Reliability Index.
  • Keep up with maintenance: Make sure your car gets regular maintenance to keep all the systems running in top shape, and to catch potential issues early on. It’s a lot cheaper to pay for regular oil changes and transmission flushes than it is to buy a brand new engine.
  • Find a go-to mechanic: Another tip is to find a mechanic you like and trust. If you don’t have one, consider asking friends or family to give you a recommendation. A good mechanic should be someone who offers good rates and is transparent about the things that need to be fixed. 

The takeaway

  • Car repair insurance can help you pay to fix electrical and mechanical issues
  • It doesn’t cover maintenance, wear and tear, or accident damage
  • Car repair insurance can be beneficial for some drivers, but it isn’t a necessity

Paying for car repairs can be a pain, and having car maintenance insurance can save you money. However, not everyone needs this type of insurance. If your car is under warranty, or if you’ve purchased an extended warranty, car repair insurance isn’t for you. Remember that car repair insurance doesn’t cover common services, like oil changes or new tires, but it can be helpful with pricier repairs.

Elizabeth Rivelli

Elizabeth is an insurance writer for coverage.com, where she covers insurance providers and reviews policies to help consumers find comprehensive and affordable coverage for every area of their life. She has more than three years of writing experience for top online insurance and finance publications.

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